TOWARDS A DECLINING STATE? THE RISE OF THE HEADQUARTERS STATE
TOWARDS A DECLINING STATE? THE RISE OF THE HEADQUARTERS STATE
By Spyros Sakellaropoulos
In contrast to current notions of globalization having resulted in a diminution of state sovereignty capitalism is better able to reproduce itself within a national formation. There is thus no such thing as global capitalism but merely imperialism, i.e. an uneven articulation of national formations. Within this framework the State and its mechanisms are there to ensure the unimpeded reproduction of capitalist relations. Each instance of class struggle through its outcome modifies the structures of the State. What is characteristic of the contemporary state is thus not diminution of its activities but its transformation from a social state to a headquarters state. This second type of state embodies the downturn in popular assertiveness in recent years, one symptom of which is contraction in its social functions, changing it into an authoritarian institution elaborating bourgeois strategies.
Over the last years, and particularly since the advent of the globalization debate, the issue of the boundaries of state power – and indeed of its content – has re-emerged. This article attempts a critical approach to the view that the State has today been weakened, arguing that what is in fact occurring is a readjustment of its day-to-day functioning with a view to safeguarding its fundamental role, namely long-term reproduction of capitalist vested interests.
In order for this to become clear, what is required is an extensive examination of the key viewpoints according to which on account of globalization the role of the State is being diminished or significantly modified. We shall then look back at the most essential aspects of the discussions in the 70s, when a cohesive Marxist theory of the state in monopolistic capitalism was being formulated. Subsequently, we intend to outline our own problematic on the overall changes in the role of the State, with emphasis on the importance of the attempt to express the long-term interests of the ruling class. Our whole argumentation is informed by the basic Marxist thesis that the driving force of history is class struggle. We accordingly assert that changes in the function of the State are associated neither with an indefinable social dynamic, nor with the triumph of omnipotent technology, but with modification of the social balance of forces and the effects that such modification causes, the most important of these being the transition from the ‘interventionist state’ to the ‘headquarters state’.
The headquarters state is the new form of state supplanting the social state, which had embodied significant concessions to the labouring strata. The headquarters state in contrast consolidates displacement of the balance of power to the advantage of capital through modifications such as the transfer of economic functions to capital, privatization of many aspects of the social state, growing state authoritarianism, etc.
2. The theory of the powerless State.
In this part of the essay we propose to present a number of different views on the present and future of the nation-state. All these viewpoints nevertheless share an assumption that something new has emerged in comparison to previously-existing forms of the contemporary nation-state, something new which has to do with limitations in the scope of state sovereignty. These are theories of the weakened/transmuted State, of the network State, of the antagonistic State, of the post-modern State, of the neo-Marxist approach to the State and the theory of Empire.
Α) The weakened/transmuted State
According to Featherstone and Lash, the globalized State has begun to replace the nation-state as the basic framework within which social activities are conducted (Featherstone and Lash 1995: 1-2). The reason for this is that globalized procedures and institutions have invaded the nation-state, dissolving the conceptual and geographical boundaries within which the theory and practice of state sovereignty exercised its influence. The result is that states have no other option but to transfer their power to international and transnational institutions (Camilleri/ Falk 1992: 98-9).
The supporters of the weakening of the State claim that entry into the era of the globalized economy entails fundamental delinkage of state institutions from any possibility of influencing economic developments and/or controlling international economic forces. In contradistinction to the former arrangement whereby national policies were directing the economic forces, we now witness a situation where the economy is globalized and supranational economic forces impose their economic policies. According to an alternative interpretation, it is in essence the downgrading of the importance of state policy that brings about the end of politics as hitherto known and the corresponding rise of the omnipotent markets (Narr/Schubert 1994 as cited by Kotzias 2004: 115-6). For Strange, what is observable is shift of power from the State towards the free market, to the point that the latter begins to function as an independent political institution through its interconnections with the media but also through the policies it itself creates (Strange 1996: 44).
Β) The network state
One variant of the weakened state is that of the network state. According to Carnoy/Castels, many isolated institutions function in the form of networks within which continuous reciprocally determinant bargaining is in progress: national governments, supranational bodies, international institutions, local governments, regional administrations, NGOs. All these bodies are interconnected, with decisions being made and relations of representation established at every point of the network – not necessarily on the basis of the older hierarchical mode of organization. In the Information Age the State is the network state where every link is found to be in interaction with every other and all are equally indispensable in determining the functioning of the state (Carnoy-Castells 2001: 411). The result is that in these processes, where not infrequently important decisions are taken, the state finds itself in discussion with governmental, extra-governmental and non-governmental agents as equal to equal (Jessop 1997: 575), and in essence participates in a new form of network organization of power (Albrow 1996: 259). A new form of power is created: governance which is the power expressed in horizontal, co-operative forms of governing (King/Kendall 2004: 129), contrasting with the declining governmental form linked to the nation state.
What all this amounts to is erosion of the State through the steady transfer of state sovereignty to all kinds of non-state organizations (supranational organizations, regional entities, local communities, etc. Jessop 1997: 573-574),
C) The competitive State
Bob Jessop seeks in his work to extend the concepts of state-network and governance into a theory of the competitive state. In Jessop’s model the globalization process through restructuring of local, regional and supranational levels of economic and political organization contributes to a reshaping the role of the State. The State is not abolished but is reorganized as part of an attempt to cope with new demands at a variety of different levels (geographic, institutional, economic, political) (Jessop 1997: 576). Essentially what is involved is new form of capitalist state to succeed the state of the Keynesian model. Jessop calls it ‘the competitive state’, claiming that what characterizes it is its securing both of economic development within its borders and of the advantages accruing to capitals raised within a particular state and valorized outside of it. The competition is fostered through the agency of entities based in other states and the key objective of the competitive state is expansion of state power beyond its borders, either by shaping the framework of inter-frontier exchanges or by contributing to emergence of new terrain for capitalist accumulation. For this to become feasible, the competitive state privileges policies that are linked in the first instance to the knowledge-based economy but also involve such competitive factors as land, labour, economic agents, social institutions, creation of a supportive environment, etc. (Jessop 2002: 96). For the purpose of realizing these goals, the competitive state implements a range of policies whose aim is to secure suitable conditions for capitalist accumulation, the control of capital over the workforce, the co-ordination of processes arising from changes in the relation between space and time etc. (Jessop 2002: 271-4).
At the same time, the competitive state is post-national, due to the increasing importance of other spatial scales and horizons of action, which make the national economy less susceptible to macro-economic direction and the national territory less important as a power container. Strong tendencies are also present for aspects of economic and social policies to be assigned to government at the regional, metropolitan and municipal level, the reasoning being that policies aimed at influencing the supply side on a micro-economic scale will be more efficient if framed at the level where they will be implemented. Nevertheless, paradoxical as this may seem, this whole process can end up generating an increased role for the national state that will regulate the interscalar transfer of these powers, notwithstanding the fact that the entity doing the regulating will be not a national sovereignty state but a state playing a primus inter pares role in intra-governmental relations (Jessop 2002: 250-3). All these processes are based on what Jessop calls ‘meta-governance’, meaning on the one hand organization of the institutional framework and the rules for the individual modes of governance and on the other re-arrangement of the balance of forces between the different modes of governance. The most important transformation that has overtaken the state is that it has essentially limited its capacity to be a sovereign authority. In the framework of metagovernance it is transformed into one participant among others in a pluralistic system of guidance, where it contributes with its own resources to the processes of negotiation (Jessop 2002: 243).
D) The post-modern State
Martin Shaw, for his part, is of the view that an important process of transformation has taken place, and that what has resulted from it is the ‘western State’, a product of the Cold War consolidation of capitalist states foreshadowing the global State. The ‘western State’ is the form of social organization to be encountered in the countries of the developed ‘West’, identifiable through their collectively chosen devolution of aspects of their own national sovereignty (Shaw 1997; 2000). The end of the Cold War has entailed further development of the global aspects of state policies and a strengthening of supranational/global institutions such as the UN. Of course we have not yet reached the point of transition to the global state, since there are hesitations on the part of Western political leadership and reservations at the prospect of full displacement of power to the globalized apparatuses (Shaw 1997: 502). Nevertheless, the transferences that have already been effected are not at all negligible, but are of such dimensions as to bring about a radical modification of the relations that had been developing between the states up to that point, as well as forms of powers such as statehood and authority. The movement in the direction of formation of the global state simultaneously concentrates and fragments statehood, also rearranging the relations between state and society, since the rise of the globalized state proceeds in parallel with the globalization of society, economy and culture (Shaw 2000: 193).
It is interesting that Sorensen, too, will later speak of the emergence of the post-modern state, raising many of the same points as Shaw. According to Sorensen the distinctive features of the post-modern State are multilevelled governance based on supra-national, international, national and sub-national institutions (in many combinations and at many levels). The supra-national and international institutions are those that underwrite citizen rights, with particular respect for notions such as ‘community of citizens’ or ‘community of emotions’ (Sorensen 2004: 162), and collective identity is linked to institutions both above and below the nation. The greater part of economic activity is carried out within the trans-border networks. The degree of self-sufficiency of the ‘national’ economy is low (Sorensen 2001: 91), with resulting denationalization of state power (Sorensen 2001: 160).
Ε) The neo-Marxist theory of the State
Through an especially original analysis, W. Robinson attempts to introduce Marxist methodology into the study of the modern State. For Robinson globalization has succeeded in bringing the world into a uniform – capitalist - mode of production, at the same time incorporating the national regions into a global sphere. The progressive abolition of the time-of-day factor and subordination of geography to the logic of production create a phenomenon entirely without precedent. (Robinson 2001: 159). This is a new phase of capitalism, the transnational phase, surpassing the historically prior phase of the nation-state. During the nation-state period the dominant classes developed under the protection of the state, thus creating particular interests that were in conflict with the interests of the bourgeois classes of different national origin. By contrast, in today’s phase one may detect a redefinition of capitalist accumulation, and a redefinition of class formation insofar as the nation-state is concerned (Robinson/Harris 2000: 16-7).
At the political level these transformations also mean a change in the corresponding institutions of state. The new transnational phase of capitalism is not a radical innovation but in fact a continuation of capitalist development covering a long period of restructuring of the system, including its institutional forms (Robinson 2001: 160). The result is on the one hand the emergence of the transnational state and on the other the strengthening of old, as well as the creation of new, supranational institutions.
The transnational state comprises an entire constellation of social forces distinctively linked to capitalist globalization and the rising transnational bourgeoisie and incorporated into different groupings of political institutions. These institutions transform the national states and the supranational institutions in such way as to secure the domination of this class as the hegemonic fraction of capital on a global scale.
The transnational institutions gradually replace the corresponding national ones in the policy areas of development, management and administration of the globalized economy. The function of the nation-state is transposed from elaboration of national policies to the execution of policies formulated through the transnational institutions. The nation-states do not remain external to the transnational states but are incorporated into them as their constituent parts (Robinson 2001: 167).
Far from ‘national’ and ‘globalized’ being mutually exclusive terms, globalization is incorporated into local social structures and processes (Robinson 2001: 174- 175). Within this framework national governments act as transmission belts and relay stations for policies promoting imposition of the transnational agenda.
F) The case of the Empire of Hardt/ Negri
Hardt and Negri’s thesis is that state power is weakened through the process of formation of Empire. The removal of restrictions on economic cross-border economic transactions, the information revolution, the development of telecommunications, the non-material economy: all these are generative factors of Empire. A significant additional factor is that of changes in social organization and the content of production. The distinction between internal and external is being progressively abolished (Hardt/ Negri 2000: 187), such that use value and exchange value are ceasing to exist in a specific place (Hardt/ Negri 2000: 210). The object of exploitation and domination is tending to become not so much specific productive activity as global productive capacity. Integration of the global market brings with it the end of Imperialism (Hardt/ Negri 2000: 333). The dynamic of Empire appears synonymous with the dynamic of capital. Capital has globalized the system of domination so that it can no longer be identified with any individual nation-state. The power of capital is imposed without the imposition clearly issuing from any specific geographic position. For capital, neither a ‘centre’ nor a ‘periphery’, neither a ‘home’ nor an ‘abroad’ exist. (Hardt/ Negri 2001: 239).
Given the decline of state power, the notion of domination is transformed, taking the form of a synthesis of national and transnational organization informed by a uniform logic of power (Hardt/ Negri 2000: xii). In contrast to Imperialism, Empire develops no territorial power center and has no stable geographical borders and limits. It is a new mechanism of domination incorporating the global political system within its open borders (Hardt/ Negri 2000: xiii).
3) Antinomies of the theory of the declining State
There is a common element in all the abovementioned views: their claim is that in the present phase of globalization the state is weakened. It is not effaced; it retains some of its past prerogatives, but it ceases to be the agent par excellence of political power. Even in theories positing modification of the functions of the state, such modification coincides with an undermining of its general role through transfer of powers from the national to the international or supranational level. This raises a whole series of issues that must be addressed.
The first has to do with the concept itself of globalization, which is notoriously difficult to define. It is in no way evident that proponents of the abovementioned theories agree on a single definition of the phenomenon by virtue of which the nation state is losing important aspects of its autonomy. We do not propose to involve ourselves in extended citation of definitions. Let us simply enumerate certain general theses on which globalists are in accord. They are as follows:
- Globalization is a new phenomenon.
- It is a qualitatively new situation that transcends the traditional nation-states, creating new organizational forms at the supranational level.
- Implementation of new technologies and expansion of multinational capital both play an important role in the development of these forms.
The basic parameters of the phenomenon are, we believe, covered by these three points. Nevertheless, significant objections may be raised against all three of them.
First of all, as far as the unprecedented of globalization is concerned, according to some studies the world is no more globalized, and possibly less, than it was in the period before World War I (Bairoch 2000, Obstfeld 2000, O’Rourke/Williamson 1999). Even in relation to direct foreign investments, the largest inflows and outflows of capital occur between the developed countries (United Nations 2003).
As far as the multinationals are concerned, Hu has demonstrated why so-called multinational corporations are merely national companies with international affiliates (Hu 1992: 113- 115). Hirst/Thompson show how the greatest part of the activities of multinationals takes place within the mother country (Hirst/ Thompson 1998: 97).
Moreover the new technologies, for all their indisputable importance, do not in themselves amount to any radical new disjuncture in the history of productive systems given that technological developments in conditions of primacy of productive relations over productive forces (Bettelheim 1978; Koria 1986) it is not technological developments that create social structures but the inverse of this.
As far the supposed loss of sovereignty is concerned two observations should be made:
The first is that such a view makes the mistake of over-subjectivizing the state form. The State-Subject appears unable to deal with the diminution of its powers entailed in the process of globalization. The objection might be raised here that the State is not a subject, having no power of its own (Poulantzas 1979: 80- 81) but merely reflecting the social balance of forces and crystallizing class powers. Consequently, for any ‘strengthening’ or ‘weakening’ to become comprehensible, there must first be an analysis of the terms that led either to the strengthening or the weakening in question.
The second observation has to do with the fact that the formulation of theories about the diminution of sovereignty is nothing more or less than description of the terms of their incorporation into the imperialistic chain. There have always been strong and less strong states, and always – depending on the balance of power – the former have exerted more or less pressure on the latter (Krasner 1995/6: 150-151). The notion of national sovereignty was and is a relational notion. Creation of the so-called transnational organizations by the strong states is also an indication of their ability to expand their influence outside their national space.
The second issue has to do with the cancelling-out of specific state policies. There are a host of examples to show how nation-state policies differ radically between themselves. Characteristics examples of the multiformity of national policy can be seen in taxation of business profits (Flower 2002: 34) in industrial policy (Weiss 1998: 18-23; Weiss 2003: 296-7) and in macroeconomic policy (Weiss 1998a, 191-192).
Such differences are even more glaringly apparent when it comes to issues of strategy. Precisely because there is no globalization, completely different state orientations and strategies are evident. It is surely no coincidence that Palan, Abott and Deans should mention seven different national strategies (Palan/ Abott/ Deans 1999).
The third issue is linked to all variants of the theory of the network state. It is obvious that in the past any given state had contacts, collaboration, disagreements, etc., with other agents apart from nation-states. Nevertheless, in a period of increased internationalization, such practices undoubtedly multiply. That is not the real question. The real question is whether the state is an equal partner in these networks, or more precisely whether the dimensions are qualitatively similar. Our answer is no, because what is peculiar about the state is that the capitalist nexus is reproducible only within specific political forms, in the present case nation-state formations, meaning those political forms that took shape in the course of the rise and the extended reproduction of the capitalist mode of production and proved to be the most effective, in contrast to others that were also tried, like the colonial corporation (for example the Dutch East India Company or the English East India Company), the empire, the colonial empire, the city-state, the network of commercial cities (Balibar – Wallerstein 1990: 122). This view could have some validity if one were to provide a well-documented account of how the site of reproduction of the capitalist mode of production is now the global system. The site of reproduction, not of appearance or existence, and that would mean something very specific. It would mean firstly that there is an integrated global market. It would also mean that there is a global bourgeoisie and a global proletariat. And it would mean that there is a global state.
All the contradictions in Robinson’s analysis have their source here. The reason for this is that, although his theses are coherent and plausible, they are also complicit in reproduction of a peculiar theoretical amalgam combining an acceptance of globalization and weakening of the nation state with utilization of Marxist terminology and assertion of the primacy of class struggle. As far as creation of a unified mode of production is concerned, it is worth remembering that there is not one capitalism but numerous national capitalisms which are interwoven asymmetrically, constituting the imperialist chain. At no point in Robinson’s analysis is it explained how – through what process – the imperialist chain is to be broken up.
The thesis on Empire is demonstrably problematic, comprising in reality merely a variant on the theory of the globalized network. Here too the predominant schemata are those of downgrading of the nation-state, the globalized economy, super-domination of the new technologies, conditions of chaos lacking every element of stability.
However, recognition that the state is not a subject leads us to examination of what exactly the state is, and its relation to class struggle, so that we might understand the class role of the state, its functions and its long-term mission.
4. The Marxist discussion on the State
Within the framework described above, the international debate that took place in the 60s and 70s is especially important, and enlightening, precisely because it succeeds in identifying the basic parameters of the problem. Only through knowledge of what the State is, and which class interests it serves, can we understand where it fits in today.
More specifically, in parallel with the development of the movements of 1968 an intense controversy took place between some eminent theorists of Western Marxism, taking as their common point of departure a rejection of the instrumental view of the State, the view which perceived the State as a mere tool of the bourgeois class – a position adopted not only by so-called Soviet Marxism but also by radical Western intellectuals such as R. Miliband. At the opposite pole from these views other analyses, such that of N. Poulantzas, were developed according to which the State must be seen as ‘a relationship of forces, more precisely the material condensation of such a relationship among classes and class fractions’ (Poulantzas 1978: 128- 129). The basic function of this mechanism, the State, is ‘to organize and represent the long-term political interest of the power bloc’ (Poulantzas 1979: 127).
Poulantzas’ views have been subjected to criticism by German Marxists of the derivation school (Altvater , Hirsch [1975; 1978] and others). These theoreticians judge that the neo-Gramscians, particularly Poulantzas, overlook the decisive factor determining the form of the State, i.e. the relationship between State and capitalist accumulation. There is thus a correlation between the form assumed by the State, operation of the law of the tendency of the rate of profit to fall and the State’s endeavours to create countervailing tendencies.
However, the theses of the German school give the impression that each and every social development is linked to the needs of capitalist accumulation (Jessop 1990: 37), perhaps accelerating it, perhaps delaying it. The result of this is that many basic elements in material-social praxis – ideology, consciousness, political representation, etc. – are overlooked. Moreover, one thing not explained by supporters of the logical derivation school is why the accumulation of capital is fostered by the modern capitalist state and not some other form of state (Poulantzas 1978: 52).
The differences between the two schools would perhaps be smaller if it could be made clear that the questions bearing on the State concerned two different issues. Poulantzas is specifically preoccupied with defining the State and the German School with the functions and the functions of the bourgeois state. In this way if an attempt is made to synthesize the views of the two schools, taking into account the necessity of shaping an all-embracing answer, it may become possible to avoid the twin traps of economism and over-politicization. The State is not merely a relationship but embodies the outcome of class struggle within the framework of a specific mode of production. The aim of the bourgeois state is to secure long-term representation of bourgeois class interests. It is evident that all these exertions on the part of the State presuppose an ability to take into account all the modifications in the intra-bourgeois balance of power, the ascent or descent of specific fractions of capital, the whole conjuncture of the class struggle.
This excellent debate of the 1970s succeeded in combining development of the form of the phenomenon known as the state with development of the class struggle. What is unfortunate is that in the 80s the whole discussion was largely shifted to the theory of reformulation of the State, to post-Fordism and to Regulation theory. A theoretical current was essentially created around the theory of regulation, distancing much of the discussion from its initial basis. Through the theory of reformulation of the State an attempt was made to conceptualize changes in production as the point of departure for acquiring an understanding of the development of the State. Middle-range notions were introduced, unlike with the theory of the capitalist state, such as the Fordist and post-Fordist state (Hirsch 1983, as cited by Bonefeld, 1991: 40]. For Hirsch the modern interventionist state was created out of the pressures of competitition in the international market, out of the growing concentration of capital and out of social deconstruction (Hirsch 1991: 17). The interventionist state was one of the key elements in the Fordist model for capital accumulation (others being the Taylorist organization of production, the intensity of accumulation, the generation and exchange of relative surplus value, the mass production of consumer goods, high wages, the polarization between specialized and non-specialized labour (Hirsch 1983a, as cited by Psychopaidis 1991: 180). In contrast to all this, the rising post-Fordist state is based on new forms of production generated by the use of microelectronics, on flexible forms of labor and on the creation of a core workforce supplemented by a mass of peripheral workers, on contraction of the role of trade unions, etc. (Pelaez/Holloway 1991: 135-6). Essentially what happens is that the state is associated not with reproduction but with its own permanent adaptation to a regime of regulation ensuring the conditions for securing the continuation of capital accumulation (Jessop 1991: 84).
Positions of this kind are informed by a teleological type of approach whereby the objective laws of capitalist development lead to special forms of Fordist and post-Fordist regulation (Bonefeld 1991: 45). This serves as a method for incorporation of class struggle into the objective laws of development (Holloway 1991: 92). However, as Clarke correctly claims, the entirety of the characteristics of both Fordism and post-Fordism are not just aspects of a regime of regulation but also the reflection of a class balance of power characterizing the whole of the inter-war and post-war periods. (Clarke 1991: 128).
It is this important shift that leads to the modern discussion on the State, the acceptance of notions like that of globalization and the omnipotence of technology, the hovering around anything transnational (organizations, companies, power), the governance and the metagovernance, etc. It is really as if notions like class struggle, bourgeois strategy, imperialist chain, dominant ideology, have totally disappeared. But it is only in this light that we can understand contemporary developments. Otherwise we confine ourselves to a descriptive analysis, where technological developments and the changes in work relations coexist with the internationalization of economies, without any interpretation, as if from a certain point onward everything just happens. In order to find an answer to the different versions of the so-called globalization of the state it is necessary to mention how class struggle has contributed to change in the modern world and how this is reflected in the functions of the modern state.
The changes in the modern world
The first significant change is the fall of the regimes of so-called “existing socialism”. It is a change of immense importance: the imperialistic chain was reconstitued. The visible possibility of an alternative form of social organization collapsed. There was a dissipation of the pressure that these regimes had exerted on the West in the direction of maintenance of a minimum programme for social relief of the lower strata.
The second important change is the retreat of the labour and left movements that was so conspicuous in the countries of the capitalist west in the 60s and 70s, with a parallel retreat of the corresponding anti-imperialist national-liberation movements. The retreat has taken place at two separate levels, which however partially overlap. Οn the one hand we have the inability of the labour movement to find an adequate response to the bourgeois strategies implemented in the wake of the crisis of over-accumulation of 1973, strengthening ingrained syndicalist reflexes that proved ineffectual in the face of policies of whittling away the social rights of the popular classes. At the same time the parties of the left were not able to elaborate a mass anti-capitalist policy by taking advantage of the dynamics of the social movements to insist on an orientation of left governance (Sakellaropoulos 2002: 128-9). On the other hand, the fact that in most cases the movements of national liberation attached overriding importance to the need for national integration meant that they typically ended up getting dragged into the whirlpool of neo-fundamentalism, with the dynamics of the fall of ‘really existing socialism’ only serving further to guarantee that they would be incorporated into a capitalization process. The two basic forms of pressure on bourgeois strategies were thus disempowered. The result was that the bourgeois classes of the West were much more easily able to implement their policies, shifting the balance of power to the disadvantage of labour.
The third change related to internationalization of the economy is not of such recent origins. Its beginnings can be traced to the period following the end of World War II and it continues, not without fluctuations, up to the present day. Empirical data indicates that product exports increased as a percentage of GNP in the developed countries from 8% in 1950 to 16.5% in 2000 (Bairoch 2000: 202; UNCTAD 2003). Similarly, the inward stock of direct foreign investments increased as a percentage of GNP in the developed western countries from 6.9% in 1960 to 15.8% in 1999 (Bairoch 2000: 209; Anastasopoulos 2003: 182). This development suggests that the peaceful period following World War II coincided with resumption of the internationalization process that had been interrupted by the outbreak of World War I.
The fourth change results from the three previously mentioned ones. Reconstitution of the imperialist chain, continuing internationalization of the economy, the retreat of labour, left-wing and anti-imperialist mobilization, all contribute to creating the specific historical framework within which capital attempts on the one hand to reverse the fall in profitability brought about by the over-accumulation crisis of 1973 and on the other to abolish or restrict the social rights acquired by labour over the preceding decades.
This strategy is put into effect through the functions of the capitalist state, which is not neutral but permeated by class struggle, readjusting its strategy in the light of developments and aiming always at perpetuation of the long-term interests of capital. This is its role and its mission, springing from its very nature. It is not something that just happens, accidentally, or incidentally. The state becomes internationalized because this is the way it can respond to the social interests that, structurally, it represents. From the moment that the indigenous ruling class judges that the process of internationalization of the state does not serve its interests, the state will cease to be internationalized. What is involved is thus not an irreversible course of development that the physiognomy of the state must undergo, but a development that is socially and historically determined. It is for this reason that such important differences are observable in the state policies that are being pursued. They are the outcome of class struggle, and they accelerate or delay the present-day class strategies that are unfolding.
4. Special transformations in the policies and role of the modern State: from the interventionist state to the headquarters state
a. General framework
The distinguishing feature of the modern period is transition from the social state to the headquarters state. The social state intervened in various ways in the relationship between capital and labour, factoring in the – existent – popular struggles as well as the pressure exerted de facto by the existence of the regimes of ‘really existing socialism’ and the anti-imperialist movements. The changes described in the previous paragraph introduced new parameters into the situation, facilitating the rise of the headquarters state. This is the state form that, on the one hand, surrenders to the private sector part of the economic functions it has until recently exercised, on the other focuses its activities on planning policies to help shift the balance of power in favour of the forces of capital. The changes that take place in a number of functions of the state reflect this shift in the balance of power.
What this implies is that in each new conjuncture the State is obliged to respond as best it can to the new situation. That means taking care of the cohesion of the power-coalition for the reproduction of bourgeois social relations, for the policies and ideological hegemony of the dominant class and for upgrading of the position of the social formation within the imperialistic chain. They are elements of a strategy that Hart/Prakash have aptly name ‘strategic trade and investment policy’ (Hart/Prakash 2001: 91-3). It is a conscious attempt on the part of the headquarters state on the one hand to strengthen the indigenous bourgeois class in international competition and on the other to make the country attractive for foreign investment by creating suitable infrastructures, a favourable framework for taxation, specialized workforce, etc.
To put it somewhat differently, the headquarters state is there to guarantee the organization and representation of ‘the national economy’ as an entity seeking to compete with other national economies on the best possible terms for the local bourgeois class. If we wished to use Hobbesian terms we could say that nations are at war to protect their national economies, though in fact the real enemy is not so much other states as their own citizens (Tsoukalas 1997: 28). Implementation of measures such as deregulation of labour relations, fragmentation of the labour market and boosting of productivity is truly feasible only in the framework of a specific unit of territory, a fact which greatly clarifies the relations between international capital and the nation-state (Panitch 1998: 17): the former is entirely dependent on the latter for the creation of suitable terms for self-generating capitalist accumulation. (Tsoukalas 1997: 29).
But what are the concrete changes that distinguish the headquarters state from the social state? They are changes related to the following: a) relations between state and economy; b) the growth of state authoritarianism; c) parties and state; d) the national vs the supranational and e) imperialism and the State. Let us examine them in more detail.
- The flexible headquarters state: New relations with the economy and local government.
The first point to clarify is that the headquarters state is not less interventionist than previous forms of state but is interventionist in a different way. One of its most important new functions is transfer of numerous activities which in the past bore the stamp of popular struggle from the state sector to the private sector, where they acquire an entirely different content. This can be seen very clearly in relation to the economy, where state intervention continues, not in the form of withdrawal of direct investments, but by means of a dual movement involving on the one hand creation of conditions for boosting enterprise profitability (indirect or direct privatization of the apparatus of labour force reproduction, development of infrastructures, implementation of state provisioning of a wide range of financial inputs, adoption of policies of austerity and enactment of flexible working relations), and, on the other, more centrally, increasing concern with regulating currency frameworks, levels of interest rates, money production, income distribution, etc. (Vergopoulos 1996: 326 – 328).
These political directives interact with other policies of transferring responsibilities from the central state to various institutions of local and regional government. As a characteristic example we could point to how social policy, economic development, urban planning, environmental management, administration, etc. have been ‘hived off’ to local government.
This serves a dual objective: the headquarters state seeks on the one hand to become more flexible in applying its basic strategies and on the other to offload onto regional institutions the cost of the social discontent the new policies generate. In this sense it is not some dynamic of globalization that deprives the State of some aspects of its power. On the contrary, it is state-elaborated political guidelines, whose aim is to achieve the most effective application of concrete class policies.
B) The Authoritarian Headquarters State
At the same time all this process of upgrading the functions of the nation-state for the purposes of improving the competitiveness of national capitals and transferring the costs to the popular strata intensifies the transfer of power to centres inaccessible to popular control (Pooley 1991: 70), thus reinforcing the features of the authoritarian state: displacement of real power not only from the legislature to the executive and from there to the administration (Poulantzas 1978: 218- 227), but above all to the various committees, councils and organizations that function as the most authentic representatives of the powerful monopolistic fractions of local and international capital – precisely because they do not reflect, even in a distorted way, the presence of popular strata. The example of the Central Bank is characteristic. The monetary and fiscal policies of the national states are not designed by the governments – let alone the parliaments – but by independent central banks, the direction of which is in the hands of independent technocrats, who enjoy very wide margins for autonomous initiative by comparison with the rest of the political staff (Schulz 1999: 45).
In parallel, At the juridical-repressive level, an upgrading of judicial power is observable which in some cases (Italy) has acted as a catalyst for change in the political system, also functioning more generally as a vehicle for regularization of the restructuring procedure, complementing directives of the executive defined within the framework of the dominant strategy. The resultant upgrading of the repressive apparatus is mainly precautionary in character, it is very rare for intensification of repression to occur in the absence of intensified popular struggles, but it also entails modernization in terms of methods and coordination. Thus, the establishment of international institutions such as TREVI, the Schengen Treaty and so on aims at the mapping out of a comprehensive policy for shaping an authoritarian state through administrative reorganization and heightening of the effectiveness of repressive agencies.
These directives are compounded by the ideological trope of the fight against terrorism, the various patriot acts, the dichotomy between patriots and supporters of terrorism, the growth of surveillance, limitation of democratic rights and subordination of anything and everything to purported ideals of the ‘free world’. Phenomena such as the conditions of detention at Guantanamo, interrogations without the presence of a lawyer, simplified procedures making possible extradition on the basis of mere suspicion of involvement in terrorist activity, are just a few aspects of the overall situation.
C) The Internationalized Headquarters State
The basic position of this article is that whatever internationalization of the state occurs is over-determined by the directives of the headquarters state and not vice versa. In other words there is no neutral internationalizing dynamic propelling forward developments (and with them the State) but simply the overturning of a balance of power favouring the reinforcement of internationalization, utilizing them in the interests of the national power bloc.
It is only in this light that we can comprehend the particularities of the national-international nexus under the new conditions. What should therefore be noted is that the process of co-decision by nation-states within the framework of supranational integration entails a number of complexities which greatly transcend the one-dimensional state-supranational entity relationship. In fact all the member-states are also present, each with its own special interests and objectives, leading to formation of coalitions and counterbalancing tendencies – since a state can make concessions on one issue if it has guarantees that on another it will be treated more favourably - as well as antagonisms (Harman 1996: 21) and deadlocks. The basic strategy of the dominant classes is mapped out initially at the national level, also taking into account the international balance of forces (Kotzias 1995: 57). These decisions are needless to say taken at elite levels, contributing to further redistribution of power to the advantage of governmental and quasi-governmental networks of power (top bureaucrats, committees of experts) impenetrable to the rank-and-file. The role of the State is not restricted in this way, but the role of Parliament and representative institutions is. The headquarters state is strengthened, with power overcentralized at the apex of the pyramid (Moravcsik 1994: 4 as cited by Ioakeimidis 1998: 29). Behind a screen of negotiations, invoking as an alibi the pressures to which a national government is subjected from its partners in the various international organizations, internal policy issues are relabelled foreign policy issues, the content of which can be modified only to a very slight extent (Moravcsik 1994: 3 as cited by Ioakeimidis 1998: 29). The result is that national parliaments, mindful of the risk of sanctions being imposed in the event of non-compliance (Moravcsik 1994: 9- 10 as cited by Ioakeimidis 1998: 30), routinely and more or less without discussion rubber-stamp decisions taken at an international level.
International and supranational organisations thus constitute a new arena for action, within which the headquarters state is transformed into a vehicle for managing new alliances (Kotzias 1995: 223) and regulating their content in accordance with strategies and targets that have already been mapped out at the national level. To put it somewhat differently, there is no supernatural power inducing the nation state to seek integration into supranational entities but simply an awareness that in that way the dominant interests in the national power bloc will secure the maximum benefit. It is obvious, that every state, depending on how much power it wields, can exert influence on the decisions that concern it, or block them. We might characteristically cite the inability of the UN, in numerous instances, to reach decisions, or the failure of the recent WTO Summit meeting at Cancun.
In conclusion, the process of supranational integration in no way implies subordination of national social formations. We should bear in mind that the so-called supranational organizations are the creations of states (Krasner 1999: 226; Panitch 1998). Whatever legitimacy supranational organizations possess can be traced to the participation of states in them (Hirst 2001:133). When their content is modified, it is the states that do the modifying (Petras 1999). Supranational organizations are in fact an ancillary factor in international society (Jackson 2000a: 106) and by extension in the functioning of the imperialist chain. Now as in the past states are the geographical and institutional entities within which capitalist accumulation is realized. They are a site for constitution of the conditions for productivity and profitability, together with the necessary political and ideological prerequisites for reproduction of capitalist social relations.
d) Imperialism and the emergence of the headquarters state
The approach outlined above offers a more dialectical interpretation of the modern world, as distinct from the mechanistic conception of a uniform global social system. Such an interpretation emphasises the continuing reality of national social formations, of interdependencies, hierarchies and pressures developing within the international system, not to mention the structuring of imperialist blocs as alliances around a hegemonic power.
While not underrating the extent to which capital has been internationalized, this approach does make a crucial distinction: the international system (and the political forms that reproduce capitalist social relations) is not defined one-dimensionally on the basis of tendencies towards capitalist accumulation (the blind dynamic of capital as self-valorizing value). It is determined by the totality of the requirements for reproduction of the capitalist mode of production as a complex articulation of economic, political and ideological relations.
In this light the collapse of the Eastern-bloc states led to important hierarchical changes within the imperialist chain. The United States achieved undisputed status as the world’s most powerful state, assuming the role of hegemonic capitalist power with the mission of safeguarding capitalist interests all over the world. The military interventions against a succession of countries from the early 90s onward (Iraq, former Yugoslavia, Afghanistan) served on the one hand to validate this American supremacy, on the other to restore imperialist order as against regimes which appeared disinclined, whether for nationalist or religious-fundamentalist reasons, to submit to it.
This general framework has two facets to it. One has to do with elaboration of institutions of the headquarters state to serve the objectives of imperial legality. The related changes have already been mentioned in the paragraph on the authoritarian headquarters state. The other concerns inter-imperialist rivalry. Precisely because reproduction of capitalist relations proceeds initially within national structures and then in mediated form on the international plane, inter-imperialist rivalry does not disappear but takes place in a new landscape. The strategy of the American hegemon, but also the whole dynamic that has sprung from the shift in the balance of power, has led to differentiation in terms both of different forms of state and of different manifestations of the headquarters state. More concretely, the hardening of imperialistic policies and the rise of the headquarters state, apart from sidelining the social state, leads on the one hand to creation of the protectorate state (states resulting from successful overt intervention by the imperialist factor to perpetuate its presence in a region - there are many well-known examples of this: Afghanistan, Iraq, Bosnia, Kosovo) and on the other hand to branding of other countries as rogue states (states with oppressive regimes that pose a threat to the “peaceful way” of life of citizens of the “free world”): Iran, Cuba, North Korea, Syria, Libya.
The attitude of the most powerful imperialistic states to the new international reality at the same time creates alliances, but also engenders rivalries. New disputes emerge, new agreements and disagreements arise. Characteristic from this viewpoint are the disputes in recent years over whether or not to proceed with a series of military interventions, culminating in the intense clashes over the war against Iraq. Not only the UN but also the EU and NATO became embroiled in these disputes, thus exposing limits to the ‘power’ of supranational organizations.
What did all these show? Quite simply that internationalization of the state in no way precludes the emergence, given the slightest opportunity, of particular national interests. Contrary to Hardt-Negri's thesis there is no uniform logic of domination but merely individual strategic alliances that are articulated and dissolved in accordance with each specific historical conjuncture. In any case the nation-state clearly still has quite a future ahead of it.
This article takes a diametrically opposite view to all those recently formulated positions according to which on account of globalization the State finds itself losing elements of its sovereignty. The State is not a subject that may be deprived of its own power. It is the material result of class struggle within a social formation dominated by the capitalist mode of production. The basic function of the capitalistic state is to serve the long-term interests of the bourgeois class, in particular of its hegemonic fraction.
The element that is new in the modern era is that as a result of the evolution of the class struggle there have been significant developments, e.g. the fall of ‘actually existing socialism’, contributing to reconstitution of the imperialist chain and the retreat of the movements that emerged in the 60s and 70s, but also to inability to restore profit rates to previous levels following the overaccumulation crisis of 1973.
In these conditions, the national bourgeoisies have embarked upon an endeavour to bring about a radical displacement in the correlation of forces and a significant increase in the share of the national income accruing to capital. There is a transition from the interventionist state to the headquarters state. The former seeks to intervene in the relations between capital and labour, taking into account the existence of important foci of popular resistance. But overturning the balance of power leads to the rise of the headquarters state, which in turn focuses on designing policies to shift the balance of power in favour of the forces of capital.
Internationalization of the State does not signify deprivation of its powers. It means adaptation to new conditions with a view to achieving reproduction of bourgeois relations of power. Obviously not every fraction of every bourgeois class benefits: there are strata that are downgraded because of the whole process, but this merely reflects the functions of clearance served by the crisis and does not at all imply any restriction or weakening of the State.
In its attempt to assert the interests of ‘its own’ bourgeois class in the arena of international competition, each state attempts to transfer the costs of the rise in productivity onto its own dominated classes, for the accomplishment of that purpose pressing into service the entirety of its economic, political and ideological institutions. Not only is the State not weakened. On the contrary, there is a great strengthening of all of its functions that are impenetrable and beyond the range of popular control.
In fact, if there is something new, it is the shift of the centres of decision-making towards parts of the headquarters state that are impenetrable to popular control. Participation in the various international organizations intensifies this trend, while also shaping a terrain for handling new coalitions on behalf of the State. Recent historical developments have shown that intensifying internationalization of capital and the formation of supranational entities do not cancel out the specific interests of each state. National interests emerge in each new conjuncture, leading to disputes, dissolutions of old alliances and the quest for new ones.
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I would like especially to thank Bob Jessop, James Petras and Panagiotis Sotiris and three anonymous reviewers for their very important observations on previous drafts of this essay.
 One possible objection from a Marxist viewpoint, as we understand, could be that, in both the Communist Manifesto and Capital, Marx makes mention of a global market. In fact there is no problem about accepting that the factors of production could be disseminated throughout the world, thus constituting a global market. The difficulties begin when one claims that there is such an entity as global capitalism. Global capitalism does not exist. The accumulation of capital even at the international level is mediated by nation states. The coexistence of international capitals and states modifies the conditions of existence for international as opposed to national capitalist competition. This would not be the case if there were a uniform global capitalism. The key element in this modification is the existence of national currencies (Busch 1987; Milios 2000). These contribute to the maintenance of different levels of productivity, between different countries, and in turn to correspondingly different levels of profitability and of remuneration (Oikonomakis / Sakellaropoulos / Xenaki 2005). All this is possible within a geographically globalized market but it would not be possible in the context of a uniform global capitalism.
The issue of so-called multinational companies is of course too complex to be subjected to any kind of extensive analysis in this article. We will confine ourselves to supporting Hu’s view that when a multi-national enters a foreign market it does so under a national sign. However, from the moment it starts functioning in the new location, things become more complicated. The company in question is transformed into a fraction of the national capital of its host country. It is obliged to function within the institutional and social boundaries of its new environment, and at the same time is transformed into a new player on the state field (Panitch 1998). In effect, the capital identified as foreign belongs to the total social capital of a specific social formation, at the same time maintaining a special relationship with its country of origin. The special relationship is also reflected in special agreements between the country of origin and the host country. In any crucial conjuncture the affiliate company knows that it will have the support of the mother state, testifying to the power equilibrium taking shape within the imperialist chain and its influence inside the various social formations. What does this mean for the theory of State? Firstly that in all cases companies have a national identity and whatever problems they face are solved through state intervention. Secondly that the entry of foreign capitals into a social formation has a restructuring effect on pre-existing social coalitions (Panitch 2000:8), thus forming a new economic and financial landscape.
 This is meant in the sense that the history of modes of production is a history of different relationships of exploitation, not a succession of technological systems.
As Wood correctly observes “It would not be too much to say that the state is the only non- economic institution truly indispensable to capital” (Wood 2003: 139).
 There is no inverse correlation in this sense between state and internationalization such that ‘more internationalization = less state’ and vice versa (Wood 1999: 8-9).
It is no coincidence that the last time the UN approved a military intervention was in 1995, even this approval being based on a highly controversial interpretation of an earlier decision.