Dominance and Decline
Reading Phil Neel’s Hellworld (part 5.2, page 149-192)
[This post is part 5.2 in a series in-which I will be reading and reflecting on the book Hellworld: The Human Species and the Planetary Factory by Phil A. Neel. You can read the series introduction here. Unless cited otherwise, all quotes are from the relevant section of Hellworld]
It took me much longer to get back to this post than I had originally intended. Partly because I have been travelling around the country a little bit and found myself behind on a few things. But also because I found the second half of Chapter 3 tricky to write about. It is perhaps the most detailed analysis of the Chinese economy so far, resisting easy summary.
In my last post, I tried to capture what I felt was a clear trajectory that runs through the first half of this chapter, one that begins with the broken bodies of workers in China and leads to the planetary body of capital, a body that morphs and encircles earth, entraining all who inhabit it and being regenerated by our labour.
This is not just an exercise in shifting between different scales, but an argument for understanding how they interact and shape one-another. Neel illustrates his argument with the poetry of Xu Lizhi and references to Mario Tronti, both of whom are concerned with the body of the worker: not as a secondary concern, but as deeply revealing of the structure of capitalist exploitation.
In detailing this structure, Neel talks us through some different political-economic forms that operate at different scales of this picture. There is the worker, the factory, the firm, the supply chain, and the global financial mechanisms that co-ordinate investment.
These are all constituent parts of what Neel refers to as territorial industrial complexes.
These are areas of the planet’s geography which host relatively intense build-ups of fixed capital (machines, transport infrastructure, energy installations.) Neel also offers the term geographic industrialization to describe how these complexes emerge and change. If territorial industrial complexes are the units of this system, geographic industrialization is a process term for how they change over time. Geographic industrialization describes a process in which “the flow of demolition and development quite literally [etches] history into space.”
This process produces “changes in the geographic, demographic, and technical megastructures of global production.” More immediately though, they produce changes in us. Here we could think in terms of class composition, which Callum Cant and Matthew Lee explain (in relationship to the 1926 general strike in Britain) in this recent episode. It is also summarized very concisely here.
The territorial industrial complexes that dot the planet are novel developments in the technical composition of production and therefore the composition of the working class. The technical composition of production then shapes the social and political composition of the working class (although not directly) and therefore the life of the workers movement and the struggle for communism.
For Neel, categories like geographic industrialization and territorial industrial complexes provide us with ways of describing capital in its age of planetary domination. Understanding this processes more clearly then, has analytic and therefore strategic benefits for those that might wish to develop political strategies that can account for the technical composition of capitalism today (as opposed to assuming that little has changed since 1917, to make a crude comparison.)
It is interesting to note here too, what the relationship might be between an analysis of territorial industrial complexes verses an analysis of the nation-state, as different units of political-economic analysis or different lenses we can apply to the make-up of our world.
As ways of apprehending the world these terms offer different priorities for describing capital, nations, and the planetary system. Clearly, thinking in the terms used by Neel in this chapter, we see more clearly the co-dependence and competition between capitalists spread across different firms and different nation states. As opposed to only thinking in terms of conflict between national structures and governments.
Brenner’s Late Blooming Blocs
The second half of the chapter, whilst animated by these questions, embarks on a much more granular analysis of the Chinese economy. Specifically, how different territorial industrial complexes have emerged and changes within China.
Neel draws on the work of economic historian Robert Brenner. Robert Brenner is a very highly regarded marxist historian whose work is central to a series of important debates within marxism and economic history.1 Neel draws on Brenner’s description of the dynamic that emerges between ‘earlier-developing industrial blocs’ and ‘later-developing industrial blocs.’
As previously outlined earlier in the chapter, territorial industrial complexes are the manifestations of dynamics that emerge from the combined activities of different firms; all looking after their own interests but generating ‘higher order’ logics as a result of all doing this at the same time. Thinking in terms of ‘earlier-developing industrial blocs’ and ‘later-developing industrial blocs’ is a way to understand the relationship between these processes of development. Or put another way; what happens when firms decide to take different risks or try different approaches to out do each-other.
Despite competing against each-other, firms do benefit from shared investments in infrastructure. Once a firm has “invested in a physical facility, they take on the burden of that facility’s location and the set (but initially unclear) rate of depreciation and obsolescence of its affiliated equipment.” So the benefits of investment becomes fixed and therefore present a risk that a firm might miss out on the benefits of investing elsewhere, where inputs might be cheaper or improved production methods become available.
When new equipment does become available this can create a situation where “firms burdened with obsolete equipment sell it off at a discount rate to weaker firms in dependent countries.”
So, firms are constantly competing over where they can set up their production facilities to achieve the cheapest inputs (cheap labour supply primarily) but there is always a risk that someone will invest later (somewhere where labour is cheaper and once production technology is more advanced) and they might overtake you.
This dynamic of competition is how Brenner, and then Neel, think about the relationship between earlier-developing industrial blocs and later-developing industrial blocs (in general but also in China.) The relationship (or tension) between these two blocs is often expressed as crisis (in general but also in China.)
Neel, once again drawing on Brenner, writes that when considering the “competition between earlier and later-developing industrial blocs, periodic crises are key punctuations in the process, clearing out obsolete stock in earlier developing regions, driving consolidation among the surviving firms, and solidifying nascent changes in the geography of production.”
Neel turns this set of analytic tools towards a very granular analysis of the Chinese economy, supported by quite a lot of data and several graphs.
The Pearl River Delta, which has been discussed in previous chapters, is both a “‘later developing bloc’ within the social total capital [meaning later when compared to other parts of the world] and ‘an earlier developing bloc’ relative to the emerging industrial clusters in the Chinese interior.”
Firms on China’s coast were able to out-compete other parts of the global economy, only to find themselves needing to migrate production to China’s interior and other nearby regions. Meanwhile, those coastal hubs have managed to “leapfrog up the value chain” meaning instead of there being jobs in manufacturing there is now employment in “business services, research and development, high tech production, and high-end consumption.”
No War But Trade War
The analysis provided in this chapter is very granular and data-rich; my summary will skip over most of that richer detail. However, I think it is fair to extrapolate some of the broader arguments that can be drawn from this analysis.
First, Neel is unconvinced that the dynamic between the US and China can be considered as a trade war in the ‘classical sense’ arguing instead that ‘tariffs against China have tended to focus on more on questions of national security exposure and on higher-tech sectors in which Chinese firms are not yet competitive.”
Despite this, he does acknowledge that “a genuine trade war has been occurring in the middle ranges of the supply chain.” Firms in China’s coastal regions face challenges from above (advanced firms in South Korea and Taiwan) and from below from “less advanced competitors from inland China and emerging industrial hubs in South and Southeast Asia.”
Building on some of the writing about supply chains from earlier in the chapter, Neel references the work of everyone’s favorite Julia Hartley-Brewer shit-talker, Ashok Kumar. Specifically, his book Monopsony Capitalism: Power and Production in the Twilight of the Sweatshop Age, which offers an analysis of ‘buyer driven’ supply chains.
Monopsony (as opposed to monopoly) refers to a market which is dominated by a buyer, so another way of thinking about a buyer driven’ supply chain. In Ashok’s book (summarized by Neel) he outlines the way that global clothing brands were able to push down costs of production by ensuring competition between “a handful of low-cost” locations, also known as sweatshops. We can also think of sweatshops in terms of SMEs (small-and-medium size enterprises.) Sweatshops compete to sell products to a single buyer (otherwise there have nowhere to sell to) and they compete to offer lower prices by sweating labour (as opposed to achieving productivity gains through innovations in production, such as automation and mechanization.) Because they don’t automate labour processes and require only ‘unskilled’ labour SMEs are highly mobile.
This type of production was piloted by Taiwan “where dense networks of SMEs began to dominate consumer goods production from the 1970s onwards.” Foxconn, which was the focus earlier in this chapter, is a Taiwanese company that emerged out of this moment. Foxconn opened a Shenzhen facility in 1988 as part of a wave of Taiwanese companies seeking to benefit from cheaper labour in mainland China. This Shenzhen site would help to “anchor the cluster that would develop into Foxconn City.”
Neel goes on to unpack, in quite a lot of detail, the ways in which firms like Foxconn have been able to consolidate its place as a supplier in the global economy. Specifically, Foxconn has managed to build on the monopsony power of firms like Apple who “owns the IP [intellectual property] and specialized in design and marketing.” By doing this, they have been able to dominate suppliers beneath them in supply chain via their own status as a monopsony.
However, despite this domination firms like Foxconn (and others such as Samsung) must stay ahead of competing firms, opening facilities in cheaper markets like Vietnam and India. Racing each other to dominate regional competitors whilst consolidating their status. These firms then look to “retain their position against competitors and further refine profits by funneling money into R&D [research and development…] and mechanizing and automating as much production as possible.”
This is a specific historical example of the earlier-developing versus later-developing dynamic outlined previously. Once again, running through this process, we see capital’s desire to evacuate labour from the production process leading to dynamic processes of relocation, development, and deindustrialisation.
The Global Norm
In contrast to the sinophilia percolating in pockets of the anglophone left (that sees China’s development as an indicator of how to move on from the period of stagnation we find ourselves in) Neel stresses that China is not immune to forms inertia that can be observed in capitalist economies in Europe and North America.
He’s clear in his argument that the same pattern of stagnation can be seen in China as other earlier developing capitalist economies, the same “overall pattern [is] visible in the data [and] not at all unique to China.”
This pattern consists in “the overall decline in profitability and stagnation in net profits, driven at least in part by increased automation and corporate consolidation.”
Going further than just a descriptive account, Neel wagers that “the conditions Brenner identifies among US manufacturers in the late 1960s and early 1970s seems to presage the immediate future of many industrial enterprises in China today.”
The echoes of decline can be seen in the Neel’s description of China, which he writes is defined by “heavily monopolized industrial firms competing in a cutthroat market intricately intertwined with the state and saturated by overcapacity, with macroeconomic stability increasingly reliant on volatile speculative bubbles that pour wealth into the hands of often-distant land developers and corporate share holders, all leading to an intractable rise in inequality and expanding precarity.”
The question remains then, if China is not the savior of the world-system, but subject to the same dynamics witnessed in other national-economies, how might the shape class struggle in the coming decades.
In a recent article, Tim Barker (and sometimes interlocutor of Brenner2) offered a history of American “declinism.” A recurring tendency within the US-American intellectual sphere (or whatever remains of it) that identifies the cracks in Amerika’s great statuesque figure of world-hegemon. He details various intellectual currents that have claimed US-America’s imminent decline. From the more plausible threats posed by the post-war Soviet Union to retrospectively odder sounding claims. Such as those from the 1980s that the US would be eclipsed by their once war-time adversaries Japan and Germany.
Barker’s essay is a useful addition to debates about the US and China’s relative statuses. It is clear that the appeal of decline is hastened by the reality of the genocide in Gaza and US-America’s increasingly wild belligerence across different parts of the world. And whilst Ranajit Guha’s notion of ‘dominance without hegemony’ remains accurate in describing US-American belligerence, it is unsettling to think that actually “even unchecked deterioration of the US might be compatible with the persistence of the US as the strongest pole in a multipolar world.”3 Rather than “dominance without hegemony” then, we might want to think in terms of “dominance without omnipotence.”4
If nothing else then, this chapter has left me wondering what communist struggle looks like in a period defined by processes of dominance and decline viewed through systems of production, not located only within specific national contexts. A world in which US-American decline doesn’t necessarily translate into Chinese ascendancy.
Readers may well be familiar with his name due to its association with the Brenner Debates, these were a series of debates that took place throughout the 1970s which addressed the question of how capitalism emerged from feudalism. These debates built on an earlier set of debates from the late 1940s and 1950s, often called the transition debates or the Dobb–Sweezy debate (referring to the names of Maurice Dobb and Paul Sweezy, who were key proponents of the debate.)
Brenner is now in his 80s, but remains active, frequently publishing in the New Left Review, often co-authoring articles with another American intellectual, Dylan Riley. Frequently these articles address the topic of political capitalism, which refers to a situation “wherein low returns on productive investment were compensated by politically engineered upward redistribution on a systemic scale.” [The Long Downturn and Its Political Results: A Reply to Critics, NLR issue 155] All of which is to say that Brenner, like Neel and many others, is concerned with constantly updating and developing an analysis of the capitalist mode of production by engaging in debates that continue to ask what capitalism actually is and why it looks the way it does today.
https://newleftreview.org/issues/ii140/articles/tim-barker-some-questions-about-political-capitalism.pdf
https://phenomenalworld.org/analysis/histories-of-decline/
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