Statement of the International Committee of the Fourth International
Globalization and the International Working Class

International finance vs. the capitalist state

The same subjectivist outlook, combined with a petty-bourgeois fascination with the military apparatus of the nation-state, is exemplified when the Spartacists turn to the question of finance capital. They begin by citing a speech by David North, in which he referred to the increased power of finance capital as follows: “Not even at the height of its glory did the British Empire possess even a fraction of the power over its colonial subjects that the modern institutions of world imperialism such as the World Bank, the IMF, GATT and the EC routinely exercise over the supposedly independent states of Latin America, Asia, Africa and the Middle East.” [1]

This presentation of an undeniable fact of economic life, expressed in a whole series of statistics, evoked a furious response from the Spartacists.

“The idea that the World Bank and IMF exercise greater power over the workers and peasants of India than did the British colonial army and police is pacifistic nonsense.” [2]

Here again the Spartacists reduce all historical processes to the exercise of military force. The plundering of the wealth of India did not take place primarily through military, but rather economic, means. The chief instruments for the destruction of the Indian economy and its subordination to the British Empire were not guns, but cheap cotton textiles and the railways.

The life-blood of capitalist productive activity is not military power, but international finance. To secure the means to finance investments, build infrastructure and operate basic facilities, the governments of the semicolonial countries have to implement the so-called “structural adjustment” programs of the International Monetary Fund and the World Bank. These programs, initiated in the mid-1980s, following the Mexican debt crisis, have proven to be the most effective method for sucking the life-blood out of whole regions of the globe and transferring vast amounts of wealth through the automatic workings of the financial markets, into the coffers of the major banks and transnational corporations.

The extent of this financial transfer can be seen from the following statistics for just a single year. In 1992, the interest on debt due from the poorer nations to the banks and international lending institutions was $125 billion, while the estimated return on the investment of the transnationals (calculated at 15 percent of the capital stock of $420 billion) was $64 billion, making a total transfer of $189 billion. Even after deducting the $59 billion granted in so-called aid, the total transfer was $130 billion. Even this staggering figure fails to give the full picture. Added to this must be the effect of declining raw material prices, the impact of transfer pricing policies of the transnational companies and the charges for the use of technology and “intellectual property rights.”

Recent events have rendered their own judgement on the profundities of Spartacist in relation to the ability of finance capital and its institutions to impose their will not only on colonies, but on nominally independent states. Presidents and prime ministers from Thailand to South Korea and even Japan the second largest national economy in the world have, over the past several months, received object lessons in the relative power of the International Monetary Fund and national states. The photograph published in newspapers from Jakarta to Washington, showing Indonesian strongman Suharto putting his signature to the IMF bailout terms, while IMF Managing Director Camdessus looks over his shoulder, is worth, as the saying goes, a thousand words.

The Spartacists’ glorification of the nation-state is summed up in their attitude to the role of international agencies of finance capital, such as the World Bank and the International Monetary Fund.

“The view that ‘transnational’ corporations,” they write, “transcend the nation-state system leads to the notion that certain international economic agencies, like the World Bank and the International Monetary Fund (IMF), have now become a kind of world capitalist government.”

“No less absurd,” they continue, “is the idea that these institutions are powers unto themselves, independent of the imperialist nation-states ... these international agencies act at the behest and in the interests of the major capitalist powers, not autonomously of them and certainly not above them.” [3]

For the Spartacists, there is no reality higher than the national market and the national bourgeois state, and insofar as the global financial system and international financial institutions are considered, they are treated as the sum of national markets or the instrument of the domination of national states.

This fixation on the nation-state, for all its superficial radicalism, has nothing in common with Marxism, which, as Trotsky explained, “takes its point of departure from world economy, not as a sum of national parts but as a mighty and independent reality which has been created by the international division of labor.” [4]

The Spartacists continually invoke Lenin and his work Imperialism in their attack on the International Committee. But Lenin’s work cannot be employed to defend the dominant role of the national state. On the contrary, he was explaining the dominant and global role of finance capital in the imperialist epoch. Far from the national state playing the dominant role, Lenin maintained the exact opposite: “Finance capital is such a great, such a decisive, you might say, force in all economic and in all international relations, that it is capable of subjecting, and actually does subject, to itself even states enjoying the fullest political independence...” [5]

Lenin was examining world capitalism at the beginning of this process and the trends he identified have since developed on an enormous scale.

The national state and the banks are both creations of the bourgeoisie, and their history is, to a great extent, intertwined. However the power of the banks is not derived from the nation-state, but from the control of credit and finance, the lifeblood of the capitalist economy. Far from the one-way relationship that the Spartacists present the banks as the subservient instruments of the national state the real relationship has been far stormier. The history of the banking and financial system in the post-war period can be said to be one of a continual struggle by the banks to free themselves from control by the national state. And the rise of international finance capital and global financial markets has taken place in direct opposition to the state.

The growth of the international financial system in the post-war period is inseparably bound up with the history of the international monetary system established at the Bretton Woods conference in 1944. From almost the day the United States entered the war, leading officials in the Roosevelt administration were concerned with the development of a viable, post-war financial structure. There was a realization, borne of the bitter experiences of the preceding two decades, that unless the conditions for an expanding world market were established, tariff and import controls dismantled and a stable international system of payments established, the world economy would rapidly plunge back into depression, giving rise to the threat of social revolution.


North, Capital, Labor and the Nation-State, p. 1


Workers Vanguard, February 21, 1997


Workers Vanguard, March 21, 1977


Trotsky, The Permanent Revolution, London, New Park, p. 22


Lenin, Collected Works, Moscow, Progess, Volume 22, p. 359