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The World Market, Variegated Capitalism, and the Crisis of European Integration 1 Bob Jessop Drawing on Marx, the regulation approach, and the varieties of capitalism literature, I present an alternative to theories that either posit one world market with a singular logic or else suggest that there are several varieties of capitalism, each with its own distinctive logic. The alternative to be presented is that we have a variegated capitalism within a world market organized in the shadow of the ecological dominance of neo-liberalism (now in crisis). The specific features of ‘variegated capitalism’ will be developed and related to the notion of ecological dominance. I further argue that, even in crisis, neo-liberalism continues to have path-dependent ecological dominance (i.e., causes more problems for other accumulation regimes and modes of regulation than they can cause for it). The theoretical case is illustrated from the development of European integration from its initial stages of integration among six “Rhenish” economies to an incoherent variegated capitalism organized increasingly at EU level along neoliberal lines that have proved inconsistent with the expanded reproduction requirements of regional, national, cross-border, and transnational economies. This in turn has major implications for the roles of states at different scales from the local through regional and national to supranational states and international regimes. This is particularly evident in the repercussions of the US crisis and the crises in Eastern and Central Europe. 1. The World Market All those laws developed in the classical works on political economy, are strictly true under the supposition only, that trade be delivered from all fetters, that competition be perfectly free, not only within a single country, but upon the whole face of the earth. These laws, which A. Smith, Say, and Ricardo have developed, the laws under which wealth is produced and distributed -- these laws grow more true, more exact, then cease to be mere abstractions, in the same measure in which Free Trade is carried out. ... Thus it can justly be said, that the economists -- Ricardo and others -- know 1

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The World Market, Variegated Capitalism, and the Crisis of European Integration1 Bob Jessop

Drawing on Marx, the regulation approach, and the varieties of capitalism literature,

I present an alternative to theories that either posit one world market with a singular

logic or else suggest that there are several varieties of capitalism, each with its own

distinctive logic. The alternative to be presented is that we have a variegated

capitalism within a world market organized in the shadow of the ecological

dominance of neo-liberalism (now in crisis). The specific features of ‘variegated

capitalism’ will be developed and related to the notion of ecological dominance. I

further argue that, even in crisis, neo-liberalism continues to have path-dependent

ecological dominance (i.e., causes more problems for other accumulation regimes

and modes of regulation than they can cause for it). The theoretical case is

illustrated from the development of European integration from its initial stages of

integration among six “Rhenish” economies to an incoherent variegated capitalism

organized increasingly at EU level along neoliberal lines that have proved

inconsistent with the expanded reproduction requirements of regional, national,

cross-border, and transnational economies. This in turn has major implications for

the roles of states at different scales from the local through regional and national to

supranational states and international regimes. This is particularly evident in the

repercussions of the US crisis and the crises in Eastern and Central Europe.

1. The World Market

All those laws developed in the classical works on political economy, are

strictly true under the supposition only, that trade be delivered from all

fetters, that competition be perfectly free, not only within a single country, but

upon the whole face of the earth. These laws, which A. Smith, Say, and

Ricardo have developed, the laws under which wealth is produced and

distributed -- these laws grow more true, more exact, then cease to be mere

abstractions, in the same measure in which Free Trade is carried out. ...

Thus it can justly be said, that the economists -- Ricardo and others -- know

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more about society as it will be, than about society as it is. They know more

about the future than about the present (Marx 1976 <1847>: italics added).

One could add that Marx, too, knew more about our future than he knew about his

present. For he argued that “the most developed mode of existence of the

integration of abstract labour with the value form is the world market, a place in

which production is posited as a totality together with all its moments, but within

which, at the same time, all contradictions come into play” (Marx 1973: 227). The

current crisis of a global economy organized predominantly on neo-liberal lines

certainly seems to vindicate this position. For neo-liberal globalization is associated

with the privileging of profit-oriented, market-mediated economic calculation at the

expense of wider concerns with use-value, sustainable development, or the

repercussions of unbridled accumulation on the wider society. Conversely, when

Marx was writing Capital, capitalism was still being formed, production was not yet

posited as a totality, and the world market was far from fully integrated. Despite

claims that the world market was more integrated in 1913 than in the interwar years

or the 1990s, we can say that it was more integrated in the last quarters of both the

19th and 20th centuries than it was when Marx was penning his critique of political

economy. The acceleration of world market integration in real time, especially in the

fields of global finance and world money, also marks a qualitative change in the

dynamics of the world market compared with the nineteenth century. Thus, if we

adopt a world-historical perspective on the development of the world market, the

latter’s increasing integration under the dominance of neo-liberalism should make

Marx’s analysis especially relevant in the current period.

Marx emphasizes that the world market ‘is directly given in the concept of capital

itself’ because the world market constitutes the presupposition of social reproduction

‘as well as its substratum’ (Grundrisse: 163, 228).2 Indeed, as he later notes in

Capital, 'it is the tendency of the capitalist mode of production to transform all

production as much as possible into commodity production. The mainspring by

which this is accomplished is precisely the involvement of all production in the

capitalist circulation process. … The intervention of industrial capital promotes this

transformation everywhere [and] with it the transformation of all direct producers into

wage-labourers too' (Capital I: Ch. IV, italics added).3 Elsewhere Marx notes that

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capitalist production is unthinkable without foreign trade (1978: 456). This implies

that circulation - not production - is the initial driving force behind the formation of

the world market.4 However, while the development of the world market is promoted

initially by world trade, it is radically reinforced by the rise and consolidation of big

industry: "[t]he immanent necessity of this mode of production to produce on an

ever-enlarged scale tends to extend the world-market continually, so that it is not

commerce … that revolutionizes industry, but industry that constantly revolutionizes

commerce. Commercial supremacy itself is now linked with the prevalence to a

greater or lesser degree of conditions for a large industry. Compare, for instance,

England and Holland. The history of the decline of Holland as the ruling trading

nation is the history of the subordination of merchant's capital to industrial capital

(Capital III: XX). Whereas merchant capital continually compares purchase and sale

prices for its merchandise (the source of mercantile profit),5 '[t]he industrial capitalist

always has the world-market before him, compares, and must constantly compare,

his own cost-prices with the market prices at home, and throughout the world"

(Capital III: XX).6

One might now add, of course, that it is the increasing integration of financial as well

as productive capital that has enabled the logic of capital to operate more

completely than ever before on a global scale. As Marx noted, the effective

operation of the world market requires the full development of the credit system and

of competition on the world market (Capital III: VI). For

the credit system accelerates the material development of the productive

forces and the establishment of the world-market. It is the historical mission

of the capitalist system of production to raise these material foundations of

the new mode of production to a certain degree of perfection. At the same

time credit accelerates the violent eruptions of this contradiction - crises -

and thereby the elements of disintegration of the old mode of production

(Capital III: XXVII).

Indeed, one could argue that the continuing internationalization and globalization,

especially of financial capital, are crucial processes in enabling the logic of capital to

operate more completely than ever before on a global scale. And, as recent events

in global credit markets indicate, this has been reinforced by developments in

financial instruments such as securitization and derivatives (see below).

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The increased relevance of Marx’s analysis of capital is all too often disguised by

the use of the term 'globalization' to describe the contemporary world economy and

its implication that there is something qualitatively different between the present

situation and earlier periods of mercantilism, free trade imperialism, and imperialism

based on territorial conquest and trade blocs7. Increasing integration does not, of

course, exclude uneven development and temporary leads and lags but these

should be seen in part as factors driving neo-liberal globalization forward rather than

as fundamental obstacles that will sooner or later bring it to a halt. One aspect of

this relevance, also too often ignored, is that the true limits to capital accumulation

reside in the capital relation itself and in its increasing destruction of nature rather

than in short-term fluctuations, medium-term cycles and crises, and long-term

waves of accumulation. The expanded reproduction of the capitalist mode of

production has long constituted the most pervasive and powerful influence over the

dynamic of the world market. The latter is 'the most developed mode of existence of

the integration of abstract labour with the value form is the world market, a place in

which production is posited as a totality together with all its moments, but within

which, at the same time, all contradictions come into play’ (Marx 1973: 227). The

realization of all these contradictions is crucial to understanding the dynamics of

world society. It remains to consider whether this justifies analyzing the logic of

capital at the level of the world market qua world system.

The World System (to be elaborated in second draft ) Let us consider one attempt to do this: Wallerstein’s world system theory. This

posits a single logic of capital based on the reproduction of a unitary world system

with a single division of labour and multiple cultural systems and within which

capitalist powers engage in economic and military competition to capture surplus

produced through this division of labour. Wallerstein regards exploitation as

occurring at a world scale, based on the threefold division of the world into a centre,

semi-periphery, and periphery. The core comprises those economies that are

technologically advanced, produce capital-intensive goods and advanced services

(and enjoy a relative monopoly in their export to the semiperiphery and periphery);

the semi-periphery comprises industrialized economies with significant urban areas

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(such as Brazil or South Africa) but lack the power and dominance of the core

economies and have significant areas of rural poverty; and the periphery provides

raw materials, primary products, and cheap labour power to the semi-periphery and

the core. While this threefold division is fixed, positions within it are not. Economic

and social formations can move between them (albeit typically in single rather than

double steps). Such mobility is shaped by the logic of the system plus players’

strategies. The ‘strength of the state machinery in core states is a function of the

weaknesses of other state machineries’. This is reflected in military competition as

well as economic competition, leaving peripheral formations open to intervention

through war, subversion, and diplomacy. Wallerstein also noted that there were

external economies that maintained their own economic systems based primarily on

internal commerce, which enabled them to stay outside the world system and,

perhaps, to escape from the logic of dependency and underdevelopment.

It would seem that world system theory has an important advantage in relation to

methodologically nationalist political economy in seeking to explain the development

of a given national or regional economic and social formation in terms of how it fits

into the overall logic of the world system. This seems to correspond to Marx’s

account of the world market. The fate of individual economies is shaped not only by

its own resources and capacities but also by those available in other parts of the

world system and, in the case of the periphery, on military domination and

diplomatic divide-and-rule strategies as well as economic exploitation that produces

underdevelopment. But this claim comes at the price of assuming the relative

constancy of the logic of the world system rather seeing it as emergent and variable.

While there may be a directional tendency in the logic of capital accumulation, this

does not guarantee a specific threefold division of international labour. This entails a

crude a priori simplification compared with Marx’s more nuanced analysis of the

world market as the final step in the concrete-complex understanding of the

emergent logic of capital accumulation on a world scale – a step reflected in the fact

that the theme of the world market and crisis was planned to inform the final volume

of Capital and as such constitutes one of its notorious ‘missing books’.

Referring to the world market in Marx’s sense of the term commits us to the view

that capital accumulation can be commensurated and even integrated on a world

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scale. It does not commit us to the proposition that there is a single, generic, unified

mode of production. As Marx notes in the 1857 Introduction, there is 'no production

in general' or 'general production', only a 'particular branch of production' and the

'totality of production' (1973: 24). Moreover, particular production is always

associated with 'a certain social body, a social subject' (ibid). This argument can be

re-specified to capitalism: there is no such thing as capitalist production in general

or general capitalist production, only particular branches of capitalist production and

the totality of capitalist production. Adopting contemporary terminology this might

seem to justify distinguishing analytically among varieties of capitalism (VoC) and

exploring their interaction within the framework of the world division of labour.

Varieties of Capitalism or Variegated Capitalism Does the notion of varieties of capitalism provide a superior alternative to the theory

of a singular world system? While it does allow for greater contingency in the

dynamic of capital accumulation, there are four main grounds for refusing to adopt

this view without qualification.

First, the VoC approach is overly concerned with distinct (families of) national

models of capitalism, treating them as rivals competing on the same terrain for the

same stakes. This is, of course, a form of methodological nationalism in which

national states and their boundaries serve to define the scope of different models.

This focus on territorial logics clearly conflicts with the logic of the space of flows

associated with the world market (cf. Harvey 2003; for a critique, Jessop 2006).

Second, these supposed varieties of capitalism are often studied in terms of their

respective forms of internal coherence on the false assumption that they can and do

exist in relative isolation from each other. This problem cannot be solved by invoking

the key role of national states in shaping institutional and regulatory frameworks for

all economic players in a national economy – especially as state formations on other

scales and networked international regimes also have increasingly important roles.

Third, and relatedly, this approach tends to study the temporal rhythms and horizons

of VoC as internal, specific, short- or medium-term, unrelated to the long-term global

dynamic of capital. And, fourth, the VoC approach tends to assume that all varieties

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are equal and, if one is more “productive” or “progressive”, it could and should be

copied, exported, or even imposed elsewhere. One qualification is appropriate here

for certain versions of the VoC, in which self-consistent models (liberal market or

coordinated market economies) are said to be more stable than hybrid models (Hall

and Soskice).

If the VoC approach risks reducing the logic of the world market to a mechanical

juxtaposition and interaction of ‘varieties of capitalism’, is it possible to synthesize

the world system thesis and VoC antithesis? One possibility is to analyze the logic

of capital in terms of ‘variegated capitalism’. This highlights how changing divisions

of labour in an increasingly integrated world market tend to create a single

variegated capitalism rather than reproducing a more or less enduring set of

national varieties of capitalism that fill potentially independent niches. This has

major implications for changing forms and functions of states viewed as specific

mechanisms of government and governance.

First, rather than describing and interpreting different forms of capitalism as if each

occupied a separate silo within a segmented world market or world society, it would

be better to explore the scope for rivalry, competition, antagonism, complementarity,

or co-evolution across different forms (cf. Crouch 2005) and their spatio-temporal

fixes within a wider international or global division of labour. This encourages the

identification and explanation of zones of relative stability in terms of their changing

complementarities, asymmetries, contradictions, and crisis-tendencies in a complex

‘ecology’ of accumulation regimes, modes of regulation, and spatio-temporal fixes.

Importantly, it also involves noting their respective capacities to displace and defer

contradictions and crisis-tendencies into the future and/or elsewhere into zones of

relative incoherence, instability and even catastrophe.

Second, a focus on internal coherence ignores the extent to which comparatively

successful performance in certain economic spaces depends not only on external

as well as internal conditions but also – and crucially – on the ability of a given

model to externalize costs onto other spaces and/or future generations (on the

significance of spatio-temporal fixes in this context, see Jessop 2002, 2006). This

includes the uneven ability to displace or defer contradictions, conflicts, and crisis-

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tendencies to other places and times. In other words, zones of relative stability are

typically linked to instability in or beyond national spaces in a complex ecology of

accumulation regimes, modes of regulation, spatio-temporal fixes. Moreover, in

case this gives the misleading impression (associated with mainstream VoC work)

that competition among different models of capitalism is essentially pacific because

it is market-mediated as well as profit-oriented, one should note that competition can

also occur through predation, structural domination, and resort to military means.

Spatio-temporal fixes are rarely purely pacific solutions to structural contradictions,

strategic dilemmas but also extend to conflictual and/or coercive geo-economic and

geo-political institutions and practices.

Third, there is a double problem with the methodological nationalism that seems to

inform much of the varieties of capitalism literature. On the one hand, there is often

wide variation within any individual national economy across its different sectors

and/or regions, casting doubt on the national economy as an analytical unit and

raising questions about divisions of labour defined in terms of place and/or scale,

both within national frontiers and across them in transnational networks. And, on the

other hand, if we recognize that methodological nationalism is misleading even

when the significance of the national territorial state is invoked to justify this

assumption, then we should consider how variegated capitalism depends on inter-

scalar articulation and the role of government and governance on other scales

above, below, and transversal to the national scale. This is especially important

given the “relativization of scale” that characterizes the contemporary world market,

i.e., the loss of taken-for-grantedness of the primacy of the national scale in post-

war economic and political organization and the absence of an alternative scale that

exercises a comparable primacy. Indeed, a focus on national economies ignores

alternative socio-spatial configurations such as emerging supranational blocs, global

city networks, or global commodity chains. Interestingly, such cross- and intra-

national variations are connected to the socio-spatial configurations associated with

forms of capitalism as well as to the changing dynamic of the world market. These

patterns preceded, co-existed with, and/or have emerged following the relatively

short period (in world-historical terms) of the primacy of the national scale.

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Fourth, concern with varieties of capitalism may lead to neglect of the market-

mediated competitive pressures and political initiatives that encourage convergence

among them, whether through European integration and harmonization and/or US-

sponsored expansion of networked, world market-friendly international economic

regimes. In this regard, states, the inter-state system, and international regimes are

critical factors in shaping VoC dynamics. In this context, neo-liberalism is not just

one variety of capitalism among others that has proved more or less productive and

progressive (or more or less inefficient and exploitative) and could be adopted

elsewhere with the same positive (or negative) results, as if the whole world

economy could be organized along these lines. An emphasis on ‘horizontal’

comparisons and/or competition among national or regional varieties of capitalism

diverts attention from the ‘vertical’ relations between core and periphery (Radice

1999; Wallerstein 1974, 1980) and ignores important asymmetries in the

competition and co-evolution among varieties of capitalism due to differences in

their capacities to shape the world market. In short, to paraphrase the well-known

revisionist principle in Orwell’s Animal Farm (1945), while all varieties of capitalism

are equal, some are more equal than others. The dominant model cannot be

generalized to all others. Thus, we must reject, as Radice (1999) argues, claims

about the suprahistorical superiority of one or another disembedded model of

capitalism that could then be adopted elsewhere. For example, not all economies

can establish their national money as the world currency and run massive and

growing trade deficits, not all national states can be military masters in a unipolar

world, and so on. This is not just a matter of logical compossibility.8 It also concerns

discursive-material, spatio-temporal compossibility, i.e., the substantive fit (or

otherwise) among varieties of capitalism. This involves not only the economic

competitiveness of a given form of capitalist organization but also the capacity of its

political regime(s) to promote this form in and beyond its frontiers in relations among

places, interscalar relations, and networks.

In short, to re-interpret the world market as 'variegated capitalism' improves, I would

argue, on two alternative claims that: (a) there is a single world system that,

operating through the logic of capitalist competition, tends to drive all capitals and

their associated 'space economies'9 towards convergence around a single model of

capitalism;10 or (b) there are only separate varieties of capitalism that co-exist within

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a differentiated world economy. The growing integration of the world market makes

it especially inappropriate to study ‘varieties of capitalism’ in isolation and indicates

the conceptual use-value added of thinking in terms of variegated capitalism.

Expressed in terminology developed elsewhere (Jessop 2007, Jones and Jessop

2009), this can be read as a call to explore the structural coupling, co-evolution, and

mutual complementarities-compossibilities as well as the contradictions and mutual

exclusivities among varieties and stages of capitalism and their implications for the

future dynamic of capital accumulation on a world scale. In short, ‘variegated

capitalism’ at the level of the world market provides an important theoretical and

practical horizon for the study of the capital relation. This casts new light on Marx’s

claim that the world market is the arena at which all relevant forces interact. For he

did not refer thereby to a singular logic operating with singular directionality at the

global level (the mistake in crude versions of world system theory) but an emergent,

tendential, and synthetic logic.

The Uneven Development of Variegated Capitalism A dialectical analysis need not stop with the first synthesis – this would be too easy.

The move from varieties of capitalism to variegated capitalism runs the risk of

reproducing the assumption that all varieties of capitalism are equal even though

casual observation and theoretical first principles suggest that some varieties are

more equal than others. I will develop this argument in two steps. First, I consider

the heterogeneity and uneven development of the world market, refusing the idea

that the world market is an exclusively capitalist phenomenon subordinate to a

single logic. And, second, I elaborate the implications of the concept of ecological

dominance for an analysis of the development of variegated capitalism in a world

market organized in the shadow of neo-liberal, finance-led accumulation.

The formation of the world market must be seen as 'doubly tendential' on the

grounds that, first, the formation of the world market is itself tendential, subject to

leads, lags, and reversals; and, second, the world market, in so far as it is formed,

provides the global context in which all the laws of capital accumulation and their

overdetermination come to operate. Marx and Engels note both these tendencies.

For example, in The German Ideology (1845-46), they remark: ‘The movement of

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capital, although considerably accelerated, still remained, however, relatively slow.

The splitting up of the world market into separate parts, each of which was exploited

by a particular nation, the exclusion of competition among themselves on the part of

the nations, the clumsiness of production itself and the fact that finance was only

evolving from its early stages, greatly impeded circulation' (1976: 56). They add that

this limitation was overcome in part by the rise of big industry, which

'universalized competition, established means of communication and the

modern world market, subordinated trade to itself, transformed all capital into

industrial capital, and thus produced the rapid circulation (development of

the financial system) and the centralization of capital. By universal

competition it forced all individuals to strain their energy to the utmost. It

destroyed as far as possible ideology, religion, morality, etc., and where it

could not do this, made them into a palpable lie. It produced world history for

the first time, insofar as it made all civilized nations and every individual

member of them dependent for the satisfaction of their wants on the whole

world, thus destroying the former natural exclusiveness of separate nations.

… Generally speaking, big industry created everywhere the same relations

between the classes of society, and thus destroyed the peculiar individuality

of the various nationalities. And finally, while the bourgeoisie of each nation

still retained separate national interests, big industry created a class, which

in all nations has the same interest and with which nationality is already

dead; a class which is really rid of all the old world and at the same time

stands pitted against it. Big industry makes for the worker not only the

relation to the capitalist, but labour itself, unbearable" (1976: 00).

Marx also examines uneven and combined development in occasional remarks on

differences in the national intensity and productivity of labour, the relative

international values and prices of commodities produced in different national

contexts, the relative international value of wages and money in social formations

with different degrees of labour intensity and productivity, the incidence of surplus

profits and unequal exchange, and so on (e.g., Marx, Capital I: Ch 12).

Thus variegated capitalism can only be a first, albeit important, step to analyzing the

world market in terms of an uneven and combined development that integrates not

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only particular branches of capitalist production with their related 'social bodies' (or

forms of social embedding) but also a wide range of pre- or non-capitalist forms of

production into the logic of the world market. The totality of production includes

subsistence production, petty commodity production, household production, informal

productive and reproductive labour and, a fortiori, their dynamic interrelations with

capitalist production in all its variety. These modes of production and forms of labour

are unified, to the extent that they are, through the increasing 'ecological dominance'

[see below] of capital accumulation in the world order. Indeed, the more strongly

integrated is the world economy, the stronger do we find the contradictions of capital

accumulation operating on a world scale. This has positive and negative effects. For

uneven and combined development not only propels world market integration but

may also serve as fetter thereon. How this logic works itself out depends on the

relative strength of different circuits of capital and varieties of capitalism.

The concept of ecological dominance refers to the capacity of one system or

institutional order within a complex self-organizing ecology of systems or orders to

cause more problems for other systems (or orders) than they can cause for it (for a

fuller account of the concept, see Jessop 2007 and the appendix to this paper).

Ecological dominance can be understood either in terms of the relative weight of

different varieties of capitalism and/or in terms of the relative impact of different

circuits of capital. Thus one can ask about the uneven development and structural

coupling of different varieties of capitalism within a regional or global division of

labour (e.g., the Rhenish, Scandinavian, and liberal market models in European

economic space or the dominance of the liberal market model within the global

economy); or about the relative dominance of commercial, industrial, or financial

capital within circuits of capital on different scales. These aspects are typically inter-

related. Thus the ecological dominance of neo-liberal market coordination is a

function of the relative predominance of finance-led accumulation in neo-liberal

economies within the world market and of the relative ecological dominance of

financial capital within the global circuits of capital within an emerging world society.

The logic of financialization (wherever it occurs, i.e., not just in relation to US

financial capital, if, indeed, this can be identified as a distinct fraction of capital

outside the global financial system in general) undermines or restricts the operation

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of economic determination in the first instance (i.e., the primacy of productive

capital) within the overall logic of capital accumulation. In contrast with the

structured coherence of Fordism and the post-Fordist knowledge-based economy,

the post-Fordist neo-liberal financial regime militates against the long-term

structured coherence of accumulation regimes and their modes of regulation. In

particular, it weakens the spatio-temporal fixes with which regimes based on

the primacy of productive capital manage the contradictions between fixity and

motion in order to produce zones of relative stability by deferring and displacing

their effects. This can be seen in the impact of financialization not only in Atlantic

Fordism but also in the export-oriented economies of East Asian and the viability of

import-substitution industrialization strategies in Latin America and Africa. The

destructive impact of financialization in this regard is reinforced through the neo-

liberal approach to accumulation through dispossession (especially the politically-

licensed plundering of public assets and the intellectual commons) and the dynamic

of uneven development (enabling financial capital to move on when the disastrous

effects of financialization weaken those productive capitals that have to be valorized

in particular times and places). It is also supported by the growing markets opened

for the ‘symbionts and parasites’ of the ecologically dominant fractions of capital in

their heartlands – associated in turn with their own forms of uneven development on

regional, national, and global scales.

Variegated Capitalism and European Integration Varieties of capitalism can be explored in terms of their responses to the

contradiction between the economy considered as a pure space of flows and the

economy as a territorially and/or socially embedded system of resources and

competencies. The liberal market economy is linked in ideal-typical terms to a liberal

state. It is important to note here that the liberal state also constitutes a form of

intervention in the organization of the market (Gramsci 1971; Foucault 2008) and, in

the current period, this is associated with policies that promote liberalization,

deregulation, privatization, resort to market proxies in the public sector,

internationalization, and cuts in direct taxes. The Rhenish version of the coordinated

market economy is linked to a neo-corporatist mode of state intervention, which

involves the state in modulating the balance of competition and cooperation, de-

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centralized ‘regulated self-regulation’, a widening of the range of private, public, and

other ‘stakeholders’ in the pattern of corporatist negotiation, an expanded role for

public-private partnerships, policies to protect the core economic sectors in an

increasingly open economy, and efforts to maintain high levels of taxation to finance

social investment. Dirigiste (or statist) coordination of market economies involves in

turn resort to regulated competition, state guided national strategies rather than top-

down planning (indicative or prescriptive), increased governmentalized audit of

private and public sector performance, the expansion of public-private partnerships

under state guidance, neo-mercantilist protection of the core economy (extending in

the current global economic crisis to so-called financial mercantilism), and the

development of new collective resources to facilitate economic security and global

competitiveness. In turn, the East Asian export-oriented model involved a Listian

developmental state that guided economic growth, initially for national security, then

catch-up development, and, most recently, innovation-led competitiveness. Despite

neo-liberal policy shifts and imposed structural adjustment policies, a post-

developmental neo-mercantilist state still engages in meta-guidance, in part through

networks, of the economy, privatization measures are selective and tied to state

strategies (or the interests of state managers), liberalization of collective

consumption (under GATTS) has been limited, free trade under WTO rules has

been imposed gradually (outside of the IMF crisis) and protection continues in the

name of national security, and the tax system is still largely developmentalist.

I now apply these general arguments to European state formation, where economic

and political forces are seeking to restructure national states and economies in the

hope of solving the long-standing structural ‘problem’ of competitiveness within

regions, national economies, and the wider European economic space. The

resulting policies and their historical sequencing can be studied in terms of the

principle that not everything that is possible is compossible. Central to this analysis

is a focus on the potential for incompatibility, antagonism and contradiction within

and between the four first-order socio-spatial structuring principles of territories,

places, networks, and scales (and, by extension, possible second- or third-order

principles) and their implications for the compossibility of different state spatial

strategies and state spatial projects.

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The six founding members of the European Economic Community (EEC) had

modes of growth and regulation belonging to one or another of the regulated

varieties of capitalism as well as one or another form of conservative-corporativist

welfare regime or, in Italy's case, a clientelist Mediterranean welfare regime (cf.

Ruigrok and van Tulder 1996; Hantrais 2000). The initial steps towards European

integration aimed to integrate Western Europe into Atlantic Fordism; and the

'Monnet mode of integration' was concerned to create a 'Keynesian-corporatist' (sic)

form of statehood on the European level favourable to different national Fordist

modes of development (Ziltener 1999). Rather than involving a strong principled

commitment to economic liberalism at almost any cost at this stage, market

integration was expected to have spillover effects that would consolidate regulated

capitalism on a wider scale and also lead to deeper political integration. For this

reason, the early stages of integration encouraged the development and coherence

of the European Communities as instances of variegated regulated capitalism.

The situation changed as the European Community expanded to include members

with different modes of growth, regulation, and welfare. Initially the United Kingdom

was relatively isolated as a liberal market economy (and this in part motivated the

French veto on earlier entry) but nonetheless served an important intermediary role

in spreading the influence of de-regulated international finance into the Continental

heartland.11 The growing incompossibility of different varieties of capitalism was

aggravated by the emerging crises of Atlantic Fordism and its differential impact

across national models in Europe – with some making neo-liberal regime shifts at

different times and some making neo-liberal policy adjustments, thereby increasing

the economic and social heterogeneity in the original core, intensifying the crisis in

European integration, and prompting the search for a new mode of integration. This

made it harder to create the conditions to re-scale state planning from the national

to the European level and/or to establish a tripartite Euro-corporatism (on Euro-

corporatism, see Falkner 1998 and Vobruba 1995; on its limits, Streeck 1995). The

Monnet mode of coordinated market integration was replaced by the more liberal

internal market project, creating conflicts among neo-liberal, neo-corporatist, and

neo-statist currents. Eastwards expansion of the European Union has aggravated

the incoherence of the EU – an effect that is far from accidental but was promoted

by neo-liberal forces within and beyond the European Union and that has, more

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recently, seen neo-liberal chickens come home to roost because of over-rapid

deregulation and debt-fuelled speculation, threatening the overall stability of the EU.

These problems encouraged a turn to the open method of coordination (OMC) in the

1990s, which was officially consolidated in the Lisbon agenda. The latter had strong

support from the founding members of the EEC and from Austria, Denmark,

Portugal, and Sweden. It combines a commitment to international competitiveness

with retention of the European social model and can be seen as a compromise

between neo-liberal and social democratic variants of capitalism. The emerging

Lisbon project is closely tied to the shift from a Keynesian-welfarist mode of

integration to a more Schumpeterian-workfarist mode. This involves the de- and re-

territorialization of the state, the de-statization of crucial economic and social

policies, the re-scaling of state power, and an increasing emphasis on networked

power. Retaining older forms of European statehood would have been incompatible

with the changes in accumulation regimes and hindered after-Fordist re-regulation.

The growing incompossibility of an increasingly variegated European economic

space with the Monnet model of integration helps to explain the shift away from

policies of harmonization and the development of the open method of coordination

as one among several examples of ‘multi-scalar meta-governance conducted in the

shadow of post-national hierarchy’ (Jessop 2007a). In contrast to the earlier pursuit

of various measures of positive integration alongside the pursuit of negative

integration, growing incompossibility has produced a bias in economic and, to a

lesser extent, social policy towards negative integration and collibration. Pursuit of

measures that tend to eliminate restrictions on ‘the four freedoms’ (the free flow of

goods, services, capital, and labour) tends to weaken the coherence of the

respective national cores of coordinated market economies and to advantage

mobile capital (on the neo-liberal bias of negative integration, see van Apeldoorn

2002; Altvater and Mahnkopf 2007). The OMC is a distinctive form of collibration,

i.e., the judicious mixing and remixing of market, hierarchy, networks, and solidarity

to improve overall outcomes (cf. Dunsire 1996), that represents a major response to

the growing incompossibility of distinct varieties of capitalism within an increasingly

integrated economic and political space that has been subject to growing pressures

from an increasingly integrated (and, more recently, crisis-stricken) world market.

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From one viewpoint, given the ecological dominance of neo-liberalism on a world

scale from the 1980s onwards (cf. Jessop 2007a), the pursuit of neo-liberalism

within the EU appeared to be the line of least resistance given the co-existence of

several ‘varieties of capitalism’ with their complex contradictions. One indicator of

this is the changing position of the European Round Table, which is an important

site of compromise between contending fractions of capital and a major vector of the

interiorization of external constraints as well as intra-European conflicts and

contradictions (cf. van Apeldoorn 2002). The OMC helps to mediate the resulting

variegation without relying purely on negative integration and without imposing a

one-size-fits-all economic and political programme. It does this by allowing states to

pursue different approaches to shared EU objectives, thereby facilitating the

extended reproduction of a variegated capitalism based on the structural coupling

and co-evolution of different modes of growth and regulation with different modes of

insertion into the European and wider world markets.

This emerging trend in institutional restructuring and strategic reorientation can be

contrasted with the usual alternative accounts of the rescaling of the traditional form

of sovereign statehood or the revamping of liberal intergovernmentalism inherited

from earlier integration rounds. The emphasis is on efforts at continuing collibration

in a changing equilibrium of compromise rather than on systematic, consistent resort

to a single method of coordination to deal with a fixed pattern of complex

interdependence. Effective collibration depends in turn on 'super-vision' and

'supervision', i.e., a relative monopoly of organized intelligence combined with

overall monitoring of agreed governance procedures (Willke 1996). Thus we have

seen repeated rounds of constitutional debate over the design of the Europolity as

well as growing resort to and expansion of comitology, social dialogue, public-

private partnerships, mobilization of non-governmental bodies and social

movements, etc., as integral elements in attempts to guide European integration

and steer European Union policy-making and implementation (Scott and Trubek

2002). The recent and continuing crisis over the European constitution and its

validation through national referenda and/or legislative decision-making indicates

the problems of economic and political incompossibility in an expanding European

Union that is itself located in an increasingly heterogeneous world market and polity.

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Reflecting the complex position of the European Union within a variegated

capitalism that is not confined to European economic space but extends to the world

market, EU meta-governance has become a crucial site for contending political

forces both within and beyond the EU as they seek to shape its overall strategic

direction and/or specific economic and social policies (cf. Ziltener 2001; van

Apeldoorn 2002). Thus it has been a vector for American neo-liberal pressures to

redesign the world order and for attempts to promote an alternative European

model. While the initial compromise position was embedded neo-liberalism, the

current economic crisis illustrates how the balance of forces has shifted in this

regard against neo-liberalism within the European framework. Even before this volte

face, however, the tendential Europeanization of economic and social policy had

been closely linked, in line with the principle of subsidiarity, to the increased role of

subnational and cross-national agencies, territorial and/or functional in form, in its

formulation and implementation. In this regard there has been a significant scalar

division of labour between the EU, national states, and sub-national tiers of

government linked to different forms of networking and efforts at governmentality.

The current struggle over the most appropriate response to the global crisis of neo-

liberalism that was ‘made in America’, first emerged there, and has since spread to

Europe with a vengeance. This has revealed significant differences once again

between the economies that undertook the most marked neo-liberal regime shifts

(Eire, Iceland, the UK, Spain, the Baltic Republics, and Eastern and Central Europe)

and those that inclined more to neo-liberal policy adjustments (notably the Benelux

economies, Scandinavia, and Germany) and the limits to their compossibility within

the current constitutional, institutional, and meta-governance arrangements.

European Economic and Political Space(s) within the World Market Even though the global neo-liberal highpoint had already passed in terms of elite

consensus (let alone popular support) and a retreat had begun both from neo-

liberalism as system transformation in post-socialist economies and from the

coercive imposition of neo-liberalism on crisis-ridden economies, the ecological

dominance of the logic of neo-liberalism within the context of capital accumulation

on a world scale is still present. This reflects the continuing ecological dominance of

the American economy within the world market, the continued dominance (despite

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declining hegemony) of the US federal state in the world political order, and the

ecological dominance of the world market within world society more generally. In

other words, the crisis of global neo-liberalism triggered by the financial crisis that

originated in the USA is causing more problems for other forms of economic

organization at scales from the urban and regional through the national to supra-

regional economies than their dynamics (and crisis-tendencies) can cause for neo-

liberalism. An interesting example of this is the pathological co-dependency of the

US and Chinese economies. In addition, the overall logic of the world market,

organized in the shadow of neo-liberalism, causes more problems for other systems

and the lifeworld than they can cause for the economy.

This approach should change how we think about the United States in the world

market and world society. The US is often discussed as a hemispheric or global

hegemonic power in world society and/or as the economically dominant power in the

world economy. But it no longer enjoys the hegemony that it exercised in the

immediate post-war economic order, when it sacrificed immediate economic

interests to promote its longer term interests in global economic expansion whilst

promoting the economic-corporate interests of other advanced capitalist formations

through their integration, directly or indirectly, into the circuits of Atlantic Fordism or

the wider international economy. In the immediate post-war period the US also

enjoyed the benefits of economic dominance through its technological supremacy,

control over oil reserves and other strategic commodities, gold and foreign currency

reserves, possession of the master currency, and ‘soft’ power exercised through the

cultural industries. In the last two decades the US has been losing this dominance,

especially relative to the European Union, Japan, and the BRICS economies (Brazil,

Russia, India, China, and South Africa). The neo-liberal regime shift developed as a

response to this crisis in political hegemony and economic dominance. This has not

reversed the loss of US political hegemony (despite its appeal in post-socialist

economies) or the overall decline of American economic dominance (witness the

continuing fiscal, budgetary, and trade deficits in the US economy). But the US still

retains the (destructive) power of ecological dominance, i.e., it still causes more

problems for other economies than they can cause for it. It is better able to displace

and defer the contradictions of neo-liberalism onto other spaces and times than

other varieties of capitalism in other spaces can displace their problems into the

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American economy. This illustrates on a global scale the old aphorism that, if a firm

owes a bank 10,000 dollars, it has a problem, but if the debt is 10,000,000 dollars,

the bank has a problem. In other words, the threats posed by current economic

imbalances in the neo-liberal USA and its relations to other major economic players

(especially China and Japan) threaten the stability of the world market and, a fortiori,

world society. Indeed, the blowback effects of US policies are more likely to damage

the growth dynamic of the US economy than the policies pursued in other varieties

of capitalism.

Among the most obvious indicators of the ecological dominance of the American

economy have been the positive feedback effects of the growing international trade

and financial imbalances between the United States, China, and Japan as well as

their implications for environmental destruction through the unsustainable growth of

production in China and consumption in the United States. As we have seen, the

necessary adjustments cannot be made without a major global crisis that forcibly re-

imposes proportionalities in the global circuit of capital that proved impossible to

resolve politically. These positive feedback effects are especially significant in the

current period because of the specific neo-liberal and neo-conservative policies

pursued under the exceptional political regime presided over by George W. Bush

and its domination by a distinctive set of particular capitalist interests. It is far from

clear that the underlying balance of force has shifted decisively away from neo-

liberalism (except at the level of ideological contestation and political rhetoric on the

political scene) within the first 100 days or so of the Obama Administration. It seems

more likely that we are witnessing another iteration of the turn in neo-liberal regimes

to ‘Third Way’ rhetoric and policy solutions that serve primarily to provide flanking

and supporting mechanisms in the transition from roll-back to roll-forward neo-

liberalism. The Obama victory and subsequent transition ended one particular

political mediation of neo-liberalism but neo-liberal financial capital is likely to

provide more fundamental and more durable in so far as crisis-management in the

USA seems to be premised on the assumption that the global economic crisis stems

from a crisis in neo-liberal finance-led accumulation rather than, as is the case in

Europe, from a crisis of neo-liberal finance-led accumulation.

Conclusions

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This paper has emphasized the need to look beyond conventional approaches to

the analysis of the global and/or European economies and their implications for

European integration. It has proposed an approach that is concerned with

variegated capitalism within a world market that is organized under the dominance

of finance-led, neo-liberal accumulation. I have suggested that the logic of roll-back

neo-liberalism is still ecologically dominant at the level of the world market even

though it is in retreat at other levels (with the significant partial exception of the

USA) in favour of a roll-forward neo-liberalism flanked and supported by other

mechanisms to maintain and reinvigorate the momentum of neo-liberal restructuring

in the subset of neo-liberal regimes. It is this period of ‘Third Way’ roll forward neo-

liberalism that recent attempts to promote European integration have been pursued

– with the failed Lisbon Agenda providing an excellent exemplar of a neo-liberal

slanted project. Conclusions to be further elaborated.

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Appendix: Conditions making for Ecological Dominance of Social Systems

Internal

• Scope for continuous self-transformation because internal

competitive pressures are more important than external adaptive pressures in the dynamic of a given system

• Extent of internal structural and operational complexity and the

resulting scope for spontaneous self-adaptation in the face of perturbation or disruption (regardless of the external or internal origin of adaptive pressures)

• Capacity to distantiate and/or compress its operations in time

and space (i.e., to engage in time-space distantiation and/or time-space compression) to exploit the widest possible range of opportunities for self-reproduction

Transversal

• Capacity to displace its internal contradictions, paradoxes and dilemmas onto other systems, into the environment, or defer them into the future

• Capacity to redesign other systems and shape their evolution

by context-steering (especially through organisations that have a primary functional orientation and also offer a meeting space for other functional systems)12 and/or constitutional (re)design

External

• Extent to which other actors accept its operations as central to

societal reproduction and orient their operations in this light (e.g., integrating its needs into their own decision-making premises and programmes as naturalised constraints). Organisations also have a key role here through their ability to react to the irritations and expectations of several functional systems

• Extent to which a given system is the main source of external

adaptive pressure on other systems (e.g., through the impact of recurrent system failures, worsening social exclusion, and positive feedback effects)13 and/or is more important than their respective internal pressures for system development

Source: Modified version of Jessop (2007)

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23

Endnotes 1 This is a draft version of a paper prepared for conference on Globalisation and

European Integration: ‘The Nature of the Beast’, University of Warwick, 5-6th June

2009 2 Cf. Capital III, Chapter 6, p 146, on the world market as 'the basis and vital

element of capitalist production'; also "The world-market itself forms the basis for

this mode of production" (Ch 20). 3 The tendency to create the world market is directly given in the concept of capital

itself. Every limit appears as a barrier to be overcome. Initially, to subjugate every

moment of production itself to exchange and to suspend the production of direct use

values not entering into exchange, i.e. precisely to posit production based on capital

in place of earlier modes of production, which appear primitive [naturwüchsig] from

its standpoint. Commerce no longer appears here as a function taking place

between independent productions for the exchange of their excess, but rather as an

essentially all-embracing presupposition and moment of production itself (Marx

1973: 163). 4 Mandel also notes that the capitalist world market universalizes market relations,

not the capitalist mode of production of commodities (Mandel 1978: 61, 84). 5 In this context, Engels notes that 'the first maxim in trade is secretiveness -- the

concealment of everything which might reduce the value of the article in question.

The result is that in trade it is permitted to take the utmost advantage of the

ignorance, the trust, of the opposing party, and likewise to impute qualities to one’s

commodity which it does not possess' (1844/1975: 422). 6 The industrial capitalist always has the world-market before him, compares, and

must constantly compare, his own cost-prices with the market prices at home, and

throughout the world. In the earlier period such comparison fell almost entirely to the

merchants, and thus secured the predominance of merchant's capital over industrial

capital (Capital III: XX, 446-447) 7 For example, the changed nature of world money, the growth of derivatives, and

the increased importance of intellectual property as an economic category.

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24

8 Cf. McMichael 1990 on the role of incorporated comparison where one model has

a strong constitutive impact on the structural environment in which other models

operate; Jessop 2007a on ecological dominance; and Konings 2008 on the

influence of asymmetrical intermediary capacities in global circuits of finance). 9 I use this term from geography to avoid taking for granted that an economy is

necessarily national in scope. The notion of 'space economy' is compatible with

local, metropolitan, regional, national, supranational, or cross-border economies. 10 Cf. Marx's comment on The Gotha Programme that there is no generic 'present'

state but, rather, a 'motley diversity of present states'; nonetheless, despite some

variation in the level of capitalist development, they share certain essential

characteristics by virtue of their common ground in modern bourgeois society (Marx

1875). 11 Konings (2008) notes that continental banks also exploited the separation of

industry and finance in the Anglo-Saxon model to move some of their international

financial activities to the City of London, which, in turn, modified the way in which

the liberal financialization model operated. 12 Luhmann notes that the structural coupling of function systems is especially promoted by

organisations whose multi-functionality is the most likely to be disturbed by artificial

distinctions among systems (1997; 2000). Simsa reinforces this in noting that organisations

are the source of the societally most relevant, most stable, and most far-reaching decisions

(2002: 162). 13 Luhmann (2002: 55), as cited by Wagner (2006: 5).