By the end of 1990, foreign direct investment - that is, investment in manufacturing, real estate, raw materials extraction, financial institutions, etc., made by capitalists of all lands outside their national borders - reached over $1.5 trillion. Actually, this official estimate grossly understates the case because it is based on book values. But even as a minimum estimate, what is significant about this number is not only its size but the unprecedented speed with which it has grown in the last two decades: the amount directly invested in foreign lands nearly tripled in the 1980s alone. Moreover, this investment went far beyond manufacturing and the extraction of raw materials. To an ever larger extend foreign capital spread to such fields as finance, real estate, insurance, advertising, and the media.
This upsurge and diversification of globalization has been introducing new economic and political features in the countries of both the periphery and the core. In the periphery, foreign capital has penetrated more widely and deeply than ever before. In the core, the change of direction has helped produce in the world's key money markets an extraordinary spiralling of credit creation, international flows of money capital, and speculation.
This new stage of globalization has meanwhile given rise to questions about its longer-run significance. A widely accepted theory visualizes the erosion of national sovereignty at the centers of capitalism, presumably to be replaced by an "international" of capital that will make and enforce the rules of international relations. The more thoughtful members of the ruling capitalist class are well aware how chimerical the notion of a rising international of capital is. It is true that in view of the growing complexity and the many pitfalls in the world of global finance, they seek ways to strengthen, or create new, international institutions which can help to minimize the potential chaos they face. But as much as the need is understood in the abstract, and as many steps as have been taken in the hope of greater cooperation, there is no letup in the drive of nations to acquire more power and wealth. The upshot is that the speeded-up globalization of recent years has not led to harmony. On the contrary, as we will try to show, it is itself a product of growing disharmony. Contrary to widespread expectations, sources of tension among the leading capitalist powers have increased side by side with their growing interdependence. Nor has the geographic spread of capital reduced the contradictions between the rich and poor nations. Although a handful of third-world countries, benefitting from the globalization process, have made noteworthy progress in industrialization and trade, the overall gap between core and periphery nations has kept on widening.
For the sake of perspective, it is worth recognizing that the recent splurge in globalization is part of an ongoing process with a long history. To begin with, capitalism was born in the process of creating a world market, and the long waves of growth in the core capitalist countries were associated with its centuries-long spread by conquest and economic penetration. In the past as in the present, competitive pressures, the incessant need for capital to keep on accumulating, and the advantages of controlling raw material sources have spurred business enterprise to reach beyond its national borders. The tempo and nature of expansion has of course varied over time, influenced by changes in political and economic conditions and the available technology for making war, transporting goods, and communicating.
While the expansion of capitalism has alway presupposed and indeed required cooperation among its various national components - with respect to transportation facilities, weights and measures, monetary and credit arrangements, etc. - there never has been a time when these same national components ceased to struggle each for its own preferment and advantage. …