Transnational Capitalism and Global Crises

The race among dominant transnational corporations for ownership and control of AI technologies is a defining characteristic of the latest phase of the geoeconomics and geopolitics of global capitalism. This phase accelerated after the global capitalist crisis of 2008, which has resulted in several trends that have been driven by a systemic crisis of neoliberal capitalism. The first is the stagnation of global value chains reflected by global trade statistics, as the volume of global trade dramatically fell in the aftermath of the 2008 capitalist recession and has failed to rebound to pre-crisis levels if adjusted as percentage of GDP. The biggest factor behind the global trade slowdown has been the slower growth rates of trade within global value chains. In response, transnational corporations reduced the complexity of global value chains (incorporating fewer suppliers) in favor of greater capital-intensity and greater consolidation of those value chains around the most important global markets. As part of this process, transnational corporations have reorganized their global capitalist employees more rigidly around two categories: production supervisors and managers that oversee the logistical and supply operations of the global value chains and are relatively well-paid, and workers who produce within these chains at wages that continue to stagnate and decline relative to capitalist revenues.

Second, the gap between the profits of the dominant transnational corporations and the wages of the global capitalist workforce has grown wider, as more wealth is concentrated at the top. This has resulted in a further “hollowing out” of the industrial workforce in the core capitalist states, often expressed as a shrinking “middle class,” alongside the increased exploitation of the global working class. These class tensions have resulted in further deligitimacy of capitalist governments in the West, contributing to the rise of Donald Trump in the U.S. and other neo-fascist political figures and parties in Western Europe, and also in several countries in the global South. The increased intra- and inter- class tension is a long-term byproduct of the contradictions of a capitalist political project that has steadily increased the power of transnational interest blocs while reducing the political influence of workers and ordinary citizens, whose political marginalization and alienation have steadily increased.

Third, the global value chains that were previously dominated by North-South linkages, with the dominant transnational corporations concentrated in the Northern states, have increasingly been challenged by the dramatic rise of China and the policies of the Chinese state, particularly in the area of high-technology, which has helped to shift global value chains in a South-South direction, with countries of the global South, led by China, reorienting global value chains toward production, marketing and consumption within the global South, driven by the global expansion of the Chinese Belt and Road Initiative. At the same time, the Chinese state has enacted policies that have contributed to a greater emphasis on domestic production and accumulation and to more stringent requirements for foreign transnationals investing in high-technology manufacturing in China in an attempt to assert greater control over some of the most lucrative global value chains.

The business and political coalitions in U.S. foreign policy that once advocated political and economic cooperation with China have been eclipsed from the mid-2010s to the present. Global capitalist crises, starting with the 2008 global recession, have sharpened the tensions between U.S. corporations which have long benefitted from locating their global value chains within the China market and those corporations who have long felt threatened by the competition posed by Chinese exports. Meanwhile the Chinese government has sought to extract more concessions from foreign investors and to increase the scope and scale of state intervention toward an upscaling of Chinese capacity in 5G technology and artificial intelligence.

An acceleration of Chinese nationalist political strategies in recent years, combined with the global political and economic crises of the covid pandemic, have increased the costs of foreign direct investments for Western corporations in China. Western corporations that have long been in competition with China, have been joined by a broader coalition of transnational investors that have aggressively led the campaign for heightened sanctions against China. This coalition has been bolstered by defections of some transnational firms in the information technology sector away from supporting cooperation with China and toward support for a more militarized competition with China. In fact, as I have documented elsewhere, there is a growing marriage between several powerful Silicon Valley firms and the military-industrial-surveillance complex reflected in the ascendancy of military contracts secured by the big tech sector, especially driven by the AI arms race.

Interest groups within the military-industrial-surveillance complex, which have long sought to identify China as a threat justification for higher military budgets, have identified an expansion of Chinese military capacity and utilization, especially in the South China Sea, as a threat to U.S. extra-regional hegemony in Asia. The rise of China’s economic and military capacity in Asia and its long-term claim to the island of Taiwan, with newly rising military maneuvers and tensions in recent years, has accelerated an increasing confrontational posture between the U.S. and China. The heightened competition between the U.S. and China, filtered through transnational capitalist competition for AI supremacy in global markets, is driving much of the geoeconomic maneuvering between transnational firms and the geostrategic competition between the U.S. and China.

My 2019 book, Corporate Power, Class Conflict and the Crisis of the New Globalization, is where I develop many of the these arguments (this blog includes material updated from that book). See also two excellent books that provide more recent analysis of how transnational capitalist competition is fueling geostrategic rivalry between the U.S. and China, including Clash of Empires by Ho-fung Hung, Cambridge Press, 2022, and Silicon Empires by Nick Srnicek, Polity Books, 2026. The key battles revolve around how surplus value will be extracted from global value chains, which transnational interest bloc coalitions will benefit the most from the political economy of value extraction and, most importantly, how will ownership and control over high-technology processes be determined in this phase of global capitalism? In my next two blogs, I will review the books referenced here and provide further reflections on how to understand our current configuration of global corporate and class power.