Capitalism is Inherently Global

National boundaries do not represent the natural limits of capitalism.  All economic activity is ultimately determined by global market forces; the state merely provides regional constraints for global competition.

The actions of one state affects all others.  For example, accumulation of wealth in the industrialized core only occurs at the expense of other nations, through relations of exploitation.  Primarily, these relations involve unequal trade, creating dependency through specialization, and control of the economic policies of underdeveloped nations by the industrialized core via transnational organizations such as the World Bank and IMF.  I will discuss this in much greater detail later.  However, the most important point to bear in mind for the moment is that the global political-economic system is structured in such a way that resources and capital are constantly flowing from poorer countries to richer ones, creating an ever widening gap between rich and poor.

Consequently, limited motion is possible within the global hierarchy of wealth.  For most underdeveloped nations, increased integration into the world market has resulted in increased poverty.  For "semi-peripheral nations" (the handful of countries whose fortune lies somewhere in between the wealthy, industrial core and the destitute Third World), some movement in either direction is possible, but "economic miracles" are rare and often fragile.  Socialism/communism, in so far as it limits integration into the global economy, protects nations from such exploitation, to a certain degree.  Historically, if it has had any effect, it has mitigated the impoverishment of countries relative to others of an initially similar position in the global hierarchy of wealth.  (Usually, the success or failure of socialist states is measured against the standard of wealth enjoyed by the industrialized core; however, this ignores the fact that the wealth of similarly positioned but non-socialist states has steadily decreased against the core.  Hence, the comparison needs to be made against these latter states.)  Furthermore, on a domestic level, the poorest classes have generally fared better within socialist nations than within non-socialist ones.

Another example of the way in which the economic policies and fortunes of one state affects all others is the fact that within the industrialized core, nations must constantly compete with one another to retain or expand their share of the world's wealth.  Accumulation of wealth in one country always occurs at the expense of others.  Since the decline of manufacturing profitability in the 1970s, economic growth has occurred primarily via manipulation of exchange rates and monetary policy.  Thus, for the past few decades, all boom cycles have occurred directly at the expense of other countries rather than by increasing productivity and profitability.  In this zero-sum game of global tug-of-war, upturns are short-lived and frequent crises are inevitable.