The internationalisation of Gulf capital and Palestinian class formation.

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The internationalisation of Gulf capital and Palestinian class formation.

I. Introduction

Critical theoretical approaches towards understanding the economy of the West Bank and Gaza Strip typically focus on the ways in which Palestinian economic development is shaped by the exigencies of Israel's occupation. The myriad military orders that control the social, economic and political life of Palestinians have regulated industrial and agricultural production in these areas, guaranteed Israeli dominance of Palestinian commodity markets, and ensured the supply of cheap Palestinian workers as a reserve army of labour for the Israeli economy. Following the signing of the Oslo Accords in 1993, the Palestinian economy was tightly circumscribed by the system of movement restrictions that gave Israel total control of the flows of commodities and labour power in and out of Palestinian areas. Industrial zones were established at the edges of these areas--most noticeably at the entrance to the Gaza Strip--where Palestinian labour could operate as an adjunct to the Israeli economy while remaining geographically separate (Abed, 1988; Roy, 1995; Samara, 2001; Farsakh, 2005).

Notwithstanding the important insights contributed by several decades of political economic analyses, a focus solely on the characteristics of the relationship between the Israeli and Palestinian economies can obfuscate other important theoretical questions. Specifically, by narrowing the analytical lens to the focus of the West Bank and Gaza Strip, it is possible to lose sight of broader regional processes that no less shape the reality of state and class formation in these areas. The central purpose of this article is to suggest one way in which theoretical analysis could be enriched by refocusing attention on the broader regional political economy, particularly the impact of the Gulf region. (1)

The argument made below emphasises a tendency of capitalist development that is central to understanding the nature of the contemporary world economy: the internationalisation of capital. Simply put, the internationalisation of capital means that companies are increasingly forced to operate at a global level. Capitalists outgrow their national markets and are pressured to expand internationally in order to compete with rivals. Failure to do so inevitably means being swallowed up by a competitor that did manage to take the global leap. The strategic decisions of capital are made through an assessment of profit opportunities (and threats) at the international scale. Concretely, this means that capital organises itself at the global level: emphasising export-oriented activities, locating production facilities overseas to take advantage of cheap labour or other competitive advantages, and seeking mergers and acquisitions with foreign firms. Large financial flows and foreign investments in international markets become a defining feature of the world market.

Ideologically, the internationalisation of capital is buttressed by the economic doctrine of neoliberalism--a set of policies that promotes the free flow of capital across borders and the de-regulation of all economic activities. Drawing its roots from a range of sources including classical liberal philosophy and Austrian economics, neoliberalism's growing influence became apparent through the 1980s. Its policy prescriptions were firmly embedded across the globe: privatisation, cutbacks to social spending, the reduction of barriers to capital flows, and the imposition of market imperatives throughout all spheres of human activity. Neoliberalism is not simply an ideological choice of the capitalist class (or a fraction thereof), but a set of policies that emerged out of the systemic needs of capitalist social reality. The turn to neoliberalism reflected the needs of capital as it became internationalised--seeking unrestricted, increasingly rapid, and free flows across the globe. The logic of neoliberalism thus penetrated all nation states, and was specifically concerned with the ways in which these spaces were integrated into global accumulation patterns. By speeding up the rate through which capital moves across and within national spaces, and widening the spheres of human activities subject to the imperative of profit, neoliberal...

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