Third World Quarterly, Vol 23, No 4, pp 725–751, 2002 At whose service? Caribbean state posture, merchant capital and the export services option DON D MARSHALL ABSTRACT Elite planners in the Eastern Caribbean sub-region pin their hopes of economic viability on tourism, a vibrant offshore financial (and other) services sector and an increase in export activity from companies operating out of industrial parks. Framed against the perception of an inevitable globalisation process underway, with limitations posed to high-level or diversified manu- facturing, power holders have sought to concentrate on the promotion of ‘export services’ as a viable cover against new competitive challenges. This article argues, however, that this state of affairs betrays a crisis-of-mission within the ruling class on how to reconstruct political economies marked by the hegemony of merchant capital. Rather than a move towards what are globally the most remunerative factors of production—high-level manufacturing and services—a rather curious consensus has emerged which proclaims a solid future for export services without roots and/or ganglia to local manufacturing. The success of such an ‘export services’ model anywhere in the Eastern Caribbean will not turn as much on the quality of human resources as it will on overcoming the short- term horizon of local politicians, and the low-risk predilections of the wealthy planter–merchant elite. The latter’s conscious ‘opt out’ strategy on the question of manufacturing diversity has made for a strikingly conservative enterprise culture. More specifically, merchant capitalist societies like those in the Eastern Caribbean insufficiently display the sociocultural attributes required for the creation of high-level services: innovation-mediated risk, research and develop- ment competence, and affinities to industrial processes and networks. A powerful phalanx of social forces in the Eastern Caribbean ( EC)1 has arrayed itself behind an agenda of intensified services sector-led development: academic economists, the political class, business conglomerates, the individual Chambers of Commerce, and the mainstream press. They all vigorously support expansion of the tourism product, and the provision of offshore financial and other inter- national services as key to coping with globalisation. There are two primary themes that consistently emerge from the pro-services lobby. First, we are treated to arguments bemoaning the lag in manufacturing capacity at home in terms of efficiency, technology and high labour costs. These have often led to the Don D Marshall is in the Sir Arthur Lewis Institute of Social and Economic Studies, University of the West Indies, Cave Hill Campus, PO Box 64, Bridgetown, Barbados. E-mail: [email protected]. ISSN 0143-6597 print/ISSN 1360-2241 online/02/040725-27 q 2002 Third World Quarterly DOI: 10.1080/0143659022000005355 725 DON D MARSHALL sweeping conclusion that manufacturing possibilities in these small-island economies are eclipsed by recent moves by core states to centralise headquarter functions ‘at home’ and shift production abroad to semi-automated Third World production platforms. As the argument further goes, declining levels of direct government subsidy and trade liberalisation imperatives foreclose on the time needed for local firms to re-tool, attain new standards and improve quality throughput. The second theme taps into discourses heralding today’s world economy as uniquely ‘knowledge-based’, one where management expertise, a ‘welcoming society’, creativity and expertise have become more important assets than commercial crops, steel and factories. The increasing contribution of business services to the gross domestic product ( GDP) of core countries has inspired local policy makers and commentators to speak of the scope for the region in terms of its political-economic stability, exotic allure, and existing holiday resort services. Offshore banking, health convalescence, entertainment, education and information technology services are thus held out to be real levers for economic success, even renewal. As the arguments go, success in the export services sector will allow these countries to withstand the fallout from manu- facturing, and the pending loss (circa 2009) of preferential market access agree- ments for bananas, rum, sugar, and ground spices. This article seeks to interrogate the current preference in the Eastern Caribbean for export services or ‘international business’ as a strategy to militate against the harsh effects of ‘globalisation’. 2 Here Barbados is given significant address because it is mooted as a replicable model for others in the region to emulate, 3 since the government has determined, not least with an eye to unemployment, to encourage services-orientated enterprises, and an improvement in the offshore services sector. Apart from being a lead economy among those pursuing an export services strategy, the Barbadian empirical context allows for theoretical reflection and exploration on debates associated with the link between state activism, investment and social change. Briefly described here, the commercial circuit gives Barbados its character and its low-risk profile. Real estate and property development, insurance, finance and banking, transport and communications, import trading and construction predominate in the Barbadian economy, with tourism serving as the main foreign exchange earner and the state the biggest employer. Agriculture and manu- facturing lag behind not only in terms of their respective contribution to the national GDP but at the intersection of global and hemispheric imperatives as well. Merchant capitalists are not so much part of the ruling class as they are society’s leading class. This is also the case with other English-speaking Caribbean countries as commercial-dealing capitalists predominate. 4 They operate in a network of interlocking spheres of capital, encompassing the production, commodity circulation, and credit spheres. Their social position, their values and expectations register deeply into material society. The state managers, on the other hand, largely comprise creole professionals, a petit-bourgeois group not sited in the business community, but drawn to public service and career enhancement. Over time, the class configurations of state and society have produced a distorted mirror of contradictions. After some 36 years of social reform, no new economic class has emerged to displace the traditional merchant 726 CARIBBEAN STATE POSTURE, MERCHANT CAPITAL AND THE EXPORT SERVICES OPTION capitalist elite. 5 For most of these years the hegemony of commerce over production in Barbados was offset by other factors occurring in the international political economy ( IPE): the logic of the cold war alliance system, easy lines of international credit, preferential market access arrangements, and rising tourism. However, the final decade of the twentieth century shattered these IPE arrange- ments and expose the contradictions of the local economy. As the state continues to negotiate reductions in trade barriers in accordance with international agree- ments, buying and selling continues to take precedence over production and investment. This is leading to a chronic excess demand, one fostering a cultural incoherence of the most destructive sort—a society that privileges consumption at the same time that it shuns local production. Background The current struggle for small island-state recognition by Eastern Caribbean officials masks a profound two-way crisis laced with the potential of de- legitimising the ruling power bloc of each country. One aspect of this crisis relates to the unflinching bias towards non-tradeable investment on the part of the leading economic class. The other has to do with the character of the state itself, largely populist-orientated and not developmentally driven, despite the free trade challenges of the contemporary world order. These distinctions provide clues to the persistent domination of commerce over production in the Barbadian as well as other Caribbean economies. Far from occupying two airtight spheres, however, the commercial impulse and the populist instinct are inter-imbricated so as to reinforce each other dialectically. Since the Caribbean state apparatus continues to be the instrument of a black/brown petit-bourgeois political class that, like merchant capital, is not sited in any production process, development careens towards regime-consolidation imperatives and retention of the status quo. This mode of governance has set in motion pro-consumer, welfare-dependent tendencies that, when viewed together with the short-term outlook characteristic of banks and the local wealthy elite, produce a culture that valorises the ease of commerce over the challenge of industry. It is not surprising therefore that energy and imagination have not gone beyond the reflexive promotion of export services as a strategy for economic renewal, even recovery. Considerable energy has also been extended across cultural-valuational dimensions in Barbados, St Lucia and Antigua, witnessed by the struggle to defend national identities and to limit cultural domination. These efforts have been buttressed by campaigns for inter- national policy to give special consideration to small countries. 6 But this is political theatre. The plain truth is that the adaptive capabilities of the existing social structure appear to be exhausted as the limits of the post-Independence dynamic of accumulation have been reached.