INDICTMENTS OF CAPITALIST IMPERIALISM?
© 1997 Henry A. Flynt, Jr.
A. What needs indictment?
It is now a truism that there is a global economic dichotomy between metropolis and hinterland, First World and Third World, Northern hemisphere and Southern hemisphere. There is a large indignant literature which depicts this dichotomy, and attempts to analyze it. In addition, this dichotomy gave rise to a number of the large political ventures of the twentieth century. The Soviet Union always sought to carry on a war against Western or capitalist imperialism. Lenin said that the revolution came first to backward Russia because it was “imperialism’s weakest link”—placing the question of imperialism at the center of the Soviet Union’s existence. China, Cuba, Vietnam became towering symbols of anti-imperialist partisanship. Peron was associated with a mobilization of a Third-World country, Argentina, on a path which his supporters saw as an alternative to Leftism. So-called bourgeois nationalist opposition to imperialism was pursued by Krishna Menon and Sukarno, for example. The Vatican, which of course has a vast constituency in Latin America, held its own conference on development planning in the Sixties. In the late Sixties, the economist Raul Prebisch stepped forward as a spokesman for the Third World in the “responsible institutions.” These examples do not amount to a complete survey. They are meant to remind the initiated reader how large and diverse a complete survey would be.
Lately in the United States we have a youth radicalism, the radicalism of rash intuitive men, which makes purity of indignation the main consideration in its view of global wealth and poverty. To rip the System must be deliciously transgressive and cathartic—but the rash intuitive man is left unaware of the intellectual difficulties and political variations on the indignant side of the fence.
The most obvious shortcoming of the rash intuitive men is that they say nothing serious and responsible about what “we” should do next. Are the intuitive men suggesting that the differences between a Gandhi and a Mao are a mere subtlety that does not matter? Are they suggesting that you can tell by intuitive methods whether foreign investment is inherently evil, and if we grant that it is, what is wrong with it?
Those who are intoxicated with the transgressiveness and righteousness of denunciation have overlooked the requirements for a meaningful and cogent politics or economic path. The era of the revolutionary solutions is over—only time will tell whether for the long term or the short term. The era of the deeply considered revolutionaries such as Lenin, or even Castro, is over; their ventures have ended in cataclysmic humiliation. Mao, Krishna Menon, Sukarno are not especially heroes today. What is more, Eastern Europe welcomed the epoch-making privatization managed by Harvard economist Jeffrey Sachs. The realities today do not leave anybody in an economic decision-making position anywhere in the world the luxury to fly off the handle with indignation.
Academic economics glories in the private-enterprise principles which presumably have produced the global dichotomy—such as comparative advantage and free movement of capital. Michael Hudson emphasized that a century ago, there were conservative arguments against colonialism, and in favor of trade barriers—but this lesson has hardly been a beacon in our time. One who wants to oppose the global disparity by deeds—whether Lenin or Prebisch—may well prepare those deeds with a theory of why global private enterprise has an outcome which is “unjust.” Since academic economics does not permit the conclusion that “free enterprise” exploits—regarding it as no better than a claim that the earth is flat—one who wants to substantiate “unjust relations” has to go off the reservation theoretically. The appeal was usually made to Marx’s economics, although perhaps not always.
Thus, there is an entire intellectual tradition of theories of European imperialism. There is a helpful book in this regard, Alan Hodgart, The Economics of European Imperialism (1977). Hodgart notes every passage in Capital and Theories of Surplus Value which pertains to “international or colonial economics.” He then reviews a roster of theorists which I would expand slightly: Hobson, Hilferding, Kautsky, Lenin, Luxemburg, Bukharin, Baran and Sweezy, Prebisch, Jalée, Emmanuel, Bettelheim. Many of these figures resemble each other, and differ from any academic economist, in that their explicit goal is indictment of transactions between the advanced and underveloped countries which have been legal: such as private foreign investment and the international exchange of raw materials for manufactured goods. In other words, these authors explicitly aspire to theorize a war, a war which has the arcane artificiality of finance. To coin a phrase, they are militant theorists. Their results may be judged by whether they are intellectually convincing, and in that regard our theorists disagreed bitterly, casting aspersions not only on each other’s logic, but on each other’s loyalties. Their results may also be judged by how they want to strategize the war. Here again, our theorists expressed intense hatreds for each other. (Lenin on Kautsky should be enough to make the point.)
This essay is entirely concerned with analyses of capitalist imperialism in this heterodox tradition, the tradition of militant theory. It must be said, again, that the deeply considered, hard-fought revolutions of the twentieth century have lately ended in cataclysmic humiliation. Some insurgencies, such as that in Argentina, became tragic before they could win anything. The cause of privatization and free markets has won massive allegiance around the world. Revolution is not the order of the day. My concern is with the prospects of the theoretical appraisals of imperialism.
Somebody who wants to settle the matter by sheer purity of indignation needs to be presented with the following questions.
—Was Peron a good guy or a bad guy?
—Should the poor countries solve their poverty problem by securing greater profits for their capitalists?
—Should the poor countries build heavy industries of their own, no matter the hardship? (Mao, Krishna Menon)
—Should the rich nations steer more investment to the poor nations?
—Canada’s economy is largely foreign-owned, mostly by the U.S. Is Canada cruelly oppressed by the U.S.?
—Was Western Europe a victim of U.S. imperialism up to the day that the U.S. became a net debtor nation—and was the U.S. a victim nation thereafter?
—Are the reforms which made First-World capitalism less draconian to be admired—or despised as bribes forestalling the revolution?
—Given that the rich countries are rich, does that mean that their inhabitants effectively comprise a single rich class? (No class divisions in Europe, Canada?)
—Does (or did) Communist China enjoy the good life because it is, in fact, Third-World and Communist?
—Is China oppressing Tibet, economically or otherwise?
—Was the Soviet Union responsible for relationships that could be called imperialist, in East Europe or in East Africa?
B. Aims of militant economics
Let me propose a broad characterization of the aims of economic theory, and of the empirical observations which motivate theory and to which theory has to respond.
The well-being of populations is dependent on work and technology. Production is stratified by ownership and subordination. All this is implemented in human transactions which are minutely quantified and proceed in intricate circuits. The transformation of human provisioning and human gratification into trading and prices mediates the material processes—and in the longer run transforms their character. High-level abstractions such as the creation of money by central banking and the derivatives markets exert immense power over people’s well-being. We may, then, demand an explanation of this artificial and quantified reality which governs the population’s well-being.
The student of so-called international economics has to address the following observations.
—After the decolonization of 1960, the evident polarization of independent nations into rich and poor nations (on the basis of GNP per capita, if you will).
—The claim, whether true or not, that as far as trade between nations is concerned, poor nations were surrendering ever-increasing quantities of their raw materials in return for manufactured goods. (The terms-of-trade accusation.)
—The gap in wage rates between nations.
—The preference on the part of rich nations for investing in other rich nations.
—While there may be a case for premium profits in the least developed countries, it is not an open-and-shut case.
—Canada as the nation with the most foreign ownership of its economy, and the nation receiving the most U.S. investment.
—Capital flight from poor nations to rich nations.
—The change in the status of the U.S. from net capital exporter to net capital importer.
—Private foreign investment is only a small fraction in dollars of total U.S. economic activity.
—Profits from investments in underdeveloped countries are only a small fraction in dollars of total U.S. income.
—The intergovernmental financial arrangements, from Bretton Woods in 1944 to their unilateral abrogation by the United States in 1971—and up until today.
—A country can get a trade advantage over other countries by weakening its currency.
—The beneficial effect of massive foreign ownership in Canada; but not in Guatemala, for example.
—Successful development—escape from underdevelopment—by nations of the Pacific rim.
—The absence of large financial panics and world depression after World War II.
—Growing transfer of manufactures to the Third World, the former raw materials producers. The new importance, as low-wage labor, of populations which “underclass” theories conceived as expendable.
—Third-World debt, catastrophic currency devaluations, bail-outs of national economies by the I.M.F.
We ask whether these phenomena, which are all collective human creations, have explanations in terms of processes considered elementary, or material. (In other words, nonpecuniary.) How do financial magnitudes encode “physical” and “psychological” realities when an entire system of transactions or circuits is taken into view?
Indeed that is where fundamental theory would have to start—and the question has answers on different levels.
• How the U.S.S.R. transformed life in the Asian republics.
• How naked coercion assembled a global hinterland in the first place.
• How some basic ensemble of pecuniary circuits steers nonpecuniary realities of work, consumption, acquisition.
• Turning it around, how pecuniary processes are shifted by material changes (one imagines as an example the depletion of a country’s oil reserves).
I have extensive writings which are meant to be suggestive in these areas. I don’t claim to have gotten to the bottom of it. In any case, it is the only way I can propose out of the Marxist blind alley.
The task which militant theory sets itself is to explain the manifest degradation of populations: in terms of transactions mechanisms translatable into material processes. To prove that the observed polarization of nations into rich and poor is the result of a legal transactions mechanism which exploits. (Which is an unequal exchange—which appropriates without equivalent.) The aim was to find a conceptual scheme, a transactions mechanism, buttressed by data, which incriminates international transactions which are fully legal.
While the emphasis here is explicitly on indictment, it is well to note certain objective conditions which placed the regions which first were colonies, then poor nations, at a disadvantage in a capitalist world.
—Some regions started behind the goal posts in that they had not reached the feudal level of social development when modern colonialism began.
—Some nations, as collectives, want what hinders capitalist transformation. Cultural choices which are unsuited to total commercialization.
—Some national governments are said to have strategized badly, to have taken the wrong turn when they didn’t have to. Argentina.
These considerations become most prominent when backwardness is equated with safeguarding the nation from imperialism. If underdeveloped nations cling to antique religious positions such as Islamic fundamentalism, or the “Church of the poor” (as the Latin American Church is called), they have no warrant for measuring fairness by rapidity of modernization. If instantaneous lateral communication—satellite, fax, Internet—was not encouraged in Eighties Iran, that was because of a local cultural condition.
Some of the poor countries are dictatorships, such that all increases in payments to the country would be appropriated by the dictator and banked outside his country. To indulge such a state of affairs does not better the condition of the poor. On the other hand: to act from without to end the dictatorship would be interference in the nation’s internal affairs.
In this essay, I do not at all propose to review the sequence of theories since Capital. Let me only say that the project of militant theory has never been carried out to the satisfaction of any public other than a sectarian one. The concern of this essay is to work through a recent proposal for a diachronic indictment of capitalist imperialism. I end with some of my recent thoughts about militant theory.
C. The ground-plan
Marx thought that he had identified the elemental capitalist act which “steals,” which appropriates without equivalent. It was presented in Capital as the c-v-s analysis, which subsequently encounters the transformation of values into prices, and the falling rate of profit, as hurdles. Chapter II of my Ph.D. dissertation, The Theory of Socialist Economic Administration (1978), was devoted to the algebraic gist of the argument of Capital; I shall take it as my reference when a non-judgmental paraphrase is wanted. What has to be said is that the c-v-s analysis and the cogency of the transformation of values into prices have not been vindicated for any public other than a sectarian one. It seems fair to say that most academic economists who declare themselves sympathetic to Marx believe that the core of his theory was a failure.
But for the sake of argument, let us proceed as if Marx’s core notions could be salvaged. Then we need to ask, what is the elemental imperialist act in the capitalist era? The question posed by imperialism is an obscure one. Lenin found the elemental imperialist act in foreign investment to reap premium profits; others find it in the trade of raw materials for manufactured goods. But just this question of the elemental imperialist act has not been settled.
All the same, Marx and Lenin supplied us with a clue which must be the cornerstone of the analysis. Imperialism is not alien to capitalism; imperialism is a relation between regions of the earth already operative during the mercantilistic era—antedating the multilateral sovereignty which is the premise of international economic exchanges today.
National economic activity is already parcelled out among different firms: which battle with each other on many levels even while their simultaneous law-abiding aggrandizement establishes the uniformities which make the aggrandizement possible.
The world economy is segmented by national boundaries. At any given moment, nations are at markedly different stages in the modernization process. (Nations may even renounce modernity as a goal.) In the past, some nations nakedly oppressed others, pushing the latter behind the goal posts. Now we are in the midst of transactions between nations under capitalist rules. What is more, there is a discernable capitalist imperative: commodification steadily penetrates societies everywhere and seizes control of them.
D. Background sketches, Marx and Lenin
The indictments of capitalism and imperialism by Marx and Lenin were carefully crafted analyses, with definite and narrow political consequences. Marx’s indictment of capitalism, or wage labor, was rigorously synchronic and self-contained. Although Marx believed himself an expert on economic history, and wrote with great indignation about the history of capitalism, his central contribution concerned a highly simplified uniform capitalism. Marx wanted to address the pure principle of capitalism. He wanted to show that capitalism steals from the worker in principle; that elimination of the imperfections of competition, increases in wages, etc. cannot make this theft less real, even if temporary improvements in conditions gain the acquiescence of workers to their servitude.
Marx argued that exactly what is legal under bourgeois justice, exactly what is argued as a just bargain by such thinkers as Adam Smith, is the very essence of thievery and exploitation.
Indeed, Marx sought to make an even stronger case which denied that reform could ever make capitalism harmonious. Rising wages would always be a threat to employers, and they would always find a way to beat back wages or escape from high wages. Capitalist competition would always be reckless, and would never stop jarring and dislocating society. The reduction of all goals to money would never stop wounding the individual psyche.
In Marx’s pure capitalist model, the economy inside a single nation was treated as absolutely self-contained. If there were transactions with the outside at all, they were purchases or sales of goods from other sovereign nations. Thus, Marx’s core analysis of capitalism had no colonialism and did not see colonialism as intrinsic to capitalism.
According to Rosa Luxemburg, the model of expanded reproduction of Volume 2 of Capital was invalid for this reason. According to her, the colonial outlet was indispensable to capitalism. Capitalism had to go outside the nation because it could not survive unless it could constantly enlarge the market. There never had been, and never would be, a viable capitalism confined within national boundaries, conducting a purely intranational exploitation; such that nations related to one another solely as sovereign equals.
But again, there was a reason for Marx’s intranational model. Marx wanted to prove that the transactions involved in the system of wage labor cheated the worker intrinsically. Capitalism could not, by bringing itself nearer the ideal of perfect competition, or political equality and autonomy of the actors, transform itself into a beneficent institution. If Marx could not have confined the model to the capitalists and workers of one nation—if he had had to take an intercontinental model as the minimum unit, granting that capitalist transformation had not occurred in the colony—he would not have been able to carry out his quantification of exactly what the capitalists stole from the workers.
Luxemburg’s critics saw all too well that her correction of Marx in fact scuttled the Marxist project, because it left the theory without any quantified proof of unequal exchange, relying on a purely impressionistic perception of injustice. Luxemburg’s correction was understandably ignored by the Marxist faithful. Indeed, when events compelled them to try to make a Marxist appraisal of colonialism, they did so by simply applying Marx’s encapsulated model to the case in which the capitalists are in one nation and the workers are in another. The encapsulated model was made to cover Luxemburg’s case by stretching its mechanism over the extraterritoriality whose disregard invalidated the model in the first place. It is a commonplace in science, to stretch the model which is invalid because of the cases it excludes to explain the cases it excludes.
Another point to remember in applying Marx to colonialism is that Marx did not consider natural resources to have any value. Only when natural resources were worked did that confer value on them. There was no theft involved in depletion as such. There was no such thing as ecology.
When Lenin decided to write about imperialism, there already was a literature on imperialism by J.A. Hobson, Rudolf Hilferding, Karl Kautsky (in Die Neue Zeit)—a literature which struggled to appraise the significance of the international oligopolies called “trusts” in the era in which Asia and Africa had just been divided among the nations of Europe. Lenin chose to carry forward the precedent of Marx. He did not base his argument on the enslavement and plunder of the colonial era. In fact, he went to the opposite extreme. Like Marx, he focused on a pure and uniform network of economic transactions, namely direct foreign investment (perhaps with foreign loans).
Lenin denounced foreign investment as imperialism at a time when other social critics believed that imperialism could only consist in the annexation of territory: in the occupation of one country by the army of another, and the instillation of a “consular” regime in the former country by the latter (e.g. the British Viceroy in India). The leader of the Second International, Kautsky, said that only annexation of territory was imperialism. Lenin found the essence of imperialism in economic transactions which were legal and which other thinkers considered indispensable to modern economy (and so not imperialist at all).
This juncture invites bitter controversy, and we should not pass over it casually. The word ‘imperialism’ is a pejorative generic. It means that the organized inhabitants of one territory overrun those of another, and appropriate wealth from them coercively. (Even if it has the legal veil of tax collection, etc.) Archaeologists introduce the word ‘imperialism’ in connection with ancient Egyptian civilization. The question, then, is how far we can go in redefining the word when we suspect that we are seeing a new mechanism of economic domination. An inhabitant of the Soviet bloc could have said that the relation of the Soviet Union to Poland or Czechoslovakia or Hungary was imperialist. If he had, he would have been shot.
Lenin knew about the piratical epoch of European colonialism, about the days of the slave trade and the East India Company and all the rest of it. He denounced the League of Nations as a thieves’ kitchen; and the U.S.S.R. planned out a global strategy of Asian anti-colonialism. But that is not what Lenin chose to write about in his classic tract. His title suggested that capitalism came last to imperialism, not first to it. He treated an antiseptic and legal branch of international commerce, namely direct foreign investment (and perhaps also foreign loans or borrowing). As with Marx and capitalism, Lenin wanted to prove that this practice was intrinsically exploitive. Presumably it was so for a highly abstract reason, that the investor nation extracted surplus value, in the Marxist sense, from the labor force of the nation hosting the investment. A transfer of surplus value from one nation to another. Certainly there would be a marked wage difference between the two regions. The falling rate of profit may have come into it. The decline in profit had not gone as far in the underdeveloped countries as in the metropolitan countries. That allowed foreign investors to reap premium profits.
So Lenin saw the relevant imperialism as new, not old. Its core was defined not by European transactions with other continents, but by transformation of capital structure in the metropolis. Imperialism was a late phase of capitalism (late to Lenin, not to us) in which banks gained hegemony in the economies of the metropolitan countries. The financial activity of these banks beyond the frontiers of the host nation was the key to imperialist theft—not the acquisition of territories to be governed by “consuls” from the metropolis. The Rockefeller banks in Latin America: that was imperialism. By emphasizing international financial transactions over the annexation and direct governance of other countries, Lenin actually made himself more relevant to the decades which followed his death—the decades of decolonization and the burgeoning of purely monetary “exploitation” of the Third World.
Next we have to turn back to Marx. After political thought was sensitized to the importance of colonialism, students wanted to elaborate a theory from clues found in the Master’s works. I have already recounted that Luxemburg proposed to undercut Marx’s core analysis on the very issue of imperialism; but students chose to look past her objection back to the Master. Marx’s work was raked over minutely, and a sentence here and a sentence there were pulled out and stretched to become entire theories.
The key passage, perhaps, is page 238 of Volume 3 of Capital (New York, International Publishers, 1967). On this page two accusations are hurled against the developed countries. According to one, the rate of profit falls in the developed country (because production becomes more and more capital-intensive). Thus the developed country pours capital into the undeveloped country to gain a higher rate of profit there.
In the second indictment, it is the developed country which is found nefariously to have the higher rate of profit, because the shift to capital-intensive production lowers the wage bill associated with given manufactures. Since the market price is globally parametric, the advanced country which sells at this price enjoys a temporary manufacturer’s surplus; thus it gains a surplus profit when it exchanges its products with those of the undeveloped country.
The accusations find the developed country’s gain to stem from both its profit premium and the victimized country’s profit premium. To propose that both contingencies are in force at once is not brilliant, because all value theory requires an equilibrium resulting from capital rushing to the most profitable opportunity. (I don’t remember any provision for capital to rush in opposite directions at the same time.) Marx’s ruminations, in what after all were unpublished notes, fail to comprise a cogent theory. What is so disappointing for one who wants a Communist world is that militant theory has decided that we must make a meal of these spoiled scraps or else starve. We are even supposed to forget the challenge on colonialism that Capital incurred from Luxemburg.
E. The diachronic indictment — capitalism
A different avenue of righteous denunciation of Western imperialism may be proposed—the diachronic indictment. Imperialist injustice is proved from a specific course of history which began five hundred years ago, no earlier and no later.
The diachronic indictment finds injustice to be a prima facie issue. Relations between the West and the Third World were unjust because they involved conquest or coercion. They were unjust because they found one party to be rich and the other to be poor at the completion of the transaction. If the West can wield any sort of power over the Third World, and is better off than the latter, then the former oppresses the latter. To possess an advantage is inherently evil.
A drawback of this approach is so obvious that we cannot postpone mentioning it. It is merely humanitarian, face-value, undialectical. It makes no attempt to understand what drives manifest change in the institutions, the mechanisms. It takes its stand on visible relationships. It is not cognizant that social development proceeds in reversals of face-value conditions.
And beyond that, the diachronic indictment imagines that it makes sense to render moral judgments on strategic advantages. To be consistent relative to its five-hundred year perspective, the diachronic indictment would have to judge the Scientific Revolution to have been evil. Marxism, at least, had already settled accounts with reactionary utopianism. But we find that reactionary utopianism is always with us.
Notwithstanding any objections, I wish to pursue the diachronic indictment to see if we learn anything from it.
By implication, a diachronic indictment of capitalism can be made. In the beginning, capitalism had no child labor laws, no compulsory education, no minimum wage. What is more important is that there is nothing in the principle of capitalism which requires these constraints, these parameters, these floors and ceilings. On the contrary, rigorous laissez-faire doctrine finds all political constraints to be interferences and aberrations.
In the mid-nineteenth century, the worker went into the factory at age six, and did not leave it until he or she was ready to die. Workers purchased their provisions at the company store, in fact or in effect. Wages did not rise above the level of corporeal survival—and in fact, the worker was routinely abused so that he or she died early. Female employees were sexually at the mercy of employers. One can argue, then, that the result of this capitalism, which was the most pure capitalism, was indistinguishable from slavery.
A new mechanism replicated slavery’s capture of the laborer. The diachronic indictment observes: At the end of the fiscal year, the outcomes of slavery and of early capitalism, as far as the laborer is concerned, are more or less the same. Different transactions mechanisms have secured more or less the same results. Again, this draconian capitalism is the most authentic capitalism, capitalism unencumbered with politically imposed constraints on markets. Somehow, this point has not been given sufficient attention. Laissez-faire doctrine says that the form of the employment bargain guarantees that it is just. “A day’s work for a day’s pay.” But the employment bargain imposes the same existence on the workers that slavery does.
Free-market ideology finds only one way in which capitalism can be unfair. A monopoly vendor or purchaser can reap a windfall profit because his customers or suppliers are his captives, they have nowhere else to go. (Laissez-faire ideology argues that protectionism was wrong, we may remember. It is wrong for weak countries to bar entry to the goods and capital from strong countries.)
After the twentieth century begins, there are reforms concerning child labor, compulsory education, factory safety, a minimum wage. These reforms are not driven by the capitalist principle itself. They come from humanitarian activists, or for that matter, from labor radicalism. They are interferences with the market.
Nevertheless, as a result of these reforms, the capitalist result begins to diverge markedly from slavery. Children have a childhood in which they are inculcated with competences rather than producing. They spend ten years on the educational assembly line before moving to the production line. Consumer choices matter (and matter greatly). Workers acquire assets and have some personal goals. For the capitalist, these reforms are both an opportunity and a challenge. The worker becomes far more promising as a consumer, as a market for the capitalist’s wares. At the same time, rising real wages spur the capitalist to battle back in the only ways available, introduction of labor-saving technology, and transfer of manufactures to low-wage environments.
Humanitarian restrictions on cutthroat capitalism, then, prove to be the catalyst for capitalism’s development to a higher stage.
All of this takes place before the most celebrated reform of capitalism, the New Deal and the mixed economy. Now, for example, labor unions achieve statutory recognition and exemption from prosecution for monopolizing the labor supply.
So something happens which Marx’s synchronic analysis does not really capture—even though Marx was keenly cognizant of post-feudal and colonial history, primitive accumulation and all the rest of it.
The rules of the capitalist game do not produce a unique sociological outcome. They are compatible with several sociologically distinct outcomes. This proves, first, that there is a historical cross-over point at which the different forms of the transaction, as between capitalism and slavery, secure more or less the same results as far as the laborer is concerned.
What is more, to the degree that capitalism later differentiates itself from slavery, it is because restrictions on the free market are forced on capitalism by clergymen and labor radicals; in other words, the system is redeemed against its own will and principle.
On the other hand, as capitalism is reformed, there is a prima facie, sociologically definable divergence of the worker’s life from the slave's life. Indeed, the consumer markets, and consumer durables markets, of late capitalism would be impossible without increases in earnings and the expansion of the worker’s discretion. There is also the element of the large middle class which may, above all, characterize an “advanced democracy.” But the middle class means different things: the old middle class is the small business, the family farm or the store; the new middle class is corporate management and the professions, or the entire white-collar population.
Of course, while all this affluence is accumulating, the capitalist is moving the manufacturing operation farther and farther away from the metropolis, into regions where fair labor practices laws have not yet penetrated.
If the diachronic indictment is a good analysis, then it disproves Marx, or at least would make him very uncomfortable. If you judge the justice of an economic system by its result, and assume that the rationale of transactions is only a costume, and does not constitute an agenda capable of molding the course of events, then perhaps capitalism becomes less and less wicked as the early injustices are cleared away.
It is deeper than that. We assume that slavery is evil prima facie; then capitalism is evil because at its inception it has the import of slavery. The farther we get from slavery, the farther we move into moral limbo. If capitalism becomes unlike slavery, then we don’t know whether it is good or bad. Perhaps we could reach a point where the wage bargain is completely fair.
Otherwise, the diachronic indictment could move with the times. One can find plenty to decry in today’s world, plenty of disparities in wealth and power. But you have to move the template. To call “slavery” what goes on inside the regions of modernized capitalism is willfully oblivious—for the reasons already spelled out.
We may imagine Marx saying, the world does not end with capitalism, it begins with it. Capitalism is a problem unto itself. It does not matter what it resembles. When capitalism becomes a distinct formation, at that moment, it is perfectly “unfair.” What is more, the capitalist form, the specific capitalist rationale, is quite capable of generating a social order unique to it. It creates previously unheard-of stresses and shocks such as financial panics, and unemployment resulting from financial contraction. Further, it creates a climate in which selfish financial virtuosity is humanity’s only goal. Even with the growing comfort of the “labor aristocracy,” there is also a growing artificiality or abstractness of life, since qualities no longer matter, and human greatness is narrowed to the ingenuity of the stockbroker (a combination of arithmetical adeptness and shrewd divination). Even those performances which are not defined by money, such as athletics or music, are now judged by the multimillion dollar incomes of the most successful performers.
As we re-examine indictments of capitalism—that is, of wage labor—we arrive at a new perception of radical politics. Capitalism has been found to be as bad as slavery because it can yield the same result. Or, Marx would say, the wage bargain, the transactions mechanism, is a theft in any case. But then what do radicals want? We may be surprised to learn that they all have the same immediate demand: more jobs.
“To address the near-record levels of unemployment, we call for a shorter workweek at no loss in pay to provide jobs for all.”
Australasian Sparticist, Spring 1997
“Decent jobs are clearly the answer to most of what ails us.”
John C. Cort, in The Catholic Worker, August-September 1997
After carefully proving that capitalism is the same as slavery, or is theft in any case, they rush forward demanding to be abused. The demand to be abused is the immediate demand of radicalism.
Either they don’t understand what their own words mean, or else capitalism is the only way in which they can imagine the production of the social product will ever be effected. Claims to the contrary are theatrics and bluster.
It is even more ridiculous than that. A Communist sect in Italy (the ICC) carefully explains that the New Deal was a capitalist trick. It declares in its program that bourgeois democracy is the same thing as fascism. It then denounces the U.S. politician Gingrich for recently annulling the provisions of the New Deal. “We demand that you continue to trick us, you fascist!”
F. The diachronic indictment of capitalist imperialism
The diachronic indictment comes into its own with respect to colonialism and imperialism. Today, no ideologue of justice wants to defend the era in which Europe enriched itself by naked conquest and population transfers (settlement). All of colonialism involved what would now be called crimes; dispossession of aboriginal populations and the slave economies were crimes against humanity. The first proscription of the slave trade at the international diplomatic level was announced by England in 1806. The first condemnation of annexation of nations at the international diplomatic level was President Wilson’s Fourteen Principles of 1918.
But what of the “modern, democratic” era, in which nations relate economically without annexation of territory? Let us look at the operation of U.S. firms such as Standard Oil, United Fruit, ITT, the Rockefeller banks in Latin America or the Middle East. Or, for that matter, we could go back to the Monroe doctrine, in which the U.S. claimed Latin America even though it did not annex it or formally undertake to govern it.
What we see, relative to US. capitalism, is a historical cross-over point at which the only difference between foreign investment and literal, European-style colonialism is in the form of the transaction. Sociologically, we find an exercise of hegemony of the U.S. over Latin America as blatant as the French exercise of hegemony over Indochina, for example.
When the U.S. determines that its interests in another country are threatened, it unilaterally invades; or it intervenes when it is invited in by a friendly ruler to protect him from a domestic rebellion. Because the U.S. is more advanced, and larger than any Latin country, it can wield monopoly power relative to individual Latin countries, and bribe their governments. In addition, there is a long-standing claim that there is an inherent disadvantage in being a raw materials supplier.
The lesson is that there is no development in Marx’s model; Marx had no vision of what we now call development. He said that capitalism would get bigger in total, and more centralized; but at the same time that it would grind toward pauperization and catastrophe. Marx did not ascribe a long-term historic mission to capitalism, a mission of ascending to ever greater wealth, ever more advanced technology, ever changing industrial and occupational structures, increasing comfort for mass populations.
From the case of various underdeveloped countries, we learn that a nation can be drawn into the network of capitalist transactions without experiencing spreading prosperity, expansion of real manufactured wealth, marked technological transformation. But for Marx, it was merely that one nation was farther along on the path than another. Different nations did not have capitalisms which were complementary in essence. Marx had no opportunity to analyze the case of nations which failed for decades to develop in the post-colonial era.
Marx had posited that capitalism went through a necessary phase of assembly of a labor force via expropriation. The capitalist had to generate a class to which he did not belong: a propertyless population which would consent to poverty wages. When wages are pushed up, the capitalist has to shift to labor-saving technology to get more out of what the wage pays for; but he also has to find cheaper workers. (A recession is the capitalist equivalent of calling a strike on your own position. It’s more important that wages are rolled back than that some businesses will fail.)
What was not spelled out was a colonial equivalent to this assembly of the labor force. Marx did not say that international capitalism must have different capitalisms which are essentially counterposed. For world capitalism to function, some nations must wield power beyond the transaction in order to put other nations at an economic disadvantage. This is what accounts for the observed process: in which the richest nations keep imposing new rules, keep shifting the ground of the battle. It’s not a generic transactions mechanism; it’s the counterposition of the capitalisms.
Then the proportion of transactions with underdeveloped countries in the total economic activity of the developed country is not decisive. So: when some nations put others at a commercial disadvantage, what effect in particular do they seek? Cheap raw materials; cheap labor; consumer markets: in that order.
All the same, this is not a general theory of international economic activity, because it leaves unexplained the greatest volume of activity, which is between nations whose roles are parallel, not diametrically opposed. But then relations between companies are not primary in Marx’s analysis of capitalism, for that matter.
The word ‘imperialism’ already carries the connotation of oppression, as does the word ‘slavery’. To indict imperialism means to find that transactions between different territories consist in theft, plunder. The question, then, is whether commerce consists in theft, plunder. We are not concerned here with the cultural dimensions of imperialism. Whether cultural imperialism is a generic offense such as imposing a foreign language or religion on a population (Arabic and English, Islam and Christianity, in East Africa). Or whether it is a specific offense, the specific impositions of Europe’s civilization, the asceticism of the Church, the spirituality of Leibniz and Kant, the aesthetics of Beethoven, industrialization, scientific depersonalization, technification. Mercenary pragmatism.
As we see, the diachronic indictment does not pronounce on whether there is a financial mechanism of interaction between rich nations and poor nations which would be “unjust” between any pair of nations.
The diachronic indictment invites certain groups of questions.
1. When would economic interaction between nations be “just”? Is there a price for goods at which capitalist transactions become “just”? Does capitalism have to abolished before exchanges can be “just”? Do nations have to be abolished before economics can be “just”?
2. Are there imperialisms which are qualitatively more novel than, say, American banking in Latin America? What about the Soviet Union in East Europe?
Let me expand on (1) indirectly by considering how the question of what should happen was answered by certain political tendencies. When the Soviet Union still possessed some credibility, it imposed a dogmatic perspective on international commerce. Foreign ownership was absolutely forbidden. A country which went Communist was supposed to close its borders to capital. It was supposed to industrialize behind politically simulated protectionism. Righteous commercial relations were represented by trade between the Soviet Union and the bloc nations, between the Soviet Union and Cuba. These were not claimed to be equal exchanges. They incorporated politically motivated subsidies. The Soviet Union unilaterally dictated what the appropriate subsidies were. There was a trading bloc called CMEA (or COMECON by Western propaganda). Relations in this bloc were righteous international economics.
Let me expand on (2). Was the role of Soviet Russia in the Soviet Union and CMEA “imperialist”? In the decades in which the Left defined itself by its support of the Soviet Union, it denied that this new situation, found distressing by many including the Right, was an imperialism. Subsequently the question would be asked about China-Vietnam relations.
That is not all. Some thinkers always accused the Soviet Union of practicing capitalism via another mechanism, a mechanism in which the managerial class comprised the “collective capitalist” and enjoyed political control of the means of production (as opposed to individual ownership). This theory was widely ridiculed. Then Communism collapsed. When privatization was announced, ownership of the factories immediately devolved to the men who had been their managers under Communism. You can make of that what you will.
What of the episode in which Harvard economist Jeffrey Sachs orchestrated the “restoration of capitalism in Communist Europe”? Transition from Communism to capitalism. The world had never seen anything like it. The nations in question had solicited Sachs’ consultancy, of course.
By the Seventies, there were economists in U.S. universities who had been radicalized by the Counter-Culture, having never harkened to official Soviet doctrine. These economists easily assumed that the metropolitan countries had oppressed the colonial world by not investing enough in it; and that what the radical Third World wanted today was a flood of investment from the First World. To an initiate of the Old Left, this sounds like victims demanding to be raped. But it was not only being heard from U.S. radical economists. It was heard from Prebisch, and later from African representatives.
As regards U.S. foreign investment, the diachronic indictment finds a historical cross-over point at which the only difference between foreign investment and literal colonialism is in the form of the transaction.
But there is a key difference as between capitalism as such, and imperialism, in this regard. Capitalism at the cross-over was already pure or perfect. In order to remove the injustice, it had to be reformed in a way which cut into market freedom. Foreign investment at the cross-over, however, was perhaps far from perfect by laissez-faire doctrine. The role of the Rockefellers in Latin America and the Middle East, for example, obviously had illicit monopolistic and coercive aspects.
In any case, it is a devastating blow to free market and free trade ideology to point out that international finance, without territorial annexation, replicated the effect of literal colonialism. Even if the result could in part be blamed on illicit distortions of competition. And does anybody claim that monopoly and infringement of sovereignty by force are not considerations today?
In the course of the second half of the twentieth century, international economic relations underwent some sort of face-lift. Raw-materials suppliers now have cartels such as OPEC. Many Third-World countries have manufacturing sectors. East Asia has escaped the underdevelopment trap. The U.S. itself is a net debtor nation.
Beyond OPEC, various proposals have been made to remedy the supposed injustice. Talk of an income tax on rich nations. Talk of debt cancellation by Latin America. Significantly, the latter never became a reality because the destruction of the international financial structure would have hurt the poor countries more than the rich ones. Factually, underdeveloped countries clamor today for investment. Political tendencies which found the solution in nationalization and exclusion of the foreign investor simply have no appeal today.
As for protectionism, it tends to be supported by labor unions—and to be opposed by the far Left.
The U.S. cannot really be said to have foresworn military intervention, because it continues to conduct proxy wars in other nations, with or without legal cover. In the tradition of the O.D. of the C.I.A.
As of 1997, Lenin’s absolute position that the investing nation is the exploiter and the host nation is the victim does not enjoy automatic credibility. An advanced nation may be a net debtor nation; thus it would be a victim according to this theory. Profits are high not only in underdeveloped countries. Further, underdeveloped countries desperately solicit foreign investment—none more so than regimes which exist in spite of the United States, such as China and Vietnam.
G. Reservations about the diachronic indictment
How does the diachronic indictment of imperialism fare as we examine the specific historical course toward century’s end? We still find vast disparities between advanced and backward nations. The exchange between the two develops the former but not the latter. On the other hand, some former Third-World nations have developed and have become capitalist powers. (Mainly in East Asia. That leads to the surmise that East Asia could not be kept subordinate because it was socially far enough along to develop.) According to some denunciations of imperialism, it should not have been possible for any nation to make it out of the underdevelopment trap. By the way, are we now to conclude that Japan, Malaysia, Korea, etc. are guilty of exploitation just as the Western powers are? If we aren’t, then the diachronic indictment is just a moral shield for the ruling classes of the Third World.
Again, advanced nations become net debtor nations. And again, Third-World nations solicit foreign investment and complain because they do not get enough. That is a reality which anyone in a position of governmental or managerial responsibility — or even anyone in a graduate School of Public Administration or Foreign Affairs — cannot deny or disregard.
We already saw that after the Left had carefully proved that the wage bargain was slavery, its first demand was for more jobs, more slavery. Does it make sense for the first demand of the poor nations to be for more investment? What are we to make of the stance of excluding foreign capital which became axiomatic with Stalinist Communism, but is now long forgotten? What are we to make of the CMEA as a model of international economic relations?
At bottom, the diachronic indictment is a phase of humanitarian indignation. It does not have any norms. We don’t know how far the rejectionism goes, whether it extends to the Scientific Revolution, whether it extends to all of modernity (which was a strategic advantage for the European peoples). The diachronic indictment does not say whether it is anarchist. (I don’t want to be nasty to anarchism, but anarchism never made a realized break from the bourgeois status quo except for an episode in Barcelona which came to nothing.)
The diachronic indictment can’t tell you whether reform redeems capitalism—or is only a bribe to forestall the revolution. It can’t tell you how much social relations would have to change to become just.
As I said, it is face-value and undialectical. It is only capable of conceptualizing reformist change. (It may fantasize about battles won by bad-boy dictators, and rebellions which simply demolish civilization. But—we may recall the two Indian sackings of Mexico City in the seventeenth century—mere revenge does not build a better society. Pure ferocity cannot give the collectivity a life.) It has no basis to conceptualize a prinicipled revolution—which depends on knowing exactly what relations need to be replaced discontinuously by exactly what other relations.
H. The project of militant theory revisited
Let me begin with a frankly amoral look at the international economy, for astringent effect. If one views the situation as if the world had only come into being yesterday, how do we assume that there is a problem?
There is a polarization of nations into rich nations and poor nations, vaguely corresponding to a polarization of Northern and Southern hemispheres. One part of the world is far wealthier than another. But so what? Can it meaningfully be said that these discernable camps are opponents, or that one robs the other?
The advantage of the Northern hemisphere over the Southern hemisphere is a wide-spectrum advantage. Banks, manufacturing corporations, “information conglomerates,” intergovernmental financial institutions, regional economic associations, etc., pursue self-interested policies which synchronize to yield the observed North-South polarization. It includes everything from IMF-imposed financial gyrations to the manipulation of consumer tastes and social structure in laggard nations.
No single mechanism of bilateral economic transactions has thrust itself forward as the culprit. Do you think direct private foreign investment is the mechanism for pillaging the poorest countries? The main recipient of U.S. investment is Canada. Canada has prospered with a foreign-owned economy. The U.S. is now a net debtor nation. Is it oppressed by foreigners?
The same global capitalism will be with us for the foreseeable future. Today, radicals demand that the capitalist giants steer more investment to the Third World; they demand a tighter embrace. Just as they picture the remedy in the developed nations as job creation and growth of labor productivity. Proposals have been made for an anti-imperialist United Nations, for an income tax on developed nations, for debt cancellation. These proposals have not been accepted because the powerful are powerful enough to withhold their consent.
The attempt to view long-term global shifts through a moral lens founders because it cannot be translated into a feasible politics. If there is no course of action which will make the exploited feel that the world has been put right, then it is harder to identify the pivot of the exploitation. Lenin said that foreign investment is rape. But if a crowd demonstrates demanding to be raped, then rape is no longer rape as far as politics is concerned. The polarization of the world into rich nations and poor nations does not establish for political purposes that the rich nations rob the poor nations or even that rich nations and poor nations have opposite interests. A politically pivotal antagonism has not been focused.
As it happens, the escape from capitalism is not the order of the day. That means that the public understands “restoration of justice” as outdoing the winners at their own game, or cutting in on the game, or moderating the rigors of commerce politically. In the last case, we have single-issue crusading, the sort of crusade through which unions and humanitarians moderated capitalism in the developed nations. The economic theory behind such melioration has to be an accusation of monopolistic practice by the First World, or a sentimental preference for global equalization of incomes. These are the only “arguments for justice” admitted in standard economics.
Whatever reforms come about, the strategic maneuvering continues, and capitalism continues to prevail. The next century’s leading event might be a shift of the capitalist center back to Europe or on to the Pacific Rim. It would be another chapter in the meaningless circulation of empires.
I do not rule out the possibility that modern civilization is exhausted, notwithstanding the rapid technological change. That is why I attempted from the end of the Sixties to bring my philosophical and political thought closer together. (An early example was “The Three Levels of Politics” in Blueprint for a Higher Civilization.) Escaping from the blind alley of scientism, Eurosupremacism, linear progress.
• • •
J.A. Hobson, Imperialism (1902)
Rudolf Hilferding, Finance Capital
Rosa Luxemburg, The Accumulation of Capital (orig. 1913)
Karl Kautsky, Nationalist State, Imperialist State, and Union of States (orig. 1915)
Karl Kautsky, Die Neue Zeit, 1913-14, II, 909; Die Neue Zeit, 1915-16, II, 107.
Rosa Luxemburg, The Accumulation of Capital—An Anti-Critique (orig. 1921)
Nikolai Bukharin, Imperialism and the Accumulation of Capital (orig. 1924)
Gunnar Myrdal, Economic Theory and Underdeveloped Regions (1957).
Raul Prebisch, The Economic Development of Latin America (1950).
Raul Prebisch, Towards a New Trade Policy for Development (UN, 1964).
Raul Prebisch, Latin America: A Problem in Development (1971).
Shane H. Mage, The Law of the Falling Tendency of the Rate of Profit (1963, dissertation, Columbia University)
Pierre Jalée, The Pillage of the Third World (orig. 1965). HC59.7.J3513
Pierre Jalée, The Third World in World Economy (orig. 1968). HC59.7.J3613
Pierre Jalée, Imperialism in the Seventies (1972).
Pierre Jalée, How Capitalism Works (orig. 1974).
Arghiri Emmanuel, Unequal Exchange (originally 1969).
Alan Hodgart, The Economics of European Imperialism (1977) . HF1411.H.
Ian Steedman, Marx After Sraffa (1977).
Robert Paul Wolff, Understanding Marx (1984).
Samir Amin, Maldevelopment (1990).
Carl Parrini, "Theories of Imperialism," in Redefining the Past, ed. Lloyd Gardner (1986).
Although the Cold War, which gave rise to this terminology, is over.
The Econometric Approach to Development Planning (Chicago, 1965).
I do not mention my own instructors at the New School, even though they have world reputations as radical economists (Hodgart lists Hymer), because their writings did not comprise militant theory.
It is the same topic Hodgart’s book is devoted to, except that he is not remotely a militant theorist himself. He defines imperialism on page 75 as “the process by which economic growth might or might not be transmitted from advanced to backward nations.” It’s philanthopy, then.
Standard economics does not frame the question like this, of course. It assumes that there is an absolute virtue called efficiency, and defines economics as the science of efficiency-seeking. The right price is the efficiency price. Economics devolves from a single pre-chosen virtue. Ironically, laissez-faire theorists also assert that a capitalist republic does not have a national goal.
One would like to know what became of the Islamic law of usury in Iran during the Khomeini period. Was there some curtailment of banking not reported in the media?
For powerful Leninist states, sovereignty was never a constraint.
That is, I simply duplicated Marx as far as I could take it, without really settling the problem of whether Marx’s doctrine proves cogent as one puts more and more logical demands on it.
Morishima, Steedman, Wolff, Roemer.
Abstracting from corporate crime.
The Accumulation of Capital. The Accumulation of Capital—An Anti-Critique.
Forgetting that this word was literally invented by the Romans.
Why did banking and capitalization become more important than the privately held manufacturing firm after the turn of the century? Why the export of manufactures to the Third World—after decades of accusations that they had been confined to raw materials production? Why no world depression after World War II? And so many other similar questions.
J.K. Galbraith, The Affluent Society (1958).
Cf. Lukacs’ essay on reification.
Europeans become the “civic protagonists” of a non-European region. Australia, New Zealand, South Africa, North America, Argentina.
Just the sort of claim which has never been substantiated satisfactorily.
In a more familiar terminology, more concentrated.
Even though mercantilist theory had already mandated opposite roles for metropolis and colony.