Published: 6 July 2016.
Author: Michael Roberts.
The IIPPE workshop in London on modern imperialism, organised this week by Simon Mohun, Emeritus professor of political economy at QMC London University, was highly appropriate for two reasons.
First, it brought together those scholars with the latest works on modern imperialism. Both John Smith’s new book and that of Tony Norfield have been reviewed on my blog. Smith’s book has won the prize from the Monthly Review and Tony’s has been included on the short list for the Isaac Deutscher prize for the best Marxist book of the year, previously won by many eminent leftists and Marxists. And Lucia Pradella had a book Globalization and the Critique of Political Economy: New Insights from Marx’s Writings, Routledge, 2014 that was also shortlisted for Isaac Deutscher in 2015.
The other reason, of course, was Brexit. The decision of the British people to vote in a referendum to leave the EU brings into focus the history of British imperialism and its impact on the consciousness of the British people. And the workshop spent some time considering the importance of British imperialism in the 21st century. It may be only the 5th largest economy by GDP, but as Tony Norfield has shown, it is still second only to the US as an imperialist power, when finance and military might are considered. The split in the British ruling class between its past imperialist ambitions and its recent need to integrate with Europe has come to a head with Brexit.
So the workshop brought together a perfect trio to develop the latest idea on the nature of modern imperialism. Lucia Pradella, author of Imperialism and Capitalist Development in Marx’s Capital, linked Marx’s own thoughts at the birth of ‘globalisation’ from the 1870s; John Smith analysed the nature of exploitation that imperialist economies impose on the ‘periphery’; and Tony Norfield revealed the forms of economic and political hegemony from which the top imperialist economies increasingly reap the majority of their profits.
Lucia showed that Marx developed a theory of imperialism that anticipated in many ways later debates on imperialism. Marx took a step further with respect to Lenin and contemporary theorists of imperialism. On the one side, Marx grounded his analysis of imperialism in his value theory, and on the other side, he saw processes of imperialist expansion as being subordinated to the overall tendencies of capital accumulation. His approach is still relevant for understanding the interrelationship between global and national processes of impoverishment under neoliberalism and after the outbreak of the recent global economic crisis.
Lucia argued that Marx did not analyse a national economy but assumed a world system. So that which was later defined as ‘imperialism’ is the concrete form of the process of ‘globalisation’ of the capital of the dominant states. Marx recognised that the capital of the leading states leads towards dominance on the one hand; but on the other, as competition is capital’s very essence, accumulation revives inter-capitalist and inter-state rivalries.
In the age of mechanical industry, the external market prevails on the internal, impelling the annexation of new countries and increased rivalries among the industrial powers. This means exactly what Rosa Luxemburg said: that “capital needs the means of production and the labour power of the whole globe for untrammelled accumulation; it cannot manage without the natural resources and the labour power of all territories”. So whereas, at the beginning of the 20th century the vast majority of the world population was peasant or lived in rural areas, the world today has become overwhelmingly urban. This is one of the most fundamental and dramatic changes in human history.
Marx already recognised that this globalisation process would be driven by centralisation and concentration of capital and the backing of the state. In his 1879 letter to Danielson, Marx claims that railway companies had been the first historical example of joint stock companies and the starting point of all other forms, starting with banking companies. Their formation took place with or without state support: only in England was it possible without it, thanks also to the reinvestment of huge colonial profits. In other countries, like the US, this process was supported by the state with subsidies, concessions and tariffs.
However, the long-run combined effect of concentration and centralisation is an increase in capital’s organic composition and a relative reduction in the demand for labour, which coexists with an absolute increase of the number of proletarians. As living labour is the only source of value, this provokes the tendency of the rate of profit to fall and increases exploitation globally.
For me, this shows the connection between imperialism and crises. For how does the bourgeoisie get over crises? On the one hand, by enforced destruction of a mass of productive forces; and on the other, by the conquest of new markets and by the more thorough exploitation of the old ones.
Indeed, in Volume III, Marx explains that investments in colonies, where the rates of profit were higher, are a factor that counteracts the law of the falling rate of profit. Over-accumulation and the resulting decline in profit rates and economic crises explain increasingly attempts by corporations and states to secure additional sources of profits, by means of monopolies (especially over raw materials), new outlets for foreign investment, currency manipulations, speculation, and, ultimately arms spending .
Readers of my blog will be well aware of John Smith’s compelling contribution to the analysis of modern imperialism with his book. John has presented a powerful set of arguments that expose the ‘myth of economic convergence’ claimed by mainstream economics and the apologists of capital. There is significant and widening global labour arbitrage with the shift of global production to low-wage countries. And this is the most important global transformation of the neoliberal era.
Blog readers will know that John argues that imperialist exploitation is now predominantly ‘super-exploitation’. Super exploitation in Marx’s definition was where wages were held down below the prevailing value of labour power. John argues that this is revealed in the periphery (the South) in that rates of exploitation are higher there than in the North, contrary to the ‘Euro Marxist’ schema that higher productivity levels in the North should deliver higher exploitation rates. Other forms of exploitation under capitalism: absolute surplus value (namely through maximising the working day); or relative surplus value (namely lowering the cost in hours for maintaining the labour force in a given day); according to John, these have become secondary forms of exploitation under modern imperialism.
In previous posts, I have outlined where I differ with John’s analysis. So I won’t repeat my doubts here, although I did at the workshop. What came out of that discussion is that there is a difference between those who see imperialism as a world economy divided between oppressor and oppressed nations (or peoples, said John) and those who have a more ‘articulated’ analysis like myself; and between those who reckon the working class of the North do in some way gain value from the super-exploitation of the South and those who do not, like myself.
Tony brought some key insights into understanding the nature of modern financial systems and what role they play in the working (or non-working) of capitalism. Again, I have dealt with Tony’s analysis in my review of his book. But Tony’s address again emphasised the important role of British imperialism. British capitalism lost its hegemonic status a hundred years ago but in the post-war period its financial sector has maintained its global status while its manufacturing base diminished. I have described Britain in the past as the world’s largest ‘rentier’ economy. That’s an old-fashioned French word for an economy based on sucking up ‘rents’ through the monopoly ownership of capital (or land) from the profits of the productive sectors. Both the sectors exploit labour but the rentier economy relies on its financial and legal monopoly to take a share of the surplus value appropriated from labour.
One of the consequences of Britain’s rentier economy is its ambiguous relationship with European capital, in particular Franco-German capital and the European Union. British imperialist strategists have looked across the Atlantic to the US for partnership in financial power but also to Europe for trade and investment. The UK is the piggy in the middle between the US and Franco-German Europe. That has now come to a head as British capital considers whether it wants to break with the EU or not, as Europe stutters along in its long depression.
At the workshop, I was asked to provide commentary on the speakers. The words above cover that. But I also offered my own two cents. In my view, imperialism is an historical necessity because it follows from the requirements and conditions of capital accumulation. This was the fundamental premise of Luxemburg’s book onImperialism. Unfortunately, her own theory did not explain why the export of capital takes place from one capitalist land to another capitalist land, which today is one of the key features of modern imperialism.
Lenin, in his famous book on Imperialism, also does not explain this, apart from saying that: “The need to export capital arises from the fact that in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and the poverty of the masses)” and “capital cannot find a field for ‘profitable’ investment.” But it is not enough to account for capital export in terms of “the lack of profitable investment opportunities at home”, as the liberal economist and pioneering critic of imperialism, John Hobson put it. As Henryk Grossman retorted: “[W]hy,” then, “are profitable investments not to be found at home?…..The fact of capital export is as old as modern capitalism itself. The scientific task consists in explaining this fact, hence in demonstrating the role it plays in the mechanism of capitalist production.”
It is the race for higher rates of profit that is the motive power of world capitalism. Foreign trade can yield a surplus profit for the advanced country. From about the 1980s onwards, the rate of profit in the major economies reached new lows, so the leading capitalist states again looked to counteract Marx’s law through renewed capital flows into countries that had massive potential reserves of labour that would be submissive and accept ‘super-exploiting’ wages. World trade barriers were lowered, restrictions on cross-border capital flows were reduced and multi-national corporations moved capital at will within their corporate accounts. This explains the policies of the major imperialist states at home (an intensified attack on the working class) and abroad (a drive to transform foreign nations into tributaries).
It was a similar story in the previous period of ‘globalisation’ in the late 19th century. The UK was the leading imperialist power of the 19th century. The great economist J Arthur Lewis summed up the driver behind Britain’s imperialist ambitions in the late 19th century. “In the low level of profits in the last quarter of the century we have an explanation which is powerful enough to explain the retardation of industrial growth in the 1880s and 1890s… we have here also, in low domestic profits, the solution to the great mystery of British foreign investment, namely why Britain poured so much capital overseas… home industry was so unprofitable in the 1880s through the squeeze on profits between wages and prices.” Lewis, Deceleration of British Growth, p28.
At the workshop, there were the beginnings of discussion about the role of the working class in the major imperial powers. Some speakers were extremely pessimistic about the consciousness of the British or American working class to want to change society. The view was that they were embedded into the imperialist nexus, with a substantial ‘labour aristocracy’ basically living off the surplus value extracted from the South and transferred to the North. So the only hope for change would come from the growing proletariat of the South, as Cuba in the 1950s showed and presumably Latin America or other parts of the South would do now.
In a way, this is a revival of the so-called ‘dependency theory’, where it is argued the rich imperialist powers are rich only because of the poor oppressed nations and economies. To this is added the argument that the working class of the North are better off only because of the super-exploitation of the South and so are no longer a progressive force in the struggle to end capitalism.
Well, I argued against that view. First, Marx’s theory shows that there will be a tendency to equalise the rate of profit between capitals (even under monopoly capital) – indeed this is how the higher rates of exploitation in the South end up in the profit rates of the North. But this process does not touch the sides of the wages of the workers of the North – it is a redistribution of surplus value between capitalists (and capitalist states).
And empirically, this is also true. The organiser of the workshop, Simon Mohun, published a paper a few years ago that showed only 1% of working people in the US got income from capital (profit, interest and rents) as their main source of income. The rest of Americans had to work to make a living. Sure, their higher wages and their social benefits may indirectly come from the super-profits of the multi-national companies they work for – but that is the result of the class struggle over the share of value going to wages, not directly as a result of imperialist exploitation.
Imperialism has two Achilles heels. The first is the tendency of the rate of profit to fall as capitalism accumulates. Indeed, imperialism is a major counteracting factor to that most important contradiction of capitalist accumulation. The second is the proletariat – the gravediggers of capitalism – who are still growing in size across the world. John Smith showed that global proletariat has never been larger in the history of capitalism. In that sense, Marx’s prophecy in the Communist Manifesto 160 years ago is confirmed. Sure, the majority of the proletariat is now in the South and not the North. But, in my view, that does not mean the workers of the North will play no role in ending capitalism. On the contrary, they are the key to ending imperialism in its centre.
Michael Roberts publishes a regular blog entitled The Next Recession. Our readers are strongly recommended to check it out and “follow” it.