The Oxford Handbook of Economic Imperialism 9780197527092, 9780197527085, 9780197527108, 0197527094

Table of contents :
Cover
The Oxford Handbook of Economic Imperialism
Copyright
Contents
Editors
1. Introduction: Economic Imperialism in Theory and in Practice
PART ONE: THEORY
2. Imperialism and Its Critics: A Brief Conspectus
3. Classical Marxist Imperialism Theory: Continuity, Change, and Relevance
4. Marxist Theories of Imperialism in the Post–​Cold War Era
5. Theories of International Trade and Economic Imperialism
6. Capitalism, Imperialism, and Crises
7. The Clash of Interpretations: World-​Systems Analysis and International Relations Theory
PART TWO: INTERNATIONAL POLITICAL ECONOMY
8. Neoliberalism, Globalization, and Late Capitalism: Capital, Ideology, and Making the World Market
9. Imperialism from the Eleventh Century to the Twenty-​First Century
10. Slavery, Capitalism, and Imperialism
11. Development, Underdevelopment, and the North–​South Divide
12. Global Value Chains and Global Value Transfer
13. International Exploitation, Capital Export, and Unequal Exchange
14. Imperialism, Unequal Exchange, and Labour Export
15. Surplus Labour: Imperialist Legacies and Post-​Imperialist Practices
16. Locating Agrarian Labour within the Contours of Imperialism: A Historical Review
17. Women, Domestic Labour, and Economic Imperialism
18. Protecting Water and Forest Resources against Colonization in the Indigenous Américas
19. Imperialism, the Mismeasurement of Poverty, and the Masking of Global Exploitation
20. Tertiarization, Financialization, and Economic Imperialism
21. The Hegemony of the Global Exploitation of Humans and Nature: The Imperial Mode of Living
22. The Political Economy of Militarism
PART THREE: WORLD REGIONS
23. South Asian Economies in Two Imperialist Regimes between 1950 and 2020
24. Power Competition and Exploitation in Southeast Asia
25. The Capitalist World System and Economic Imperialism in East Asia
26. Pacific Islands: Sources of Raw Materials
27. Extractivism and Resistance in North Africa
28. Railway Imperialisms in East Africa: Laying the Tracks for Exploitation
29. Southern Africa: A New Geometry of Imperialism
30. Asymmetric Interdependence: North America’s Political Economy
31. Colombia and OECD: How Institutional Imperialism Shapes the Global Order and National Development
32. Eastern Europe’s Post-​Transitional Integration into Western Economic Relations through Social Labour Recognition
33. Land Grabbing in Southeastern Europe in Historical Context
34. Colonial Legacies and Global Networks in Central Asia and the Caucasus
Index

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T h e Ox f o r d H a n d b o o k o f

E C ON OM IC I M P E R IA L I SM

The Oxford Handbook of

ECONOMIC IMPERIALISM Edited by

ZAK COPE and

IMMANUEL NESS

1

3 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America. © Oxford University Press 2022 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-​in-​Publication Data Names: Cope, Zak, editor. | Ness, Immanuel, editor. Title: The oxford handbook of economic imperialism / edited by Zak Cope and Immanuel Ness. Other titles: Handbook of economic imperialism Description: New York : Oxford University Press, 2022. | Includes bibliographical references. | Identifiers: LCCN 2021033766 | ISBN 9780197527092 (updf) | ISBN 9780197527085 (hardback) | ISBN 9780197527108 (epub) Subjects: LCSH: Imperialism—Economic aspects. | Postcolonialism—Economic aspects. | International economic relations. Classification: LCC JC359 .O94 2022 | DDC 337—dc23 LC record available at https://lccn.loc.gov/2021033766 DOI: 10.1093/oxfordhb/9780197527085.001.0001 1 3 5 7 9 8 6 4 2 Printed by Integrated Books International, United States of America

Contents

Editors

ix

1. Introduction: Economic Imperialism in Theory and in Practice By Zak Cope and Immanuel Ness

1

PA RT ON E :   T H E ORY 2. Imperialism and Its Critics: A Brief Conspectus By Zak Cope 3. Classical Marxist Imperialism Theory: Continuity, Change, and Relevance By Murray Leigh Noonan

15

43

4. Marxist Theories of Imperialism in the Post–​Cold War Era By Efe Can Gürcan

67

5. Theories of International Trade and Economic Imperialism By Bill Dunn

81

6. Capitalism, Imperialism, and Crises By Shireen Moosvi 7. The Clash of Interpretations: World-​Systems Analysis and International Relations Theory By Chamsy El-​Ojeili and Patrick Hayden

101

115

PA RT T WO :   I N T E R NAT IONA L P OL I T IC A L E C ON OM Y 8. Neoliberalism, Globalization, and Late Capitalism: Capital, Ideology, and Making the World Market By Toby Carroll

135

vi   Contents

9. Imperialism from the Eleventh Century to the Twenty-​First Century By Amiya Kumar Bagchi

153

10. Slavery, Capitalism, and Imperialism By Sébastien Rioux

171

11. Development, Underdevelopment, and the North–​South Divide By Kunibert Raffer

195

12. Global Value Chains and Global Value Transfer By Susan Newman

213

13. International Exploitation, Capital Export, and Unequal Exchange By Jonathan F. Cogliano, Soh Kaneko, Roberto Veneziani, and Naoki Yoshihara

231

14. Imperialism, Unequal Exchange, and Labour Export By Raúl Delgado Wise

251

15. Surplus Labour: Imperialist Legacies and Post-​Imperialist Practices By Christoph Scherrer

267

16. Locating Agrarian Labour within the Contours of Imperialism: A Historical Review By Arindam Banerjee

285

17. Women, Domestic Labour, and Economic Imperialism By Han Cheng

301

18. Protecting Water and Forest Resources against Colonization in the Indigenous Américas By Macarena Gómez-​Barris

323

19. Imperialism, the Mismeasurement of Poverty, and the Masking of Global Exploitation By Seth Michael Donnelly

333

20. Tertiarization, Financialization, and Economic Imperialism By Kalle Blomberg

355

Contents   vii

21. The Hegemony of the Global Exploitation of Humans and Nature: The Imperial Mode of Living By Ulrich Brand and Markus Wissen 22. The Political Economy of Militarism By Adem Yavuz Elveren

373 389

PA RT T H R E E :   WOR L D R E G ION S 23. South Asian Economies in Two Imperialist Regimes between 1950 and 2020 By Vamsi Vakulabharanam 24. Power Competition and Exploitation in Southeast Asia By Johannes Dragsbaek Schmidt 25. The Capitalist World System and Economic Imperialism in East Asia By Minqi Li

411 437

455

26. Pacific Islands: Sources of Raw Materials By Marta Gentilucci

475

27. Extractivism and Resistance in North Africa By Hamza Hamouchene

497

28. Railway Imperialisms in East Africa: Laying the Tracks for Exploitation By Tim Zajontz

515

29. Southern Africa: A New Geometry of Imperialism By Ricado Jacobs and William G. Martin

535

30. Asymmetric Interdependence: North America’s Political Economy By Julián Castro-​Rea

553

31. Colombia and OECD: How Institutional Imperialism Shapes the Global Order and National Development By Brayan Camilo Rojas and Ernesto Vivares

567

viii   Contents

32. Eastern Europe’s Post-​Transitional Integration into Western Economic Relations through Social Labour Recognition By Ivan Rubinić and Maks Tajnikar 33. Land Grabbing in Southeastern Europe in Historical Context By Nazif Mandaci

589 615

34. Colonial Legacies and Global Networks in Central Asia and the Caucasus By Brent D. Hierman

635

Index

655

Editors

Dr. Zak Cope Visiting Researcher, School of History, Anthropology, Philosophy and Politics, Queen’s University Belfast Prof. Immanuel Ness Professor and Department Chairperson, Political Science, Brooklyn College, City University New York

Contributors Prof. Amiya Kumar Bagchi Emeritus Professor, Institute of Development Studies Kolkata Adjunct Professor, Monash University Dr. Arindam Banerjee Associate Professor, Faculty of Economics, School of Liberal Studies, Ambedkar University Delhi Mr. Kalle Blomberg Independent Researcher, with MA in Sociology from Stockholm University Prof. Ulrich Brand Professor of International Politics, University of Vienna Prof. Toby Carroll Associate Professor, Department of Asian and International Studies, City University of Hong Kong Dr. Julián Castro-​Rea Department of Political Science, University of Alberta, Canada Dr. Han Cheng Department of Economics, Franklin and Marshall College, Lancaster, Pennsylvania

x   Editors Dr. Jonathan F. Cogliano Department of Economics, University of Massachusetts, Boston Dr. Zak Cope Visiting Researcher, School of History, Anthropology, Philosophy and Politics, Queen’s University Belfast Mr. Seth Michael Donnelly Public high school teacher, activist, author, and member of Haiti Action Committee Bill Dunn Department of Political Economy, Faculty of Arts and Social Sciences, University of Sydney Dr. Chamsy El-​Ojeili Senior Lecturer, Sociology, Victoria University of Wellington, New Zealand Prof. Adem Yavuz Elveren Associate Professor of Economics in Fitchburg State University, MA Research Fellow in the Economics Research Forum Dr. Marta Gentilucci Department of Human Sciences for Education, University of Milan-​Bicocca Dr. Macarena Gómez-​Barris Founding Director of the Global South Center and Chairperson of Social Science and Cultural Studies at Pratt Institute Prof. Efe Can Gürcan Associate Dean of Research and Development for the Faculty of Economics, Administrative and Social Sciences, İstinye University, Turkey Dr. Hamza Hamouchene Transnational Institute (TNI) North Africa Programme Prof. Patrick Hayden Editor, Journal of International Political Theory, Director of Postgraduate Taught Studies, School of International Relations, University of St Andrews, United Kingdom Prof. Brent D. Hierman Associate Professor, Department of International Studies and Political Science, Virginia Military Institute

Editors   xi Mr. Ricado Jacobs Sociology Department, Johns Hopkins University Dr. Soh Kaneko Faculty of Economics, Oita University, Japan Prof. Minqi Li Department of Economics, University of Utah Prof. Nazif Mandaci Department of International Relations, Yasar University Dr. William G. Martin Sociology Department, Binghamton University Shireen Moosvi Retired Professor of History, Aligarh Muslim University Secretary of Aligarh Historians Society Prof. Susan Newman Head of Economics, School of Social Sciences and Global Studies, The Open University, United Kingdom Dr. Murray Leigh Noonan Casual Academic in the Faculty of Arts and Education, School of Humanities and Social Sciences, Deakin University, Waurn Ponds Campus, Victoria, Australia Associate Member of the Contemporary Histories Research Group based at Deakin University Prof. Kunibert Raffer Retired Professor at the Department of Economics, University of Vienna Prof. Sébastien Rioux Department of Geography, University of Montreal Ms. Brayan Camilo Rojas Department of International Studies and Communication, FLACSO, Ecuador Ivan Rubinić Studio Europa Maastricht, Maastricht University Prof. Christoph Scherrer Department of Social Sciences, University of Kassel

xii   Editors Dr. Johannes Dragsbaek Schmidt Adjunct Associate Professor, Department of Political Science, Aalborg University Prof. Maks Tajnikar Full Professor, School of Economics and Business, University of Ljubljana Dr. Vamsi Vakulabharanam Associate Professor of Economics, University of Massachusetts, Amherst Prof. Roberto Veneziani School of Economics and Finance, Queen Mary University of London Prof. Ernesto Vivares Department of International Studies and Communication, FLACSO, Ecuador Raúl Delgado Wise Professor and Director of the Doctoral Program in Development Studies, Autonomous University of Zacatecas, Mexico Prof. Markus Wissen Professor of Social Sciences, Berlin School of Economics and Law Naoki Yoshihara Department of Economics, University of Massachusetts, Amherst Dr. Tim Zajontz Centre of African Studies (CAS), School of Social and Political Science, University of Edinburgh

chapter 1

I n t rodu ction Economic Imperialism in Theory and in Practice By Zak Cope and Immanuel Ness

The Oxford Handbook of Economic Imperialism presents the latest scholarship on the economics of imperialism in the modern age. Written by academics and researchers working in the field of international political economy, the Handbook provides detailed studies of economic imperialism’s roots, goals, methods, and impact around the world, examining the rich and varied critique of economic imperialism, and its most significant theories, intellectual traditions, and analysts. We began editing the present volume right at the outbreak of the global coronavirus pandemic in early 2020. In many respects, the pandemic itself highlights central features of contemporary imperialism, as new diseases like COVID-​19 originate from biodiversity hotspots like tropical rainforests, with deforestation one of the most serious forms of environmental degradation facilitating novel human and animal interaction. Trade inequalities built into the world economy lead to the unfettered exploitation of the environment and people in poorer nations, creating conditions under which viruses such as COVID-​19 spread. The pandemic presented us with many challenges as editors. The consequent disruption of people’s schedules unfortunately meant that many agreed contributions were not forthcoming. In addition, the antithetical views of the editors on many of the issues raised in this volume posed serious editorial difficulties. We were thus unable to include chapters on such subjects as trade liberalization in developing countries; globalization and balance of payments; the settler colonial economy; colonial reparations; ecology, imperialism, and sustainability; climate change and imperialism; imperialism, free trade, and protectionism; economic imperialism and monetary policy; imperialism and social revolution; and chapters on Russia, the Caribbean, Australasia, West Africa, Southwest Asia, and other world regions. Yet despite these challenges, we have assembled a wide range of penetrating and incisive chapters that illuminate the contours of today’s internationally stratified world economy.

2    Zak Cope and Immanuel Ness The Oxford Handbook of Economic Imperialism is divided into three sections, namely ‘Theory’, ‘International Political Economy’, and ‘World Regions’. We outline the contents of each section as follows.

Theory The first section of the Handbook, ‘Theory’, consists of six chapters that provide an overview of the major theories of economic imperialism. In particular, the chapters elaborate on Marxist, world systems, crisis, and dependency theories as these relate to the study of economic imperialism. This section highlights the intellectual history of theories of economic imperialism, and some of their most significant progenitors, and outlines the theoretical foundations for the applied understanding of economic imperialism. Zak Cope’s chapter, ‘Imperialism and Its Critics: A Brief Conspectus’, provides a survey of the literature on imperialism. It begins by defining the concept of economic imperialism, and proceeds to describe five modes of economic imperialism, namely, colonialism, internal colonialism, settler colonialism, investment imperialism, and unequal exchange, each predicated upon and reinforcing national oppression. The chapter concludes by highlighting the pronounced tendency of ‘anti-​imperialist’ discourse to lend support to some of the world’s most repressive authoritarian states. Murray Noonan’s chapter, ‘Classical Marxist Imperialism Theory: Continuity, Change, and Relevance’, argues that the classical Marxist theories of imperialism continue to have explanatory power despite the transformations that have occurred in global capitalism and international politics since the early decades of the twentieth century. Marxist thinkers and activists like Rudolf Hilferding, Nikolai Bukharin, Vladimir Lenin, and Rosa Luxemburg were instrumental not only in identifying changes in capitalism that occurred after Marx’s death in 1883 but also in linking those changes with geopolitical conditions that ultimately led to World War I. The chapter offers a critical examination of the work of the classical Marxist theorists of imperialism, highlighting the strengths and weaknesses of their analyses and the relevance of their work to understanding contemporary imperialism. Efe Can Gürcan’s chapter, ‘Marxist Theories of Imperialism in the Post–​Cold War Era’, describes how post–​Cold War theories of imperialism developed in two distinct waves. He suggests that the first wave was prompted mostly by reactions to ‘transnational’ capitalist globalisation, with its critics focusing on the contradictions of neoliberalism as the clearest manifestation of present-​day imperialism. Since the crisis of global capitalism in 2007 there has emerged a second wave of theorizing about imperialism which places greater emphasis on the North–​South divide, and redeploys Lenin’s terminology of uneven development, labour aristocracy, and super-​profits. The chapter discusses how contemporary theories of imperialism can contribute to a multidimensional understanding of the phenomenon in (geo)political, economic, and sociocultural terms.

Introduction   3 Bill Dunn’s chapter, ‘Theories of International Trade and Economic Imperialism’, introduces and reviews a long theoretical tradition which highlights unequal trade relations between countries, contesting the Ricardian view of mutual gains from comparative advantage. Focusing on mercantilism, ideas around changing terms of trade, and theories of unequal exchange, the chapter assesses the utility of theories of trade inequality in the twenty-​first century. It argues that trade and trade inequalities must be understood in parallel with changing class relations within countries and in the context of the expansion of foreign investment. The author emphasizes the point that trade relations arise within broader structures of international political and economic inequality. Shireen Moosvi’s chapter ,‘Capitalism, Imperialism, and Crises’, situates the economic crises that have occurred throughout the history of modern capitalism in changing modes of capital accumulation and related forms of economic imperialism. She examines the theories of capitalist crisis of Ricardo, Marx, Schumpeter, Luxemburg, and Lenin, and discusses the varied responses of the leading economies to the economic recession of 2007 and beyond. The chapter by Chamsy El-​Ojelli and Patrick Hayden, ‘The Clash of Interpretations: World-​Systems Analysis and International Relations Theory’, explores and critically defends one of the most ambitious social scientific theories, world-​systems analysis, by setting it against other major paradigms within the field of international relations. Specifically, the chapter compares world systems analysis with realist and liberal international relations paradigms, exploring conceptual differences around units of analysis, structures and actors, power, social dynamics and forces, and normative commitments. The chapter concludes by discussing the literature on globalization and competing Marxian and world systems approaches.

International Political Economy The second section of the Handbook contains fifteen chapters that apply key concepts in the theory of economic imperialism to the contemporary world economy. International political economy is based on the recognition that economic systems are inextricably linked to wider political and social systems at the international level. As such, this section of the Handbook examines the interplay between economic and political processes in the global economy, and explores mechanisms of value transfer, dependency, and exploitation in international relations. Toby Carroll’s chapter, ‘Neoliberalism, Globalization, and Late Capitalism: Capital, Ideology, and Making the World Market’, details the mutually reinforcing relationship between globalization, neoliberalism, and late capitalism. The chapter explains how intensifying patterns of competition have resulted in the political diminution of progressive social forces and the increased leverage of competitive fractions of capital and powerful capitalist states. The author concludes that while resistance to neoliberalism is evident in many, sometimes reactionary forms, the all-​enveloping nature of late

4    Zak Cope and Immanuel Ness capitalism and the ongoing reinvention of neoliberalism as the only solution to grave socioeconomic maladies make the task of reimagining and realizing alternative social orders formidable. Amiya Kumar Bagchi’s chapter, ‘Imperialism from the Eleventh Century to the Twenty-​First Century’, provides a historical overview of the development of capitalist imperialism. It argues that in the eleventh century several city states formed in Italy that were controlled by merchants and financiers and which dominated southern Italy and Sicily through trade and finance, prefiguring the dependency of the colonial and semi-​colonial countries from the eighteenth century onward. Following the logic of capital accumulation, the new nation states at that time began acquiring colonies, with England the sole superpower until it was challenged by Germany in World War I. After the interregnum of the interwar years, the United States emerged as the most powerful nation economically and militarily, its paramountcy having been challenged by the Soviet Union until it went into terminal decline from the late 1970s. Bagchi argues that the United States’ superpower status is currently challenged by China and Russia. Sébastien Rioux’s chapter, ‘Slavery, Capitalism, and Imperialism’, problematizes the relationship between slavery, capitalism, and imperialism. It explores how slavery and the slave trade played a historical role in capital accumulation and economic imperialism from the early modern period to the Industrial Revolution. The author examines the central importance of slavery in the expansion of capitalist trade and production, as well as its role in the constitution of an international division of labour premised upon the uneven exploitation of distant spaces and populations. The chapter explores the ways in which capitalist techniques shaped slavery and its institutions and investigates the rationalization of slave production in the context of an increasingly competitive international commodities market. It considers the fundamental importance of struggles and resistance against slavery in the context of capitalist imperialism and concludes with a discussion of modern-​day slavery and its roots in militarized borders, wars of encroachment, and the economics of dependency. Kunibert Raffer’s chapter ,‘Development, Underdevelopment, and the North–​South Divide’, examines the endurance of the North–​South divide on a planetary scale. It discusses what Max Weber had termed capitalism based on the principle of looting, which transferred enormous values to the Global North, financing its industrialization. In the process, Southern economies were disarticulated and extraverted to benefit colonial powers. The author analyses key features of the present world economy, showing how trade structures disadvantage Southern countries through unequal exchange and transfer pricing, and how financial structures discriminate against Southern countries by denying them meaningful debtor protection. The author explains how tax evasion by some Northern countries deprives Southern countries of resources needed to finance development and discusses the role of international organizations such as the IBRD, the IMF, and the WTO. The author describes the ways in which agreements such as the Lomé and Cotonou treaties have hampered development and perpetuate the North–​ South divide.

Introduction   5 Susan Newman’s chapter, ‘Global Value Chains and Global Value Transfer’, discusses the restructuring of production that has taken place over the last thirty years, namely the rise of global value chains and global production networks, and explains how this has shaped the transfer of value from the Global South to the Global North through direct channels of appropriation along these chains and the associated tendency towards the impoverishment of workers engaged in primary production. The chapter describes new financial avenues for the appropriation of value created in the Global South that have opened as global value chains intersect with the financialization of commodity chains and the rise of global wealth chains as routes through which multinational corporations channel value to avoid fiscal claims, legal obligations, and regulatory oversight. The chapter by Jonathan Cogliano, Soh Kaneko, Roberto Veneziani, and Naoki Yoshihara, ‘International Exploitation, Capital Export, and Unequal Exchange’, discusses how international exploitation and unequal exchange emerge in the global economy by focusing on simple economic models with and without credit markets. Free trade of commodities among rich and poor countries results in a transfer of labour time between countries, allowing the citizens of some countries to consume more of the world’s social labour than they have contributed. Capital movements across borders together with strong restrictions on the movement of people result in net exporters of capital exploiting (or benefiting from unequal exchange at the expense of) net capital importers. The authors argue that under perfect competition, mutual benefits from free trade in goods and capital can coexist alongside unequal flows of revenue and labour in the world economy. They conclude that market imperfections and the open use of coercion are not necessary for international exploitation to emerge, but they may be central for it to persist over time. Raúl Delgado Wise’s chapter, ‘Imperialism, Unequal Exchange, and Labour Export’, describes how monopoly capital has become the central actor in the global economy. Through mega-​mergers and strategic alliances, this fraction of capital has reached unparalleled levels of concentration and centralization, leaving every major global industry dominated by a handful of large multinational corporations. In the expansion of their activities, the largest monopolies have created global processes of finance, production, services, and trade that have allowed them to seize the strategic and profitable sectors of peripheral economies and appropriate the economic surplus produced at enormous social and environmental costs. The chapter analyses the current modalities of unequal exchange engendered by the implementation of structural adjustment programmes in the Global South, these having been the vehicle for the disarticulation of economic structures in the periphery and their re-​articulation to serve the needs of core capitalist economies under sharply asymmetric and subordinated conditions. The author argues that these developments have led to the emergence of a new international division of labour centred on the direct and indirect export of labour which has triggered new modalities of unequal exchange. The chapter by Christoph Scherrer, ‘Surplus Labour: Imperialist Legacies and Post-​ Imperialist Practices’, describes how informal labour relations and underemployment persist in many former colonies. The overabundance of persons offering their labour

6    Zak Cope and Immanuel Ness in relation to limited demand for the same stems from the insufficient absorption of peasants set free from their land. In many late industrializing countries most workers leaving agriculture do not find gainful employment, with many such countries prematurely de-​industrializing. Based on a comparison between the conditions prevalent in early industrializing nations and present-​day latecomers to industry and advanced services, the chapter highlights how the generally violent passage from an agrarian-​rural to a capitalist industrial-​urban economy is aggravated by imperialist legacies and current post-​imperialist practices for many countries of the Global South. Arindam Bannerjee’s chapter, ‘Locating Agrarian Labour within the Contours of Imperialism: A Historical Review’, discusses how neoliberal globalization has had profound implications for agrarian labour, particularly in the Global South. Analysing neoliberalism through the lens of interconnected historical developments in the North and the South, the author understands it as a set of continuities and discontinuities between the old imperial order and new structures of imperialism. The chapter highlights the economic and political resistance that has emerged in various contexts as a response to neoliberal policies. The chapter by Han Cheng, ‘Women, Domestic Labour, and Economic Imperialism’, discusses the relationship between the oppression of women and economic imperialism. Women’s unpaid domestic labour is a fundamental factor of capital accumulation. The oppression of women in production, reproduction, and gender relations is an integral aspect of neoliberal social structures. The author describes how consumerist lifestyles in the developed countries are sustained by the exploitation of the labour and bodies of women from the developing countries. He concludes that the super-​exploitation of women has triggered a global crisis of labour power reproduction and the rise of female-​led social and economic justice movements. The chapter by Macarena Gómez-​Barris, ‘Protecting Water and Forest Resources against Colonization in the Indigenous Américas’, considers recent forms of resistance in the Americas that contest the legacy of neoliberalism, debt, and economic imperialism emanating from the United States. Specifically, the author examines Chile as a laboratory for neoliberalism and the social and political movements therein that directly challenge histories of wealth accumulation through extractive and racialized capitalism. The chapter examines how state violence and an expanding prison and military infrastructure is used to criminalize protest and describes creative strategies of resistance and refusal. The chapter by Seth Donnelly, ‘Imperialism, the Mismeasurement of Poverty, and the Masking of Global Exploitation’, investigates the calculation of global poverty and reveals the strong ties of the metric to the neoliberal political and economic establishment. Donnelly deconstructs the widely publicized statistics that purport to show how extreme poverty in the world has dramatically fallen. He subjects the analytical categories and methodology employed by the World Bank to calculate its poverty statistics to a systematic critique. By artificially reducing global poverty through statistical manipulation, the World Bank can proclaim the success of the neoliberal project, legitimating its further expansion. The chapter contends that if more accurate measurements are used,

Introduction   7 such as the United Nations Conference on Trade and Development (UNCTAD) $5 per day standard, global poverty has increased. Kalle Blomberg’s chapter ,‘Tertiarization, Financialization, and Economic Imperialism’, investigates the increasing share of value associated with services in the core countries of the global economy. In conventional accounts this value is synonymous with the inherent productivity of these activities and is assumed to derive from their human capital content. In this crucial intervention, Blomberg explains that the proliferation of what Marx called fictitious capital has characterized neoliberal development in the core of the global economy. The growth of fictitious capital obscures the reality that both the expansion of finance and the growth of services in the affluent countries are underpinned by value extracted in the dual exploitation of labour and nature in low-​wage countries. In the next chapter, ‘The Hegemony of the Global Exploitation of Humans and Nature: The Imperial Mode of Living’, Ulrich Brand and Markus Wissen introduce the concept of the “imperial mode of living” as an innovative contribution to current debates on imperialism. The term refers to the norms of production, distribution, and consumption built into the political, economic, and cultural structures of everyday life for the populations of the Global North and for those countries denoted as ‘emerging economies’ in the Global South. This form of living is rooted in social class, economic structures, everyday practices, subjectivity, ideology, and ecological transformation at the world scale. The designation and meaning of the “imperial mode of living” is historically contextualized, and the authors provide an account of its contemporary dimensions. In the last chapter of Part Two, ‘The Political Economy of Militarism’, Adem Yavuz Elveren examines the relationship between economic growth and military domination. Elveren examines how high military expenditures relate to militaristic values in the political, social, and economic spheres. The chapter examines the determinants and economic costs of military expenditures through the prism of neoclassical, Keynesian, and Marxist perspectives. The chapter emphasizes three issues relating to the economics of militarism: first, its role in capital accumulation and in the absorption of economic surplus; second, the value of militarism to imperialist geopolitical security; and, finally, the impact of militarism on employment and economic growth.

World Regions Part Three of the Oxford Handbook of Economic Imperialism presents twelve chapters on economic imperialism as it operates within major geographic regions of the world today. This section includes examinations of the dynamics of value transfer and underdevelopment in South Asia, East Asia, Southeast Asia, North Africa, eastern Africa, southern Africa, North America, South America, the Pacific Islands, eastern Europe, and Central Asia and the Caucasus.

8    Zak Cope and Immanuel Ness Vamsi Vakhulabharanam’s chapter, ‘South Asian Economies in Two Imperialist Regimes between 1950 and 2020’, explores the relationship between imperialism and the emergence of neoliberal capitalism in South Asia. The South Asian region experienced a steep economic decline during the period 1750–​1950, primarily due to the British colonial rule that transformed it from a production hub to a source of raw materials, a tribute-​paying region, and a market for manufactured goods. Between 1950 and 1980, the newly independent nations of South Asia implemented Import Substitution Industrialization (ISI) policies that aimed at reducing their dependence on imperialist powers, and they began experiencing the growth of their economies after a long hiatus. Yet while South Asian countries developed an expanded industrial base and an educated workforce, their dependence on the imperialist countries persisted. From 1980 and 2020, many of the South Asian economies were restructured towards becoming more open and more market-​oriented. Vakulabharanam demonstrates that South Asian economies have in the process again become suppliers of cheap raw materials and primary produce. The chapter reveals the significant contrast between the two imperialist phases after 1950 and shows how South Asian relations of economic dependency with imperialist countries have been differently structured in each period. Next, Johannes Dragsbaek Schmidt’s chapter, ‘Power Competition and Exploitation in Southeast Asia’, examines exploitation, class conflict, and dependency in Southeast Asia. Schmidt argues that understanding the economic and political dimensions of imperialism requires a careful theoretical and empirical study of history. This chapter critically examines the historical and contemporary implications of Southeast Asia’s incorporation into the world market and traces how rival colonial powers established exploitative mechanisms to extract economic surplus from the region. The author argues that US imperialism did not simply replace the former colonial European powers but also supplemented Japanese and British economic imperialism in the region. Schmidt’s chapter challenges the conventional wisdom that American economic imperialism and hegemony was not based on the British and Japanese use of brute force. In the next chapter, ‘The Capitalist World System and Economic Imperialism in East Asia’, Minqi Li explores economic imperialism in China and the East Asian region, and its impact on the world capitalist economy. Historically, East Asia (defined as China, Korea, Japan, and Taiwan) accounted for about two-​fifths of the world population and economic output. It was not incorporated into the capitalist world system until the mid-​nineteenth century, when British imperialism used opium to open the Chinese market. As the East Asian countries responded to the challenges imposed by British-​ led western capitalism, Minqi Li shows how their economic and geopolitical fortunes diverged. While China, Korea, and Taiwan were peripheralized, Japan became an imperialist power by the early twentieth century. World War II ended with the United States as the predominant power in the world as well as in East Asia. The US-​led geopolitical restructuring created favourable political conditions for economic take-​off in Japan, South Korea, Taiwan, and eventually China. As China develops into the world’s largest economy measured by purchasing power parity, and expands its global investments, a growing number of scholars and journalists from non-​Marxist as well as Marxist

Introduction   9 perspectives have designated it as a new imperialist power. The chapter measures value flows (represented by labour time embodied in export commodities) between China, Japan, South Korea, and the rest of the world and shows that China continues to transfer more surplus labour to the rest of the world than it receives. As such, the author argues that China should be characterized as a non-​imperialist semi-​peripheral country. Yet as China’s demands for energy commodities and raw materials continues to grow, it intensifies global ecological and geopolitical contradictions. These contradictions are unlikely to produce a world war fought between China and the United States, but these dynamics of capitalist development contribute to the acceleration of global environmental crisis and set limits to China’s long-​term economic growth. Marta Gentilucci’s chapter, ‘Pacific Islands: Sources of Raw Materials’, analyses economic imperialism, resource extraction, decolonization, and sovereignty in the region. The chapter highlights how Pacific Islanders have the desire to be present and acknowledged within the world economy. The first part of the chapter is focused on an overview of colonial imperialism in the region, both historically and currently. Gentilucci shows how decades of economic imperialism have commodified natural and human resources and thereby influenced the course of social change in the region. In particular, in all the islands of the Pacific, plantations and mines have had a huge social impact, including the expropriation of lands, the arrival of migrant workers, recruited mainly in Oceania and Asia, and long-​term ecological consequences. The chapter focuses on the different ways in which social actors resist, transform, and domesticate imperialist forces. The chapter shows how mining is an ambivalent phenomenon which in some communities is a means to achieve valuable economic, social, and cultural goals and objectives. Gentilucci analyses mining activity from the lens of indigenous eco-​cosmologies—​a cohabitation of spaces in which visible and invisible, endogenous, and exogenous forces are constantly negotiated and balanced with the goal of identifying alternative spaces to the rigid dichotomy between subjection and resistance. Turning to North Africa, Hamza Hamouchene’s chapter, ‘Extractivism and Resistance in North Africa’, explores the vast expansion of accumulation through dispossession in the Maghreb region. Northern African countries are key suppliers of natural resources in the global economy, from large-​scale oil and gas extraction in Algeria, to phosphate mining in Tunisia and Morocco, and to water-​intensive agribusiness paired with tourism in Morocco and Tunisia. Hamouchene views this extractivist model of development as reaffirming the role of North Africa countries as suppliers of natural resources, entrenching their subordinate position in the global capitalist economy. The stark cases presented in this chapter exemplify broader patterns of primitive accumulation in the Global South, where accumulation by dispossession takes the form of the extraction and pillage of natural resources, and the degradation of environments and ecosystems through the privatization and commodification of land and water. Hamouchene demonstrates that ruinous imperialist policies are accompanied by a surge in the forces of mobilization, and resistance from local populations demanding that wealth be shared and distributed equitably. Nevertheless, these examples do not reveal a significant

10    Zak Cope and Immanuel Ness political movement emerging that is capable of ending abject forms of imperialism in the region. Tim Zajontz’s chapter, ‘Railway Imperialisms in East Africa: Laying the Tracks for Exploitation’, shows how the region has been exploited by foreign imperialist states, from Britain and Germany to China. Zajontz contends that physical infrastructure built by foreign states is central to East Africa’s imperialist exploitation. The chapter first recounts how rail infrastructure developed in Britain’s East Africa and Uganda Protectorates as well as in German East Africa, fostering colonial primitive accumulation by forcing local and imported labour to construct the means that would accelerate the theft of the continent’s natural wealth. The chapter examines how contemporary infrastructure development in the region has continually served economic imperialisms. Focusing on East Africa’s gradual integration into the Belt and Road Initiative (BRI), China’s transition to a neo-​imperialist investor in the region’s infrastructure market is explained. Drawing on David Harvey’s theorization of spatio-​temporal fixes as a tendency inherent to capitalist imperialism, Zajontz documents how debt-​financed large-​ scale infrastructure projects, such as Kenya’s new Standard Gauge Railway, serve the geographical expansion of overaccumulated Chinese capital and lock the region into Chinese-​centred systems of accumulation. The chapter concludes that Africa’s contemporary infrastructure boom perpetuates the continent’s dependent integration into the global capitalist economy and facilitates new forms of accumulation by dispossession. The chapter by Ricado Jacobs and William G. Martin, ‘Southern Africa: A New Geometry of Imperialism’, examines how imperialism and anti-​imperialism has shaped the region of Southern Africa. Their complex narrative traces the historical periods of imperialist rule and accumulation, from the formation of a regional mineral-​labour network in the late nineteenth century to contemporary neoliberal forms of imperialism. It describes the multitudinous, region-​specific mechanics of value extraction from natural resources, industrial enterprises, and financial and commercial flows. The chapter highlights South Africa’s changing role as the centre of the region, and transformations in its relations with the most powerful countries in the world economy. The chapter describes the new wave of accumulation by extraction in Southern Africa, and the relative failure of postcolonial states to stem the emergence of new grassroots democratic movements. In his chapter ‘Asymmetric Interdependence: North America’s Political Economy’, Julian Castro-​Rea calls our attention to the well-​attested dominance exercised by the United States over Mexico and Canada. However, he argues that this general perspective misses the crucial contribution that Mexico and Canada have made to the expansion and current prosperity of the United States. Measured in terms of its territorial outreach, natural resources, economically active population, markets, defence, and beyond, the United States would not have emerged as the global imperialist power without the contributions of Mexico and Canada. Castro-​Rea’s chapter reviews the historical evidence and the contemporary record to demonstrate that North America is a global region where interdependence, although asymmetric, has been and still is a basic defining feature.

Introduction   11 The chapter by Brayan Camilo Rojas and Ernesto Vivares, ‘Colombia and the OECD: How Institutional Imperialism Shapes the Global Order and National Development’, examines how imperialism shapes and politically frames national development in relations between the most and least powerful countries in the world economy. The chapter focuses on Colombia’s incorporation into the Organization of Economic Cooperation and Development (OECD) between 2010 and 2018. Starting from a critical international political economy (IPE) approach, the chapter investigates the role assumed by the OECD as neutral and purely technical, and analyses the dynamics of power in the intersections of domestic-​international economics. The authors show how the OECD technically shapes and politically frames national development in key areas that define the insertion of the country into the world economy. They demonstrate how external forces determine domestic policies of development which in effect maintain Colombia’s dependent economic position. In this process, multilateral recommendations become central conditionalities that define the relationship between powerful foreign interests and local capital. The chapter describes how international economic integration took shape in Colombia through policies that were erroneously viewed as models for economic development. Turning to Europe, the chapter by Ivan Rubinić and Maks Tajnikar, ‘Eastern Europe’s Post-​Transitional Integration into Western Economic Relations through Social Labour Recognition’, examines economic inequality, social labour recognition, and unequal exchange in eastern Europe. The integration of eastern and southeastern European economies into the European Union promised to improve the standard of living in the region. However, the chapter reveals that the integration has generated unequal labour exchange and that while transition countries have experienced a radical capital intensity increase, they have suffered from below-​equilibrium prices obtained in commodity markets. The chapter argues that eastern European transition state initiatives to homogenize and catch up with western countries is hindered by enduring unequal relations, enabling western Europe to exploit international inequalities and exercise economic dominance over the East. Nazif Mandaci’s chapter, ‘Land Grabbing in Southeastern Europe and Its Historical Context’, examines land grabbing, enclosure, and primitive accumulation in southeastern Europe. The chapter suggests that some parts of the region are re-​experiencing in the post-​Soviet era what happened in the seventeenth and eighteenth centuries due to the decline of the Ottoman land tenure system, under conditions involving profound sociopolitical transformation and integration with global capitalism. Mandaci contends that today, despite growing connections with the European Union, the region has remained on the western European periphery as a provider of raw materials and food to (post)industrial Western centres. Just as declining Ottoman control and the collapse of its imperial land tenure system in the eighteenth century led to the rise of chiftliks (large agricultural estates), with powerful landlords and indentured peasants, so too has the dissolution of the agricultural systems of the socialist regimes in the 1990s paved the way for a process in which large portions of arable land became concentrated in the hands of a small group of former nomenklatura, tycoons, and foreign agribusiness

12    Zak Cope and Immanuel Ness partners. The chapter suggests that although the types of regime governing southeastern Europe have changed throughout history, primitive accumulation practices that harm small farmers have been maintained under different political banners. Current practices of enclosure have turned land into a financial asset favouring foreign capitalists rather than the local population, with small landholders adversely affected by the accelerating trend of what Mandaci calls a ‘(re)concentrating land ownership’, analogous to the land grabbing presently witnessed in Africa and Latin America. The final chapter in the Handbook, ‘Colonial Legacies and Global Networks in Central Asia and the Caucasus’, by Brent D. Hierman, addresses the persistent economic and political effects of the Russian Empire’s establishment of extractive colonial institutions in Central Asia and the Caucasus. At a fundamental level, the infrastructure built by the Russian Empire in the nineteenth century and modified by the Soviet Union in the twentieth century to exploit the region’s resources endure into the present; however, the outflow of wealth and resources no longer moves towards a single imperial core. As this chapter details, new networks of extraction have been built. China has emerged as the terminus for much of the region’s natural resources, whereas Russia is the leading destination for the region’s labour migrants, thereby capturing a significant amount of human capital. Additionally, a large amount of wealth is transferred out of the region into Western financial institutions where it is held, laundered, and sometimes moved on. Hierman’s chapter argues that the flourishing of these global networks of extraction strengthens the overwhelmingly autocratic regimes of the region and hinders the development of civil society. Finally, the chapter addresses the prospects for halting these extractive processes but ultimately concludes that this is unlikely, given the interwoven nature of political and economic power across the region. Taken together, the chapters of the Oxford Handbook of Economic Imperialism demonstrate the persistence of economic imperialism in today’s world and the enduring control wielded by great powers even after the end of formal empire. In addition, it reveals how emerging powers are today expanding their economic control in new geographic contexts. This Handbook seeks to re-​establish the conceptual significance of imperialism as a major topic in political economy and as being crucial to understanding the structures, relations, and processes responsible for the endurance and expansion of poverty and inequality between countries and nations. Zak Cope Belfast Immanuel Ness New York September 2021

PA RT O N E

T H E ORY

Chapter 2

Im periali sm a nd Its Criti c s A Brief Conspectus Zak Cope

Introduction: What Is Economic Imperialism? Imperialism is the policies and actions followed by a nation or country to acquire more territory, impose its culture and language, or otherwise dominate another nation or country for the purpose of achieving its own end, be it military, political, or economic (McNabb 2016, 18). The subcategory ‘economic imperialism’ connotes ‘foreign control of assets and decisions, including where such control exists in fact but not in law’ (Austin 2003, 145). Imperialism in this sense may be ‘formal’ or ‘informal’, ‘colonial’ or ‘postcolonial’, and implies the unrequited transfer of capital, labour, or natural resources from one nation or country to another (Griffin and Gurley 1985, 1091–​1092). Winston Churchill (1898, 220) wrote that, ‘Imperialism and economics clash as often as honesty and self-​interest’ (Toye 2010, 44). Indeed, the concept of imperialism has distinct political, cultural, sociological, ideological, and psychological dimensions, and incorporates multiple intersecting strands of class, gender, and national inequities which an economist must consider in a multidisciplinary and multivariate analysis (Michie et al. 2002; Munro 2014; Bohrer 2019; Agostinone-​Wilson 2020). Abstracting from these, we may outline five modes of imperialism in its economic sense, namely, colonialism, internal colonialism, settler colonialism, investment imperialism, and unequal exchange, each predicated on and reinforcing national oppression. We conclude by highlighting the democratic limits of much contemporary ‘anti-​imperialism’.

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Colonialism Colonialism is the practice by which a powerful nation or country subjugates another. The word ‘colonialism’ applies to the domination of non-​European societies by European ones by way of conquest and settlement, particularly in the five centuries between the so-​called Age of Discovery in the fifteenth century and decolonization in the decades following World War II (Abdel-​Fadil 2018, 1811). However, colonialism is not synonymous with the economic, political, and cultural domination of overseas territories only (Fieldhouse 1982, 11–​13). Moreover, despite reaching its apogee in the modern empires of Spain, Portugal, the Netherlands, Britain, France, Belgium, Russia and Germany, colonialism is not something exclusively practiced by Europeans against non-​Europeans; Europeans have colonized other Europeans (Bartlett 1994; Noack et al. 2012; Kuzio 2020), and non-​Europeans have colonized other non-​Europeans (Darwin 2007; Karsh 2007; Biccum 2018; Manjapra 2020). Some authors have articulated the view that for the colonized countries colonization was, to paraphrase pro-​slavery US Senator John C. Calhoun in 1837, a ‘positive good’ (Ferguson 2002; Easterly and Levine 2012; Gilley 2017; Dell and Olken 2020). Undoubtedly, ‘imperial accountancy’ has demonstrated that colonialism has had heterogeneous effects at the world level, sometimes encouraging specific forms and paths of development depending on the degree of independence exercised by the colonized populations (especially, on whether they were subject to wholesale land expropriation), their position within the international division of labour, and the economic activities they have pursued (Gardner and Roy 2020, 77–​93). In South America, for example, colonial economies that relied on intensive labour exploitation (those involved in mining and sugar production) have led to lower levels of development than those that did not (such as those involved in the cultivation of subsistence crops, cattle raising, and manufacturing) (Bruhn and Gallego 2012). Yet the prima facie case for the view that colonialism was overall harmful for the colonized is that the present (highly militarized) borders between rich and poor countries broadly coincide with historical boundaries between former colonial powers and colonies (Collste 2010, 86; Walia 2021). Indeed, ‘most of the existing international inequality in standards of living was built up in the colonial period when today’s affluent countries ruled today’s poor regions of the world: trading their people like cattle, destroying their political institutions and cultures, and taking their natural resources’ (Pogge 2005: 38). The populations of Africa and Asia, except Japan and including the subjects of British India and Africa, the French, Dutch, German, Portuguese, Spanish, and American empires, as well as China, with its semicolonial features, had roughly the same standards of living at the end of the colonial period as they had had two centuries earlier, that is, between 1750 and 1950 (Lucas Jr. 2003). Today, of the twenty-​one countries with a human life expectancy figure below sixty years, all are former colonies (WHO 2016). Among countries colonized by European powers during the past five hundred

Imperialism and Its Critics     17 years, those that were relatively rich in 1500 are now relatively poor (Acemoğlu et al. 2002a). To understand the history of genocide, famine, and war in the last five hundred years is to acknowledge the key role of colonialism (Moses and Stone 2007; Moses 2008). In Africa, colonialism has had a negative effect on development (Heldring and Robinson 2012). Considering human stature as an indicator for health and nutritional quality, the biological standard of living in Africa fell under colonialism, with colonized Africans losing fully 1.1 centimetres in height between 1810 and 1970 as a result of land dispossession and the resultant adverse labour market conditions, coercive labour regimes, infectious disease proliferation from additional trade contacts and low public health expenditures, and colonial conflicts (Baten and Maravall 2021). The tax burdens imposed by colonial powers on small farmers, workers, and subjects in Africa far exceeded investment in public goods while the bulk of the funds allocated went toward the maintenance of the metropolitan government (Young 1994). Present-​day corruption in Africa, one of the major impediments to socioeconomic development on the continent, is linked to the historical systematic use of material inducements to compel local African rulers to collaborate in the colonial project of dominating and exploiting their own peoples, with the practices of postcolonial Africa’s political and bureaucratic elites sometimes being an extension of colonial era policies and practices (Mulinge and Lesetedi 1998; Langan 2017). More broadly, corruption in developing countries has historical roots tracing back to colonialism, with European settlement leading to higher levels of corruption for all countries where Europeans remained a minority in the population, that is, for all developing countries (Angeles and Neanidis 2015). In the Indian subcontinent, one of the wealthiest regions in the world prior to British rule, between 1757 and 1947 there was no increase in per capita income, and India fell behind in both absolute and relative terms (Habib 1989; Bagchi 2014; Gupta 2019). During the devastating colonial famines of 1876–​1879 and 1896–​1902, between twelve and thirty million Indian people starved to death, mortality rates often being highest in areas serviced by British railroads (Davis 2002, 26–​27, 142, 319, 332). The earlier stages of British conquest and colonization under the East India Company were also marked by large-​scale famines, in particular the Bengal famine of 1769–​1770 in which around 10 million people, or a third of the population, perished. Although precolonial India had certainly known famine, its frequency, scale, and magnitude expanded dramatically and in line with the disruption to indigenous social and economic structures that accompanied colonial interference and extractions, especially the heavy and unpredictable cost of land revenues (Sheldon 2009; Siddiqui 2020). Colonialism contributed to metropolitan capital accumulation by the indirect export of unemployment to the colonies through discriminatory trade policies. England, France, and subsequently Germany and the United States, protected their own industries from foreign competition while forcing ‘free trade’ on their colonies (Chang 2002). By flooding the colonial market with its own manufactures, Britain caused deindustrialization in India and elsewhere, converting the tropical regions into suppliers of cheap primary goods from the beginning of the nineteenth century. The rapid development of industry in the industrial countries did not lead to increased unemployment

18   Zak Cope and related social conflict there primarily because the direct export of unemployment in the form of the large-​scale outmigration of Europeans to the settler-​colonial ‘New World’ helped relocate and absorb large sections of the European working classes that had been affected by technological unemployment (Patnaik 2016). Colonialism as the expansion and acquisition of control of overseas territories by rival European powers, many featuring unmitigated slavery (with around 13 million Africans forcibly shipped to Europe’s territories between the sixteenth and nineteenth centuries), provided the historical impetus for capitalist accumulation (Inikori 2002; Bhambra 2021). Yet although colonial trade and the institutional changes it supported played a major role in the development of industrial capitalism in Europe (Acemoğlu et al. 2002b), it was not the product of free competition on an open market, but of monopoly, force majeure, and racial discrimination (Bagchi 1972). Colonialism contributed tens of millions of ‘ghost acres’ of land where the natural resources of colonized lands could be directed toward the primitive accumulation of metropolitan capital (Pomeranz 2009, 45, 274–​281, 312–​314). British industrial development was predicated on the natural resources contributed by colonialism, and colonialism encouraged the reallocation of human and financial capital so that empire and technical change intersected, with positive consequences for metropolitan growth (Zahediah 2013). The drain of wealth from colonies to the metropoles consisted in charges for services provided by forcibly imposed foreign government, remittances and payments for unnecessary imports, and especially the rapid expansion of colonial goods exports from the late eighteenth century (Banerjee and Chandrasekhar 2018, 5). Colonial trade differed from trade between sovereign nations due to the fiscal-​trade linkage, whereby colonies were paid for their exports out of their own tax revenues, thus rendering their large export surpluses unrequited for all practical purposes. In the case of colonies like the West Indies, the export surplus was simply appropriated by the metropolis as slave rents. Vast colonial transfers funded British domestic capital formation between 1770 and 1820, the crucial years of the Industrial Revolution (Patnaik 2006). The value of colonial tribute to the European economies of the eighteenth and nineteenth centuries was enormous as, for example, exacted by Britain from the West Indies, India, and Burma, and by the Dutch from Indonesia (Bagchi 2019).

Internal Colonialism Although the term ‘internal colonialism’ is something of an oxymoron, the concept is essential for understanding enduring ethnic inequality inside the boundaries of a single state, in places as diverse as Nunavik in Canada, Western Sahara in Morocco, Chechnya in Russia, and Tibet in China (Chávez 2011, 809). Internal colonialism is ‘a geographically-​based pattern of subordination of a differentiated population, located within the dominant power or country’ (Pinderhughes 2011, 235). Internal colonies are

Imperialism and Its Critics     19 those populations within state borders that are subject to nationality-​based disadvantage manifested in residential segregation and poor housing conditions, lower levels of income, property, and occupational status, unequal opportunity in education, and diminished access to transparent and nondiscriminatory justice. For the metropolitan populations, internal colonies function as an accessible yet disposable reservoir of cheap labour, a domestic supply of inexpensive land and natural resources, and a social basis for wage scaling. The term ‘internal colonialism’ was coined in the mid-​1960s (Gonzales-​Casanova 1965), and was soon elaborated with reference to the United States’ Black population (Blauner 1969; Allen 1969; Tabb 1970). It was later applied to the development of British economy and society, insofar as the denial of self-​determination to the Celtic regions under British jurisdiction, Ireland in particular, ‘fostered a dependent kind of economic development which limited their economic welfare and threatened their cultural integrity’ (Hechter 1975, xiv). A cultural division of labour based on peripheral nationality within the borders of a multinational state regularly ‘assigns individuals to specific roles in the social structure on the basis of objective cultural distinctions’ (Hechter 1975, 39). The theory of internal colonialism was further developed in relation to the US conquest and colonization of the Chicano/​a population of the formerly Mexican Southwest (Barrera [1979] 2002; Acuña 2007). The concept of internal colonialism is applicable to the former Soviet Union (Suny and Martin 2001; Martin 2001; Beissinger 2006, 2015; Pohl 2014; Hirsch 2014; Schorkowitz 2019). In the wider context of the Bolshevik war against the countryside (Graziosi 1996; Gouldner 1978), Soviet Russia’s “internal colonization” of Ukraine (Snyder 2010, 159; Krawchenko 1985, 113-​–​153; Graziosi 2005; Yefimenko 2009; Velychenko 2002, 2012, 2015; Marples 2009), and of Central Asia (Bennigsen and Wimbush 1979; Rumer 1989; Gleason 1991; Michaels 2003; Northrop 2004, 15, 72, 345, 352; Loring 2014; Cameron 2018), and the national oppression of its borderlands to maintain them as suppliers of primary goods and export revenues for metropolitan industry, had much in common with British colonial policy in Ireland and India. It was at least as deadly, with more than 2.6 million people dying of preventable starvation in Ukraine between 1932 and 1933, and 2 million in Kazakhstan between 1930 and 1933 (Wemheuer 2014, 409). Indeed, out of the six to seven million victims of forced collectivization-​induced famine in the USSR between 1931 and 1933, 3.5 to 3.8 million died in Ukraine; 1.3 to 1.5 million in Kazakhstan (where deaths reached their peak in relation to the population size, exterminating 33% to 38% of the Kazakhs and 8 to 9% of the Europeans); and several hundred thousand in Northern Caucasus and, on a lesser scale, in the Volga, where the most harshly hit area coincided with the German autonomous republic. Considering annual mortality rates per thousand inhabitants in the countryside, and making 1926 equal to 100, these jumped in 1933 to 188.1 in the entire USSR, 138.2 in the Russian republic (which then still included both Kazakhstan and Northern Caucasus), and 367.7 in Ukraine, the extreme figures for which are explained by the Famine’s different course there, for which Moscow’s policies of national oppression were largely responsible (Graziosi 2005, 102).

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Settler Colonialism Settler colonialism is ‘a specific mode of domination where a community of exogenous settlers permanently displace to a new locale, eliminate or displace indigenous populations and sovereignties, and constitute an autonomous political body’ (Veracini 2019: 1). Settler colonialism proceeds by means of colonial expansion, land confiscation, the expulsion of the indigenous population, and the dispossession of its wealth and property (Manuel and Posluns [1974] 2018). The ‘settler’ form of colonialism has had the most devastating impact on colonized populations. Thus, in the four centuries following Christopher Columbus’s arrival, at least sixty millions of America’s indigenous inhabitants may have died, with genocidal warfare, forced labour, land expropriation, removals, erasure of identity, and other factors ensuring maximum susceptibility to foreign pathogens to cause epidemics, exacerbate mortality, and curtail population recovery (Cameron et al. 2016). Settler colonialism has been distinguished from ‘franchise colonialism’, with the former aimed at the permanent dispossession and appropriation of indigenous land as opposed to the exploitation of indigenous labour (Wolfe 2006). Yet, to varying degrees, the indigenous inhabitants of South Africa, Zimbabwe, Kenya, Algeria, Bolivia, Mexico, Ireland, the United States, and elsewhere have not only been subject to the dispossession and land expropriation characteristic of settler colonialism, but also the dual labour markets and heightened exploitation associated with internal colonialism (Jacobson 1984; Cavanagh and Veracini 2017; Wolff 1974; Canny 1973, 2001; O’Leary 2019; Lockman 2012; Shadle 2015; Rolston and McVeigh 2021). As a national project, settler colonialism involves the settler population in the collective expropriation of indigenous peoples, and a struggle among different settler classes and class fractions over the distribution of the wealth and economic opportunities thereby created (Englert 2020, 1). Through permanent ‘accumulation by dispossession’ (Harvey 2003), settler societies display a capacity for independent development based on the exploitation of indigenous land and/​ or labour and typically assume an ambivalent position in relation to metropolitan imperialism (Good 1976, 597; Baylies 1980; Castro 2007). Settler colonialism has been practised for centuries by Russia, and was prevalent in the former USSR, with the Stalin government recognizing that Russian settlers throughout the Soviet borderlands, mainly workers and minor officials, ‘could form the iron framework around which a multinational state could be erected’ (Rieber 2015, 4; Pohl 2015; Morrison 2016). It was practised by Nazi Germany, with Nazi expansionism explicitly focused on gaining ‘living space’ (Lebensraum) for an expanding German population, colonizing that ‘space’ with settlers, and ruthlessly dispossessing the indigenous populations (Lower 2005; Zimmerer 2005; Bernhard 2013; Kakel 2013, 8). Settler colonialism has been practised in the People’s Republic of China, with Han Chinese policies of ‘integration through immigration’ designed to secure metropolitan Chinese control over the vast mineral and energy resources and supply lines of

Imperialism and Its Critics     21 its internal colonies of Tibet, Inner Mongolia, and Xinjiang (Bulag 2000; Chung 2018; Anand 2019; McGranahan 2019; Finley 2020; Roberts 2020). State-​sanctioned settlement of Han Chinese into ethnic minority areas has invariably been accompanied by discrimination in employment, social security, and housing (Law 2012, 115). As a means of appropriating indigenous land, pursuing resource extractivism, and/​or controlling the supply of dispossessed indigenous labour, settler colonialism has been practiced around the world, including in Australia (Howlett and Lawrence 2019), South America (Gott 2007), the United States (Kakel 2011; Hixson 2013; Guettel 2013), Kashmir (Zia 2020; Osuri and Zia 2020), and throughout the Anglophone world (Belich 2009).

Investment Imperialism The export of capital in the form of foreign direct investment, portfolio investment, and loans can be a means of economic imperialism. For the social liberal and antisemitic British economist John Atkinson Hobson (1858–​1940), capital export is made necessary by a savings glut caused by underconsumption underpinned by rising domestic inequality (Hobson 1902). The Russian Marxist Vladimir Ilyich Lenin (1870–​1924) agreed with Hobson that the impoverishment of the working class necessitates capital export since it limits profitable investment opportunities for the newly cartelized industries. For Lenin, profit rates could be maintained in the financial metropoles only by ‘exporting capital abroad to the backward countries’ where ‘capital is scarce, the price of land is relatively low, wages are low, [and] raw materials are cheap’ (Lenin [1916] 1974, 241–​242). For both Hobson and Lenin, capital export played a central role in Western empire-​building between 1870 and 1900 (Eckstein 1991, 316). Prior to World War I, the belligerent countries exhibited high levels of income and wealth inequality, holdings of net foreign assets expanded both absolutely and relatively, and foreign assets bore higher average returns than similar classes of domestic assets (Hauner et al. 2017, 37). Yet contrary to Hobson and Lenin, rather than exporting their excess capital, Britain, France and, from 1900, Germany drained capital from the rest of the world by reimporting the income from their earlier investments. Far from being hampered by their limited consumption, these countries consumed part of the product of others (Emmanuel 1972, 47). Just as the United States today is dependent on inflows of capital from the rest of the world, property income from British overseas investment was in excess of the outflow of capital throughout most of the nineteenth century and up to 1914, financing a part of Britain’s annual trade deficit on goods and services as well as financing new British investment. Though profitable, it did nothing to reduce a surfeit of capital at home (Barratt Brown 1972, 54). Furthermore, it is well known that foreign investment is mainly concentrated in the most developed capitalist countries, those with a supposed ‘excess’ of capital. Thus, although much capital investment in the late nineteenth century went to foreign countries, it largely avoided those tropical regions that witnessed the growth of formal empires between 1870 and 1900 (Fieldhouse 1961).

22   Zak Cope Between 1865 and 1914 three-​fifths of British, and two-​thirds of trans-​European foreign investment went to regions of recent European settlement, or the ‘New World’, with only a tenth of the global population, whereas just over a quarter went to Asia and Africa where two-​thirds of the world’s people lived (Edelstein 1982, 40; Stone 1999, 23, 414). This dearth of foreign investment in the underdeveloped countries, however, reflected an overabundance of inexpensive natural resources. Labour was so cheap as to effectively substitute for foreign investment where economically vital natural resources were highly abundant and used in large quantities. As part of the openness associated with late nineteenth-​and early twentieth-​century globalization, colonial governments could not restrict foreign investment to maximize rents. Rather, in the production of export commodities, natural resources and labour were efficient alternatives to foreign capital (Huff 2007, 128–​129). Historically, investment imperialism has been a strategy for meeting states’ goals of geopolitical security (containment) and economic growth (capital) in the face of competition over market access (Go 2014). British colonial investments in Africa did not generally yield ‘superprofits’ in the form of higher-​than-​average returns (Rönnbäck and Broberg 2019, 381–​382), but coercive labour market regulation (including the widespread use of ‘native reserves’) did secure a ready supply of inexpensive labour that undergirded the profitability of British capital: In a counterfactual scenario, where exploitative colonial institutions would have been absent (and the costs of labour or land consequently would have been higher), one would expect that capital exports from the United Kingdom would have been lower, as fewer British investors would have considered it economically rational to invest in the colonies. This would, in turn, potentially have affected the return on investment both domestically in the United Kingdom and potentially elsewhere in the world. A standard theoretical assumption in economics is that there is diminishing marginal return on capital within any single economy (or, as Marxists would have it, a tendency for the profit rate to fall). A decrease in the capital exported from the United Kingdom to Africa would therefore theoretically have meant that investors either would have had to invest in less-​profitable ventures domestically (or in other parts of the world), and would therefore have gained a lower return on their investments, or would have refrained from investing in the first place. Both these factors could potentially have reduced the growth rate of the total economy. Imperialism might thus have increased the amount of capital exported—​acting as a vent against diminishing marginal return on capital in the more mature capital markets in Europe. (Rönnbäck and Broberg 2019, 389)

Foreign investment is one way of diffusing technology internationally, potentially increasing the quantity and variety of goods and services available and raising living standards for the world’s population (Lewis 1948). No less than the Soviet Union and the People’s Republic of China in earlier decades, postcolonial countries have sought foreign investment as a means of increasing industrial productivity and, hence, trade competitiveness. By adopting Western technology, underdeveloped countries would no

Imperialism and Its Critics     23 longer have to exchange labour-​intensive goods for capital-​intensive goods, and losses from unequal exchange might thereby be reduced (Emmanuel 1982). In practice, however, following an initial growth spurt unregulated foreign investment can sustain an industrial structure in which monopoly is predominant, labour is insufficiently absorbed, and there is underutilization of technology (Bomschier and Chase-​Dunn 1985, 39–​40). Although the growth of foreign subsidiaries tends to accelerate economic development in less developed countries, this growth is inhibited by a high concentration of ownership of these subsidiaries by transnational corporations headquartered in a single investing country, that is, by ‘foreign subsidiary concentration’, with political corruption a mediating factor (Kentor and Jorgenson 2010, 431). In dependent economies, foreign investment generates a net outflow of capital in the form of repatriated profits, royalties, services, and repayment of debt and interest through export earnings and other revenue streams (Cope 2019, 43). Crucially, a greater quantity of productive labour is commanded by financially equivalent investment in the industries of low-​wage countries than it is in high-​wage countries (Harvie and de Angelis 2008).

Unequal Exchange Exploitation in international trade arises where there are systematic differences between the labour, or the ecological resources contributed by a country and those received by it in exchange (Emmanuel 1972a; Roemer 1982, 1983; Lonergan 1988; Andersson 2006, 2019; Foster and Holleman 2014; Hornborg 2014). For two countries to balance their trade with both bundles of traded goods fetching equivalent prices, ceteris paribus, the country with the higher wage rate must sell goods with a proportionately smaller labour content (Sau 1982, 120). While more labour is typically contributed by less developed countries, total production costs are much greater in developed countries (principally because of higher wages, technological monopoly, and huge outlays on research and development, design, and financial management). In consequence, there is an unequal exchange of labour time in monetarily equivalent trade between low-​wage and high-​ wage countries in the world economy (Barnes 1985). This unequal exchange of goods embodying divergent quantities of human labour ensures that workers in one country can purchase with one hour of their labour a greater quantity of the labour output of another country. In the last decades of the nineteenth century, real wages began to rise in the advanced capitalist countries as a result of successful trade union struggle and cheapened consumer goods. Meanwhile, dwindling rural outmigration, mass emigration to the settler countries of America and Australasia, and the domestic expansion of industrial capitalism ensured that the demand for labour outstripped its supply. With the extension of the electoral franchise from the late nineteenth century onward, the passage of collective bargaining legislation, and the provision of health and employment insurance, political pressure to maintain the wages and incomes of the working classes has been successful

24   Zak Cope mainly in the advanced capitalist countries. In the underdeveloped countries, by contrast, deindustrialization, economic disarticulation, and labour market segmentation in the context of a dual economy split between a modern export sector and a traditional agrarian sector has consistently ensured an oversupply of labour exerting downward pressure on wages (Lewis 1954, 1979; Findlay 1980; Burgstaller 1987; Breedlove and Armer 1996). In consequence, every exchange between the less developed and the developed countries in the world economy incorporates both capital and wage inequalities (Flint and Taylor 2007, 105–​106). A common Marxist objection to the theory of unequal exchange is that international wage differentials reflect underlying ‘productivity’ differences between workers in different countries. From this perspective, workers in developed countries exchange more ‘socially necessary labour time’ in international trade than less productive workers in developing countries (Mandel 1970). In fact, there are numerous objections to such justifications of global wage scaling (Cope 2019, 61–​70). Fundamentally, measuring productivity according to the market value generated by each unit of labour time relies upon circular logic, as ‘value-​added’ already incorporates those historically and politically situated wage and capital differentials justified in the name of superior metropolitan labour (Jedlicki 2007, 2). Ultimately, where labour of the same productivity is rewarded at a lower rate, international trade between two economies involves a transfer of value from the higher wage to the lower wage economy. (Amin 1976, 138–​154). International differences in the ‘organic composition of capital’, that is, in the quantity of physical plant, equipment, and raw materials used in production relative to the quantity of labour employed, can also lead to a form of nonequivalent exchange as capital-​intensive industries transfer value from labour-​intensive ones in international trade (Bauer [1907] 2000, 200–​201; Grossmann [1929] 1992; Seretis and Tsaliki 2012). Economic rent can arise in international trade insofar as some countries possess a monopoly in the sale or use of primary or intermediate goods, patents, and technologies. Monopoly in the sale of key commodities allows the biggest countries and producers to set prices along global commodity chains so that undervalued human labour must be supplied by some countries to purchase the overvalued product of others (Heintz 2006; Selwyn 2012, 2015; Higginbottom 2014). Conversely, monopsony in the purchase of commodities forces the poorest countries and producers to compete to lower sales prices by means of the undervaluation of labour (Dussel 2001, 229). There is an extensive literature on unequal exchange (Raffer 1987; Brolin 2007; Sheppard 2012; Edwards 2015; Lichtenstein 2016; Ricci 2021), and there have been many sophisticated attempts to quantify it (Amin 1976; Gibson 1980; Marelli 1983; Webber and Foot 1984; Williams 1985; Joseph and Tomlinson 1991; Nakajima and Izumi 1995; Köhler 2002; Veneziani and Yoshihara 2017; Li 2017; Ricci 2019; Cope 2019; Hickel et al. 2021). In recent decades, unequal exchange in North–​South trade has increased real per capita incomes in affluent countries, even while labour’s share of income and levels of manufacturing employment have declined therein (Kollmeyer 2009).

Imperialism and Its Critics     25 Illustrating the complexities of imperialism, China, the second-​largest economy in the world in 2020, is in an ambiguous position in the world economy. Defining the labour terms of trade as the ratio of the labour time embodied in the goods imported by a country (of a certain monetary value) over the labour time embodied in the goods exported by the country (of the same monetary value), in the early 1990s China had unfavourable labour terms of trade (less than one) against every other region in the world. China was then a peripheral economy within the capitalist world system. By 2012, however, China had become a net ‘exploiter’ in its trade with East Asian, South Asian, and African peripheral economies, whereas its labour term of trade was only 0.14 against the United States and 0.20 against other ‘high-​income economies’ (which include all the core countries, high-​income oil exporters in the Middle East, and several semiperipheral economies in Latin America and Eastern Europe) (Li 2016, 74–​75).

Conclusion: Anti-​Imperialism or Alt-​Imperialism? A recent wide-​ranging survey of imperialism is severely marred by a selective focus on ‘Western’ imperialism, both real and imagined (Ness and Cope 2021). Authors and activists on the authoritarian left have long denied or downplayed the crimes of purportedly ‘anti-​imperialist’ states and governments (Hensman 2018), and have falsified the historical record of governments in the USSR, China, and elsewhere with respect to the tens of millions of people killed by what has been called, variously, their ‘military-​feudal exploitation of the peasantry’ (Bukharin 1929), their ‘siege-​mobilised terror-​command economic systems’ (Rosefielde 2010, xvi), and their ‘tribute’ or ‘coercive’ models of confiscatory industrialization (Ellman 1989; Gregory and Harrison 2005). Defenders of Communist ‘anti-​imperialism’ not only disregard the internal colonialism of the entire Soviet era (Nahaylo and Swoboda 1990; Pipes 1997; Naimark 2010; McMeekin 2021) but they also obscure the fact that relations between the USSR and the Council for Mutual Economic Assistance (COMECON) countries were exploitative. The Soviet ‘socialist international division of labour’ was typically characterized by export-​oriented monoculture and dependent development, particularly in its underdeveloped periphery, much like the classical colonialist division of labour (Tsokhas 1980; Clark and Bahry 1983; Packenham 1986; Brun and Hersch 1990, 171–​191). Soviet monopolies sought and achieved dominance in foreign markets through loans, ‘aid’, and unequal exchange, as well as by arms sales bolstered by rampant militarism (Harrison 2014). The Soviet Union reinforced the dependency of its satellite countries by tying capital exports to trade patterns in a structure that allowed it to control and determine the fundamental lines of their economic development (Graziani 1981). Just as US military intervention in Southeast Asia, Central and South America, and elsewhere sought to curb Soviet influence and to protect US investments (Bevins 2020), so too the despotic

26   Zak Cope brand of socialism foisted on Soviet client states by force of arms and intrigue (Kolarz 1953, 1964; Crozier 1999; Andrew and Mitrokhin 2005) accorded well with the needs of Soviet monopolies (Park 1987). In the name of anti-​imperialism, nominal socialists have, inter alia, denied the genocidal colonialism of the Socialist Federal Republic of Yugoslavia and the Republic of Serbia during the Balkans Wars of the 1990s (Cigar 1995; Hoare 2003; Bećirević 2014; Donia 2014; Bartrop 2016). Today, proponents of ‘multipolarity’ deny the appalling repression conducted by the Chinese government against the Uyghur people of Xinjiang/​ East Turkestan, and China’s record of human rights violations, extreme labour exploitation, widespread environmental despoliation, and unequal relations with weaker economic partners (Holslag 2015; Cooney 2016; Kailemia 2017; Maiza-​Larrarte and Claudio-​Quiroga 2019; Shandra et al. 2019). Contemporary ‘anti-​imperialists’ have justified, denied, or simply ignored crimes against humanity on the part of Syria’s (neo) patrimonial billionaire dictatorship and its Russian and Iranian patrons (Haddad 2012; Salah 2017; Hinnebusch 2018; Mogannan 2018; Yassin-​Kassab and Al-​Shami 2018; Dagher 2019; Maher and Peper 2020). They have defended or minimized the deadly Russian invasion and occupation of Ukraine (Galeotti 2015; Miller et al. 2015; Mitrokhin 2015; Connolly 2016; Grigas 2016; Kuzio 2017; Shekhovtsov 2017; Hosaka 2018), and they have disregarded Russian economic imperialism in the former Soviet Republics (Hlosek 2006; Balmaceda 2008; Orbán 2008; Descalzi 2011; Baločkaitė 2012; Lane 2013; Lo 2015; McNabb 2016; Jirušek and Kuchyňková 2018). Self-​professed ‘anti-​imperialists’ have lionized the rentier-​capitalist governments of ‘socialist’ Venezuela and other corrupt and authoritarian populist regimes in Central and South America (Uzcategui 2010; Purcell 2017; Edema 2020). Many socialists routinely confuse anti-​imperialism with anti-​Semitism (Wistrich 2012; Herf 2016; Penslar 2017; Hirsch 2018; Arnold and Taylor 2019; Nelson 2019), all of the above with frequent recourse to rhetorical strawman, tu quoque, and ad hominem illogic. In their shared anti-​elitism, ideological antipluralism, and threatened nationalism, the far left and far right often espouse a similar paranoid and conspiracist populism (van Prooijen et al. 2015; Krouwel et al. 2017; van Prooijen 2019). In common with the radical right, the Leninist left embraces an illiberal, totalitarian ideology, and a chiliastic eschatology dedicated to political terror as a means of establishing vanguardist one-​party dictatorship (Gregor 2012; Ryan 2012). Without such rights and liberties as national self-​determination, judicial independence, freedom of the press and assembly, free trade unions, and free and fair multiparty elections, communist revolution has typically led to the establishment of a brutal imperialist oligarchy with a red veneer, closely resembling fascism in both theory and practice (Agursky 1987; Tucker 1990, 591–​592; Brandenberger and Dubrovsky 1998; Van Ree 2001; Gregor 2000, 2000a; Gellately 2007; Tismaneanu 2012; Sebesteyn 2017). Marx and Engels themselves were contemptuous of non-​Europeans, genocidally so with respect to some Slavic nations, and cared little about colonialism or slavery unless opposition to the same might be mustered for the betterment of the ‘revolutionary’ European proletariat (Moore 1974). As Engels made clear, ‘progress’ required the

Imperialism and Its Critics     27 ruthless extirpation of the ‘ethnic trash’ (Völkerabfälle) allegedly doomed to extinction by virtue of superior European and, especially, German historical dynamism. Thus, for instance, in his 1849 article ‘The Magyar Struggle,’ Engels demanded ‘a bloody revenge on the Slav barbarians’, and the annihilation of ‘all these small pig-​headed nations even to their very names.’ Marx himself was an anti-​Semite in both his published work and his private correspondence, and an anti-​African racist (Weyl 1979). Racial categories rooted in ideologies of ‘blood and soil’ and abject disdain for ‘nonhistoric peoples’ were part and parcel of Marx’s and Engels’s colonial worldview (Avineri 1968; Paul 1981; Rosdolsky 1987; Van Ree 2019). In Europe at least, the far left and far right often embrace the same adolescent ‘anti-​ imperialist’ (‘anti-​American’) ideology, leading them to proclaim support for supposed opponents of the United States, typically autocratic imperialist rivals and their satellites (Coogan 1999; Brown 2005; Postone 2006; Goldner 2010; Fringeli 2016; Reid Ross 2017; Stoetzler 2018). Yet the aspirations of semiperipheral ‘emerging economies’ to catch up and compete with ‘the West’ within the hegemonic terms of an ecologically unsustainable and socially stratifying economic model requires their systematic practice of internal colonialism and ‘subimperialism’. This has produced in accelerated, compressed, and subimperial forms the same structural violence that has underpinned the global North’s rise to planetary dominance, and it has increased conflict with the predominant Northern powers they aspire to emulate (Figueroa-​Helland et al. 2016, 257–​258). The development of the BRICS countries (Brazil, Russia, India, China, and South Africa) has remained conditional on the exploitation of the national peripheries of Africa, Asia, and Central and South America (Calderón-​Zaks 2014). The concept of subimperialism was first introduced by the Brazilian economist Ruy Mauro Marini (1932–​1997) to describe the drive toward economic, geopolitical, and military expansion on the part of larger dependent countries having high concentrations of capital in the form of industrial and financial monopolies (Marini 1978; Sotelo Valencia 2017, 54–​73; Bond 2020). The BRICS countries have historically advanced neoliberalism by reaffirming its global institutional structures and by driving overproductive and overconsumptive maldevelopment worldwide. They have also colluded in the destruction of the environment and in the sabotage of potentially workable global-​scale ecological regulation (favouring instead deepened commoditization through emissions trading) (Bond 2013, 251–​252). The truism that the average citizen in the affluent countries benefits directly and indirectly from the cheap labour and resources of poorer nations is most vehemently denied by European and North American Marxists. Yet mixed economies based on an ‘imperial mode of living’ have by far the highest political, economic, and social standards in the world (Brand and Wissen 2018; Lessenich 2019; Linden 2020). Those nations that have practised some or all the modes of imperialism described above in the most prodigious fashion are today the wealthiest. A production-​consumption index comparing the respective global income decile and by country shares of (1) the global economically active population in industry and agriculture with shares of (2) global household income expenditure finds that in the developed countries the bottom 90% of the population by

28   Zak Cope income presently consumes more of the world’s embodied labour than it contributes (Cope 2019, 114–​117). However, if food sovereignty, fair trade, regulated and diverse foreign investment (especially in high-​technology sectors of production and as conditional upon support for public healthcare, education, and civil infrastructure), reparations for colonialism, the globalization of labour rights, provisions for both minimum and maximum wages at the international level, the incentivization of economic diversification and carbon neutrality, and the disincentivization of militarism, colonialism, and autocracy can be democratically established within the structures of the international economy, then free and self-​governing mixed economies may stimulate peaceful, sustainable, and egalitarian growth worldwide (Elsenhans 1983; Köhler 1999 Quilligan 2010; Tausch 2010; Hein and Truger 2012).

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Chapter 3

Cl assical M a r x i st Imperialism T h e ory Continuity, Change, and Relevance Murray Leigh Noonan

A little over a century ago, the so-​called war to end all wars came to an official end with the signing of the peace treaty in the Hall of Mirrors at Versailles. The war years of 1914 to 1918 were absolutely horrific, with destruction, death, and devastation visited upon much of Europe and beyond. World War I, as it came to be known, was the culmination of economic, political, and military tensions between Great Power rivals. The shifting alliances, conflicts, and power struggles among nations that were a feature of nineteenth-​century European politics and diplomacy had, by the first decade of the twentieth century, given rise to two groups of formidable, competitive nations. On one hand, Great Britain, France, and Russia and their colonies and allies, and on the other, Germany, the Austro-​Hungarian empire, and their colonies and allies. Also, in the last third of the nineteenth century the expansion of European imperialism had led to the ‘scramble for Africa’ as well as the annexation and colonization of other parts of the world. The scope of such empire building by the European powers was unprecedented. In the economic field, changes had taken place too. The capitalism that Marx had analysed, namely British capitalism, had spawned competitors and the process of its expansion across the globe was well underway. Since Marx’s death, much had changed. The tasks for those following in the footsteps of Marx and Engels were manifold. The Marxist acolytes had to critically analyse and understand the political, economic, and social changes that had occurred in the late nineteenth and early twentieth centuries, using the tools bequeathed to them by Marx and Engels. On the basis of their analyses, they sought not only to inform and educate their comrades but also to form strategies for the parties of Social Democracy, to overcome the excesses associated with the then current incarnation of capitalism and its attendant political forms.

44   Murray Leigh Noonan Thumbnail sketches of history may seem at first glance to be somewhat banal ‘scene setting’, but it is important to situate theorizing in its historical context. Especially so when it comes to the classical Marxist theories of imperialism and, in particular, with Lenin’s work on imperialism. His book, Imperialism, the Highest Stage of Capitalism (Lenin 1973) has been, at times, elevated to the status of being the definitive text on the subject. Such uncritical acceptance of Lenin’s analysis of imperialism is still evident, despite the passage of time since its publication and the myriad changes in global capitalism and geopolitics that have ensued. It could be argued then that on this basis alone Lenin’s understanding of imperialism continues to have relevance, as for some it remains the indispensable and perhaps final word on the subject. A more nuanced view of the relevance of Lenin’s work on imperialism will be part of a wider discussion of the contemporary applicability of the classical Marxist theories of imperialism in what follows. This chapter critically engages with the theorizing of a selection of classical Marxist theorists of imperialism, in order to outline what their analyses revealed about their era. Arising from this overview of the output of the chosen classical Marxist thinkers, a clear picture of the strengths and limitations of each of their works emerges, enabling a platform from which to judge the relevance of their theorizing of imperialism for twenty-​first-​century global capitalism and geopolitics.

Hilferding, Luxemburg, Bukharin, and Lenin: The Classical Marxist Canon of Imperialism Theory The classical Marxist theories of imperialism, it has been suggested, are to be found in the work of these four thinkers (Milios and Sotiropoulos 2014, 1). Imperialism had exercised the minds of other Marxists (and the non-​Marxists Gaylord Wilshire and John Hobson, for example) such as Otto Bauer and Karl Kautsky, both prior to and during the period when the classical Marxists wrote their pieces on imperialism. That is, before the publication of Rudolf Hilferding’s seminal book Finance Capital in 1910 (Hilferding 1981) and during the turbulent eight years that followed. Critical engagement with imperialism was a feature of European Social Democratic writing prior to the outbreak of war in 1914. Out of this engagement came a number of considered pamphlets and articles on imperialism, which served as a resource and inspiration for the research on imperialism that was to follow. Some of this work is of interest still and has been collected in a valuable tome that gives a clear insight into the importance that Marxist writers attached to understanding the machinations of the capitalist imperialism of their time (Day and Gaido 2012). Nevertheless, it is not hard to argue that the work of Hilferding, Luxemburg, Bukharin, and Lenin stand as prime examples of Marxist analysis of

Classical Marxist Imperialism Theory    45 imperialism and thus their writings constitute the classical Marxist oeuvre on the subject.1 Hilferding’s book is our starting point.

Hilferding’s Finance Capital The publication of Finance Capital in 1910, confirmed Hilferding’s place as a leading exponent of Marxist political economy, with a number of his Marxist contemporaries praising the book (Day and Gaido 2012, 51). One of the aims of Hilferding’s book was to uncover ‘the economic characteristics of the latest phase of capitalist development’(Hilferding 1981, 21). Hilferding argued that, after 1895, there had been substantive changes to capitalism, with not only its ‘rapid expansion’ (Hilferding 1981, 318) but also changes in how capitalist enterprises were run. Joint stock companies, which Marx had identified in Capital, had become the dominant form of business ownership. Majority shareholders of a company’s stock were able to extricate themselves from the running of the business, leaving that to management. Also, diverse share ownership enabled and encouraged the interlinking of corporations. It is not too hard to see that the shareholding and ownership practices that Hilferding highlighted back in the first decade of the twentieth century remain a feature of twenty-​first-​century corporate ownership and control. One of Hilferding’s key findings about the new phase of capitalism was that competition among capitalist enterprises had eliminated a number of firms and brought others together giving rise to cartels, trusts, and syndicates. A cartel made up of two or more enterprises operated to restrict ‘certain kinds of competition in the sphere of circulation by establishing uniform terms and conditions of payment’ (Hilferding 1981, 204–​205). The trend to concentration of capital and tightening of control meant for Hilferding the competitive stage of capitalism had been succeeded. The features of this new phase, namely different types of business ownership as well as forms of monopolistic association had a specific purpose: economic domination (Hilferding 1981, 206).

Capitalism’s New Properties There were two other features identified by Hilferding that marked a qualitative change in the capitalism that Marx had analysed. Hilferding gave the appellation ‘finance capital’ to what he said was the coming together of banking, industrial, and commercial capital, which was an important development: Finance capital signifies the unification of capital. The previously separate spheres of industrial, commercial and bank capital are now brought under the common direction of high finance, in which the masters of industry and of the banks are united

46   Murray Leigh Noonan in a close personal association. The basis of this association is the elimination of free competition among individual capitalists by the large monopolistic combines. This naturally involves at the same time a change in the relation of the capitalist class to state power. (Hilferding 1981, 301)

Anthony Brewer notes that Marx had revealed three branches of capital: industrial capital, involved directly in the production process including agriculture; financial capital, the domain of banks and associated financial entities; and commercial capital, the realm of merchants and the buying and selling of commodities (Brewer 1990, 92). Hilferding argued that such was the influence of banks in the development of German capitalism and so deeply were they intertwined with industrial capital that the majority shareholders in the banks had become the dominant figures in both banking and industrial circles (Hilferding 1981, 225). So influential was Hilferding’s concept of finance capital that both Nikolai Bukharin and Vladimir Lenin adopted the concept, with both seeing finance capital as a fundamental element of capitalist development in the late nineteenth and early twentieth century.

The Export of Capital During the period when Britain held sway as the first and only industrial capitalist nation, free trade and the export of commodities were some of the hallmarks of British capitalism. The advent of the new industrializing powers Germany and the United States, which had protected their nascent industries with the imposition of tariffs, caused a shift in exports. Cheap British commodities which were able to find markets across the globe now faced tariff walls, thus increasing the prices of those commodities. The solution to the problem of declining profits associated with commodity exports was to export capital. Capital for manufacturing plants, for example, was sent overseas to take advantage of the higher prices for commodities in the countries with protective tariffs. Profits of the industrial plants found their way back to the source of the capital. Hilferding pointed out that German banks, too, were keen on exporting capital by setting up branches in foreign countries and extending loans: Thus a large German bank establishes a branch abroad, which then negotiates a loan the proceeds of which are used to construct an electrical generating plant, and the construction work is assigned to an electrical company which is connected with the bank at home. . . . It is the intimate connection between bank and industrial capital which is responsible for the rapid development of capital exports. (Hilferding 1981, 315)

Capital export not only opened up new markets but also moderated the effects of crises, promoted domestic production, and prolonged prosperity (Hilferding 1981, 318).

Classical Marxist Imperialism Theory    47 Competition among the advanced capitalist nations accelerated the export of capital, which in turn led to the jealous guarding by the advanced capitalist nations of their markets, spheres of influence, dependencies, and colonies from the other capitalist powers. Here was the impetus for the expansive colonial drive of the European powers witnessed in the last decades of the nineteenth century.

Finance Capital’s Colonial Policy Hilferding claimed that finance capital strove to incorporate ‘parts of the world market into the national market, through a colonial policy which involves the annexation of foreign territories’ (Hilferding 1981, 325). The annexations and associated tensions between colonial powers necessitated the deployment of troops to safeguard newly acquired territory both from internal resistance within the colony and from encroachment by colonial rivals. The economic and colonial policies of finance capital, with its monopolistic tendencies, tariffs, capital export, and refurbished colonialism needed a strong interventionist state. Not only that but capitalist nation states had to be aggressive, motivated by notions of racial superiority and not afraid of conflict in pursuing the interests of finance capital: The ideal now is to secure for one’s own nation the domination of the world an aspiration which is as unbounded as the capitalist lust for profit from which it springs. . . . Since the subjection of foreign nations takes place by force—​that is, in a perfectly natural way—​it appears to the ruling nation that this domination is due to some special natural qualities, in short its racial characteristics. Thus there emerges in racist ideology, cloaked in the garb of natural science, a justification for finance capital’s lust for power, which is thus shown to have the specificity and necessity of a natural phenomenon. An oligarchic ideal of domination has replaced the democratic ideal of equality. (Hilferding 1981, 335)

The State as Capitalist Class Instrument Hilferding had a straightforward view of the state in a capitalist society. It was dominated by capitalist class interests and in particular by finance capital. Capitalists dominated the state because they had enormous economic power and were able to subsume other classes’ interests into their own (Hilferding 1981, 337). This was true of the landed gentry, where alliances between the urban capitalists and large landholders cleared the way for finance capital to dominate the state. In removing the obstacle of possible opposition by a powerful class, finance capital was able to proceed with the implementation of imperialist policy (Hilferding 1981, 342).

48   Murray Leigh Noonan

Imperialism as Policy Unlike more revolutionary-​minded Marxist contemporaries such as Bukharin and Lenin, Hilferding saw imperialism as a policy. Imperialism for Hilferding could be summarized as meaning the economic policy of finance capital, ‘modern protectionist policy’, the export of capital, a strong state, and the annexation of territories (Hilferding 1981, 366, 322). Imperialism also had ideological elements such as the celebration and promotion of the strong state, militarism, war, and racism (Hilferding 1981, 336, 346, 349). Thus, in Hilferding’s analysis, imperialism existed as a vaguely defined term that encompassed the militaristic and expansionist tendencies of finance capital with an additional ideological side.

Hilferding’s Contribution to Understanding Imperialism Hilferding’s work in Finance Capital established him as one of the founders of Marxist imperialism theory. The strengths of Hilferding’s analysis of the shift from the competitive free trade era of capitalism to the era of finance capital can be found in the theoretical concepts he advanced, concepts which were enthusiastically taken up by subsequent Marxist theorists of imperialism. Concepts such as finance capital, the export of capital, tariffs, cartels, and the concentration and centralization of capital tending towards monopolization were embraced by Luxemburg but especially so by Bukharin and Lenin. Where Hilferding’s theorizing of imperialism is less strong is in his lack of a clear definition of imperialism; the instrumental view he adopted of the state; and in his universalizing of German capitalist development as representative of all capitalist development. Largely missing from Hilferding’s analysis, due to his focus on the economic side of imperialism, was a political programme to combat the excesses of the imperialist policy of finance capital.

Rosa Luxemburg, Imperialism, and Capitalist Accumulation Luxemburg’s The Accumulation of Capital (Luxemburg 1971) was published in 1913, the year before the outbreak of World War I. Some of the arguments she made in the book were the subject of quite a bit of criticism from her Marxist contemporaries Bukharin and Lenin. Nonetheless, her book has a number of keen insights into the workings of global capitalism and its close connections with militarism, the exploitation of the non-​ capitalist parts of the world and imperialism. Indeed, it is in the last section of her book, George Lee asserts, that ‘the first comprehensive theory of imperialism sculpted by a Marxist’ can be found (Lee 1971, 847).

Classical Marxist Imperialism Theory    49 Luxemburg was troubled by a problem she perceived in the reproduction schemas in Marx’s Capital. The result of her grappling with the problem was The Accumulation of Capital (Luxemburg 1971). In Luxemburg’s view, the reproduction schemas in volume 2 of Capital could not account for the expanded reproduction of the capitalist accumulation process. The reproduction schemas that Marx offered up were abstractions which narrowed society down to two main classes. With production and consumption limited to supplying just these classes, then, consumption of consumer and producer goods remained static (Lee 1971, 847). The expanded reproduction process of capitalism, Luxemburg asserted, could only occur via the incorporation of non-​capitalist territories into the capitalist accumulation process. A key part of this process of incorporating the non-​capitalist territories into the capitalist accumulation process was imperialism: ‘Imperialism is the political expression of the accumulation of capital in its competitive struggle for what remains still open of the non-​capitalist environment’ (Luxemburg 1971, 446). According to Peter Nettl, Luxemburg viewed imperialism as a combination of effects which came with the expansion of capitalism into the non-​capitalist areas of the world. These effects included: Militarism closely connected with colonialism, protectionism and power politics as a whole . . . a world armament race . . . colonial robbery and the policy of ‘spheres of influence’ all over the world . . . in home and foreign affairs the very essence of a capitalist policy of national aggression. (Nettl 1966, 524)

Imperialism for Luxemburg (and ditto for Bukharin and Lenin) was the final historical stage of capitalism, a stage characterized by ‘lending abroad, railroad constructions, revolution and wars’ (Luxemburg 1971, 417, 419). An effective way of drawing the non-​capitalist areas into the orbit of the capitalist nations was through loans. International loans offered by governments and powerful financial corporations in the capitalist countries prised open the agriculture-​based economies of the non-​capitalist regions. The loan recipients in the non-​capitalist regions became supplicants, with their economic development shaped by the priorities of the governments and financiers in the creditor countries. The pursuit for new areas of investment for surplus capital in the non-​capitalist regions was the catalyst for the loans, which not only distorted the development of the economies of the recipients, but also created a new set of capitalist competitors (Luxemburg 1971, 421).

British Free Trade and the Response: Tariffs The bountiful resources of its empire gave Britain tremendous advantages. The British colonies enabled British capitalists ‘almost unlimited opportunities for capitalist accumulation’ (Luxemburg 1971, 451). In order to sustain Britain’s pre-​eminent position as

50   Murray Leigh Noonan the leading mercantile and capitalist power, British ideologues promoted the doctrine of Free Trade. The Free Trade ideologues of the Manchester school, Luxemburg claimed, assumed incorrectly that commodity exchange was the sole foundation for the accumulation of capital. Free Trade doctrine held sway during the 1860s and 1870s, with the demise of the doctrine coming about for a number of reasons, not the least of which was that Free Trade did not advance the capitalist accumulation process in toto. Luxemburg suggested that Free Trade was finally and firmly rejected when industrial capital established itself in the major European countries (Luxemburg 1971, 450). In reaction to British Free Trade advocacy during the aforementioned period, industrializing nations such as Germany and the United States protected their industries with tariffs. The advent of protective tariffs ushered in heightened competition not only between the emerging capitalist countries themselves but also with Britain. The competitive struggle took on many forms, one of which was force. For Luxemburg, militarism was a key component of imperialism.

Militarism: An Integral Part of Imperialism and the Accumulation Process Luxemburg identified two characteristics of militarism. The first of these characteristics being the obvious one of enforcement. The use of military force by European states in the colonial period helped subjugate many parts of the rest of the world. The colonies were an important source of the wealth that was pivotal in the very beginning of the capitalist accumulation process, or what Marx termed the ‘process of primitive accumulation’. The conquering and plundering of the New World and the Indian subcontinent and the maintenance of ‘order’ was only possible through the use of military forces. With the advent of capitalism as the dominant mode of production in Europe, the armed might of the metropolitan state ensured that commodity-​based economies and commodity exchange were to become the norm for those places in the world ‘where the social structure had been unfavourable to it’ (Luxemburg 1971, 454). Military force was also intimately involved in the struggles between the capitalist powers for the division of the non-​capitalist regions (Luxemburg 1971, 454). The second characteristic of militarism, according to Luxemburg, was that it was a special province of accumulation. The argument for militarism as a special part of the accumulation process goes as follows: funding for militarism came via indirect taxes levied on workers and peasants. These indirect taxes lowered the living standards of the workers and peasants, but the increased state revenues afforded the opportunity for the state to invest in armaments manufacture. Such state investment gave stability to capitalists operating in the armaments industry. Luxemburg asserted that the armaments industry which in large part was funded through state revenue was

Classical Marxist Imperialism Theory    51 nevertheless controlled by capital. The control was enabled by legislation and by the moulding of public opinion by the press (Luxemburg 1971, 464–​466).2

Luxemburg’s Understanding of Imperialism and Its Relevance Unlike Hilferding, Luxemburg did not see imperialism as a policy or set of policies. Rather, for her, it was a phase of capitalism. Imperialism was a direct result of what Luxemburg claimed was the problem of accumulation, the temporary resolution of which required non-​capitalist countries to become outlets for surplus commodities. Lee’s claim that Luxemburg’s was the first comprehensive theory of imperialism by a Marxist, is exaggerated. It was not comprehensive, as her book omitted or gave little attention to a number of features of imperialism, namely the centrality and importance of finance capital, the export of capital, and the role of monopoly, as flagged in the work of Hilferding and, before him, the British liberal John Hobson’s groundbreaking work on the subject. What Luxemburg’s grappling with the problem of accumulation revealed about imperialism, though, was influential and remains so. Her detailed examination of how the capitalist colonial powers such as Britain and France (and others) had used loans backed up with military force to subjugate and make dependencies of Egypt, Turkey, and China exposed the horrors of imperialism. Her case study of how loans for projects such as the Suez Canal had helped subvert the Egyptian economy from what she called a natural economy (based on agricultural production for basic needs) to a commodity economy and thence a capitalist economy (Luxemburg 1971, 429–​ 439) continues to resonate. That is because international loans provided by such institutions as the IMF and various other banks are still powerful weapons in the arsenal of the imperialist powers. Another important element of Luxemburg’s book that has contemporary relevance is her highlighting of militarism and its intimate connection with imperialism. The use of military force blighted the twentieth century and Luxemburg and her comrade Karl Liebknecht were victims of it, being murdered by members of the Freikorps on the night of 15 January 1919 (Nettl 1969, 487). The use of force and the threat to use force continues to be a feature of imperialism. One only needs to consider how interconnected the military industrial complex is with contemporary US imperialism to understand the importance and continued relevance of Luxemburg’s early theorizing on the symbiotic relationship between militarism and imperialism. The emphasis that Luxemburg placed on the deleterious impact that capitalist imperialism had on the colonial countries presaged in part the work of various thinkers associated with dependency theory and its later offshoots. The contemporary focus on the impact of imperialism on what is called the Global South can be said to be influenced by Luxemburg’s pioneering work. A caveat applies here, though. While Luxemburg did

52   Murray Leigh Noonan show how badly imperialism had affected specific colonial countries, the focus in her book was predominantly on developments in the imperialist countries of Europe. Luxemburg’s understanding of imperialism was predicated on her interpretation of the capitalist accumulation process. Her theorizing of imperialism in The Accumulation of Capital was insightful but was lacking in its drawing out of the relationships between the economic and political. That is, for Luxemburg, political phenomena such as foreign policy and international relations in general had their basis in and were determined by the accumulation process: ‘In reality, political power is nothing but a vehicle for the economic process’ (Luxemburg 1971, 452). Such a narrow and deterministic view of the role of the political in imperialism was a feature that Bukharin’s writing on imperialism shared with Luxemburg’s.

Bukharin’s Holistic Approach: World Economy as Foundation of Imperialism Nikolai Bukharin’s book Imperialism and World Economy (Bukharin 1973) can rightfully be claimed to be the first comprehensive attempt to theorize imperialism by a Marxist. For both Hilferding and Luxemburg the central focus of their books was not imperialism, whereas for Bukharin it was. In particular, Bukharin wanted to analyse and thus reveal how global capitalism (the world economy) had necessarily generated capitalist imperialism. Bukharin took up Hilferding’s work on finance capital, expanding on the latter’s examination of the central role of banks in the German and U. economies. Unlike Hilferding, however, Bukharin was not content with limiting the scope of his critical examination of capitalist development to the advanced capitalist nations. Capitalism had grown and changed such that national economies were now subject to the laws of the global market (Howard and King 1989, 245). Not only that but Bukharin also concluded that due to changes such as monopolization, cartelization, the concentration and centralization of capital, and state intervention, the law of value did not operate in national economies. Rather the law of value only operated at the international level. National economies were integrated into the world economy and were subjected to the laws of the latter. Capitalism, Bukharin argued, had been transformed from its early incarnation of competitive capitalism to monopoly capitalism. Monopoly capitalism was in turn the basis for ‘organized’ state capitalism (Howard and King 1989, 246).

Bukharin’s Analysis of the World Economy The anarchical, unplanned nature of the capitalist accumulation process that was a feature of national economies in the competitive era of capitalism, was still a central element

Classical Marxist Imperialism Theory    53 of the world economy, Bukharin claimed. The world economy was also characterized by a division of labour which when combined with the uneven development of productive forces at the national and international levels, produced different types of economies and production spheres. There was a clear bifurcation in the world economy with, on the one hand, predominantly agricultural countries and, on the other, predominantly industrial countries. Bukharin highlighted the extensive connections between countries as well as ‘intensive, thicker networks’ (Bukharin 1973, 28) that drew the non-​capitalist regions further into the vortex of global capitalism. Technical progress impelled prodigious growth in production processes. Bukharin noted the qualitative and rapid leap that had occurred in the productive forces of world capitalism due to advances and improvements made by the application of electricity, internal combustion motors, turbines, and chemical discoveries. In short, the intertwining of science and industry to a high degree generated the rapid improvements in production processes occurring in the late nineteenth and early twentieth century (Bukharin 1973, 28–​29). Building on Hilferding’s analysis of the central role of German banks in the German national economy, Bukharin revealed that British, French, and Dutch banks did not confine themselves to just their home economies; they extended their reach into their colonies as well. In their national economies though, these banks were in such close relationships with industrial capital that, as Hilferding revealed, the banking and industrial capital nexus had given rise to a new entity—​finance capital. Finance capital had cemented its place as a central element of the European national economies. With technical progress accelerating the productive forces combined with the rise of finance capital and monopolies, industry had been made ‘over into one organised system’ (Bukharin 1973, 52). The organized system Bukharin delineated was the result of the competitive laws of capitalism winnowing out the weaker capitalist competitors, which in turn led to the concentration and centralization of capital. In addition, finance capital played a key part in directing investment in the production process, thus helping establish organizational connections in all branches of production. Another crucial element in this organized capitalism was the active interventionist role of the state. Incorporated into the European national accumulation processes, the state not only played an active interventionist role but also became part of what Bukharin called a ‘state capitalist trust’. That was not all; the state became an owner or stakeholder in various enterprises. The prime example of a ‘state capitalist trust’ was the wartime German state, which immersed itself in all the sectors of the economy, regulating, directing production, ensuring military needs were met. In Bukharin’s mind, the wartime German state showed how economic needs and requirements determined state functions (Bukharin 1973, 63). Out of all these developments, Bukharin identified a new phase in capitalism, that of state capitalism, which was a result of the economic, social, and political conditions that had prevailed for the two decades in the lead up to World War I. The advent of cartels,

54   Murray Leigh Noonan tariffs, monopolization, the coming together of finance capital and the state in state capitalist trusts, culminating in highly organized state capitalism spelt the end of competitive capitalism at the national level. State capitalism, Bukharin argued, had seen the elimination of competitive capitalism in the national economies but not at the level of the international or world economy. Competition in the world economy was intensified. As mentioned previously, the anarchical, unplanned nature of capitalism during its competitive phase still existed but was now part of the world economy, rather than in the national economies.

Imperialism Grew Out of Changes to the Capitalist World Economy The intensification of competition and tension in the world economy ensured that conflicts and militarism were unavoidable. As noted by Bukharin, prior to the outbreak of the war, it had been the people of the colonies that had borne the brunt of the barbarism, waste, and destruction of imperialism. With the coming of the war in Europe, it was now the working classes in the capitalist heartlands that experienced the excesses of imperialism, with levels of death and destruction never before witnessed in the world. The ‘few pennies’ and other advantages that the European proletariat received from the colonial policies of the metropolitan powers could not make up for the ‘millions of butchered workers . . . to the vandalism of plundered productive forces, to [the] high cost of living and starvation’ (Bukharin 1973, 167). Bukharin had no doubt that imperialism was not just aberrant policy or policies that could be corrected or reversed. Imperialism was a direct result of the developments in the world economy that had occurred since the supplanting of the competitive era of capitalism by state capitalism. Bukharin was scathing of the reformist position on imperialism adopted by people such as Kautsky and Hilferding. Both Kautsky and Hilferding believed that imperialism and its excesses could be mitigated by policy changes, that imperialism was not a necessary by-​product of the capitalist world economy (Bukharin 1973, 142–​143). Such an understanding of imperialism was profoundly wrong, Bukharin claimed, and it was the bankruptcy of the leaders of the Second International such as Kautsky with their reformist views on imperialism that did their part in enabling the working classes of Europe to be plunged into the murderous maw of the First World War. The buck did not stop with the reformist leaders of the Second International though. Imperialism was the cause of the war, and it was the state capitalist trusts of each belligerent nation that were both primarily and equally responsible for the carnage. Moreover, imperialism would always cause wars and the only way to stop wars was to get rid of imperialism. Socialist Revolution, not reformism, could only achieve the goal of sweeping away imperialism. Overcoming imperialism, overthrowing the ‘dictatorship of finance capital’ and smashing the bourgeois state required ‘the dictatorship of the revolutionary proletariat’(Bukharin 1973, 170).

Classical Marxist Imperialism Theory    55

The Role of the State in Bukharin’s Imperialism Theory As with Hilferding and Luxemburg, Bukharin’s portrayal of the role of the state in his theorizing of imperialism was instrumentalist and simplistic. Missing from his analysis of the state was the complexity of class struggle, the contestation between classes and within the ruling class itself. Bukharin: The fact is that the very foundation of modern states as definite political entities was caused by economic needs and requirements. The state grew on the economic foundation; it was only an expression of economic connections; state ties appeared only as an expression of economic ties. (Bukharin 1973, 73)

Bukharin based his understanding of the role of the state on the classical Marxist position as set forth by Marx and Engels in The Communist Manifesto, namely that ‘the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie’(Marx 1973, 69). However, Bukharin, in his contempt for the reformist position of Kautsky and the latter’s naïve belief in the possibility of attaining socialism via parliamentarism, oversimplified the role and functions of the state. Bukharin claimed that in the era of imperialism, bourgeois parliaments were merely decorative, functioning by and large to pass on decisions made by businessmen’s associations, giving formal approval to ‘the collective will of the consolidated bourgeoisie as a whole’ (Bukharin 1973, 128). In positing the state as a mere rubber stamp for bourgeois class interests in the period of state capitalism/​imperialism, Bukharin was able to dismiss Kautsky’s reformist utopian ideas about parliamentarism and the state. However, in doing so, Bukharin rendered the political superstructure as completely subordinate and overdetermined by the economic base. Vivek Chibber astutely points out that the classical Marxists’ handling of the state’s role in imperialism, omitted ‘the political mediation of the deep economic forces that [were] taken to be driving imperial projects’ (Chibber 2004, 429). Hilferding, Luxemburg, Bukharin, and Lenin, Chibber argues, assumed that ‘the state did not figure as an independent factor in explaining imperialism, mainly because they functioned with a fairly simple notion of the state-​capital relation’ (Chibber 2004, 429). The concepts of state capitalist trusts and state capitalism as offered up by Bukharin are prime examples of fairly simple notions of the state–​capital relation. Bukharin’s concept of state capitalism with its associated claim about the competition among capitals only being found in the world economy and not in national economies, was disputed by Lenin. Both Lenin and Bukharin were in agreement about monopoly capitalism heralding the end of laissez-​faire capitalism. They parted company over whether the monopolization process had completely eliminated competition in the national economies of the capitalist powers. Unlike Bukharin, Lenin did not see monopoly capitalism as a monolithic process; monopolies and trustification did not abolish competition and internal crisis in the national economies of the advanced capitalist countries. According to Lenin, a less monolithic picture was observable, one that saw a mixture of

56   Murray Leigh Noonan free competition and monopoly within the advanced capitalist economies (Cohen 1970, 448–​449). Monopolization was not as all-​encompassing as Bukharin suggested; rather, Lenin argued, monopolization was only partially achieved, which exacerbated internal crises in individual capitalist economies. Conflicts of interest between the monopolistic and competitive sectors showed that competitive pressures still existed. Bukharin’s conceptualizing of state capitalism did not adequately engage with how important and influential uneven development of capitalism was, both within nations and in the world economy. Uneven development had a direct bearing on the relative strengths of the capitalist powers and was a crucial part of the economic basis of the military rivalries between the great European powers (Howard and King 1989, 249). Bukharin and Lenin agreed about imperialism being a necessary product of the monopoly stage of capitalism and that war was an unavoidable feature of imperialism. Their views diverged on aspects of monopolization, competition, and the world economy, but their differences here were not antagonistic; after all, Lenin wrote an introduction for Bukharin’s book (Buchanan 1976, 69; Cohen 1970, 449; Howard and King 1989, 249).

Bukharin’s Imperialism Theory: Strengths, Weaknesses, and Relevance Notwithstanding the problems in simplifying some of the complexities of the political and economic components of imperialism, as detailed earlier, there are a number of strengths in Bukharin’s theorizing. To Bukharin goes the honour of producing the first comprehensive Marxist account of imperialism. In Imperialism and World Economy, which Bukharin finished writing in 1915, Hilferding’s insights found in Finance Capital such as the genesis of finance capital, organized capitalism, cartelization and capital export were skilfully extended and synthesized to create a coherent and logically consistent theory of imperialism. Bukharin highlighted the importance of the capitalist world economy not only for the accumulation process but also for its being an integral element in and bedrock of imperialism. Bukharin’s propositions about the relationships between the international and national economies were noteworthy and provocative. The aim of Bukharin’s book was to provide a theory that would account for the outbreak of the war that drew in the major European powers, and underscore the connections between monopoly capitalism, capitalist expansion, the state and interimperialist rivalry. Unlike reformists such as Kautsky, who posited imperialism as a policy or set of policies subject to reform, Bukharin saw imperialism as a policy of finance capital, a policy which was not only incapable of being reformed, but which inevitably led to militarism and war. The ruinous policy of imperialism could only be addressed by smashing the state and replacing the ‘dictatorship of finance capital’ with the ‘dictatorship of the revolutionary proletariat’ (Bukharin 1973, 170). Any other course was either liberalism, dangerously utopian, or misleading. In this and in other respects, Bukharin’s book critically examined several of the topics found in Lenin’s book published a year later in 1916.

Classical Marxist Imperialism Theory    57 For Alex Callinicos, Bukharin’s contribution to Marxist imperialism theory continues to have relevance, as it forms the basis, along with Lenin’s work on imperialism, of his own attempt to theorize twenty-​first-​century geopolitics and global capitalism. Callinicos identifies three major strengths of Bukharin’s analysis of imperialism. The first is ‘the greater rigour, consistency, and economic sophistication that he brings to the subject in comparison to Lenin’ (Callinicos 2009, 52). The second is that with the fusion of capital and the nation state in state capitalism, a development which had its apogee in wartime Germany, Bukharin was able to ‘integrate into [his] analysis the retreat from laissez-​faire very visible in late nineteenth-​century economic policy making’, the spread of protectionism and the arrival of ‘the state-​directed war time economies of the First World War’ (Callinicos 2009, 52). The third strength of Bukharin’s writing on imperialism is the highlighting of the centrality of the world economy in the capitalist accumulation process and in imperialism. He thus ‘established a bridgehead that can help connect the classical Marxist theory of imperialism with the world economy of our own day’ (Callinicos 2009, 52). While Callinicos’s claims about the sophistication of Bukharin’s analysis of the capitalism of his time can be questioned in the light of the critical comments outlined earlier (in particular, the simplistic and instrumentalist theorizing of the state that is a feature of Bukharin’s state capitalist trusts and state capitalism), Callinicos demonstrates in his own work that the classical Marxist theories, if handled critically and undogmatically, have much to offer in advancing our understanding of twenty-​first-​century imperialism.

Lenin’s Analysis of Imperialism: The Benchmark Theory In a collection of essays marking the centenary of World War I and its shaping of world politics, Alexander Anievas underscores the influence that Lenin’s book on imperialism has had for a critical Marxist understanding of that time. Anievas suggests that there has been a dearth of Marxist writers attempting to theorize the war’s origins, ‘which may very well have to do with the long legacy cast by Lenin’s theory of imperialism, and the orthodoxy this imposed on many subsequent generations of Marxists’ (Anievas 2016, 96). Such has been the influence of Lenin’s Imperialism, the Highest Stage of Capitalism (Lenin 1973) that for many, Marxists and non-​Marxists alike, it is Lenin’s work that was and remains the benchmark of imperialism theory.

Lenin’s Use of Hilferding’s Findings Lenin incorporated a number of the findings made by Hilferding into his own analysis. Concentration and centralization of capital, capitalist competition necessarily giving

58   Murray Leigh Noonan rise to monopolies, the surpassing of laissez-​faire capitalism by the new era of monopoly capitalism, the advent of the melding of banking and industrial capital to form finance capita, the formation of cartels and trusts, these were features of contemporary capitalism that Hilferding especially brought to the fore in Finance Capital and which Lenin elaborated on in his book. Concentration and centralization of capital led inexorably to monopolization, concluded Lenin. He came to this conclusion by reviewing the growth of large US and German corporations: ‘at a certain stage of its development, concentration itself . . . leads right up to monopoly; for a score or so of giant enterprises can easily arrive at an agreement, while on the other hand, the hindrance to competition, the tendency towards monopoly, arises from the very dimensions of the enterprises’ (Lenin 1973, 14). Another development contributing to the consolidation of capitalist enterprises that Lenin adopted from Hilferding was the process of combination. That is, different branches of a particular industry amalgamating under the patronage of one corporate entity. Lenin cited pig-​iron production and steel making as examples of the combination process (Lenin 1973, 14). There were real benefits for a combined corporate entity: stable rates of profit and the removal or smoothing out of trade fluctuations. In Germany, the influence of concentration and combination was profound. There, in various industries, large enterprises were transformed into giant enterprises and these giants were ‘backed up and directed by a half dozen big Berlin banks’ (Lenin 1973, 16). The processes of concentration and combination were not limited to the emerging capitalist powers Germany and the United States, Lenin asserted. In Britain, which had not sought to protect its industries behind tariff walls and had thus not seen the rise of cartels as in Germany, monopolist alliances had arisen when competition reduced the number of enterprises to a dozen or so (Lenin 1973, 17). Lenin claimed that the concentration of production was a general law of capitalist development, a law that was independent of differing national policies regarding tariffs versus free trade, for example. The shift from the era of free competition to the era of monopoly capitalism occurred over three stages. The first stage started in the 1860s during the free competition era, when monopoly was in an embryonic stage. The crisis year of 1873 witnessed the development of cartels. Cartelization became one of the cornerstones of economic life during the boom years of the late nineteenth century and the subsequent crisis of 1900–​1903. By the close of this stage, capitalism had transformed into imperialism (Lenin 1973, 20).

The Role of the Banks The importance of banks in the shift from competitive era capitalism to monopoly capitalism and thus capitalist imperialism was emphasized by Lenin. The banks had grown ‘into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and of the sources of raw materials of the given country and in a number of countries’ (Lenin 1973, 31). Banks too were subjected to the same processes

Classical Marxist Imperialism Theory    59 of concentration, cartelization, and monopolization that they promoted in German industries; starting as ‘middlemen in the making of payments’ they became fewer in number and bigger in size (Lenin 1973, 31). Both Hilferding and Bukharin stated that the tight connections between banks and industry were noteworthy developments in the new stage of capitalism. Lenin illustrated the strong connections thus: Six of the biggest Berlin banks were represented by their directors in 344 industrial companies; and by their board members in 407 others, making a total of 751 companies. In 289 of these companies they either had two of their representatives on each of the respective Supervisory Boards, or held the posts of chairmen. We find these industrial and commercial companies in the most diverse branches of industry: insurance, transport, restaurants, theatres, art industry, etc. On the other hand, on the Supervisory Boards of these six banks (in 1910) were fifty-​one of the biggest industrialists, including the director of Krupp, of the powerful ‘Hapag’ (Hamburg-​ American Line). . . . From 1895 to 1910, each of these six banks participated in the share and bond issues of many hundreds of industrial companies (the number ranging from 281 to 419). (Lenin 1973, 45)

Finance Capital and Financial Oligarchy Hilferding defined finance capital as capital controlled by banks but put into use by industrialists. Missing from Hilferding’s understanding of finance capital, Lenin asserted, was the influence of monopoly (Lenin 1973, 52). One other thing missing from Hilferding’s analysis of finance capital was the concentration of power in the hands of a few people in the upper echelons of finance capital, that is, a financial oligarchy. Lenin claimed that with the command of staggering sums of money which generated massive profits, finance capital and the financial oligarchy could penetrate into every area of public life, no matter what form of government (Lenin 1973, 67). Members of the financial oligarchy were at a remove from the production process, content to act as rentiers, living off the income that came their way due to their control of finance capital. The concentration of financial power in the hands of the financial oligarchy was mirrored at the national level, with Britain, France, Germany, and the United States being the dominant financial powers. In the early twentieth century, then, ‘nearly the whole of the rest of the world is more or less the debtor to and tributary of these international banked countries, these four ‘pillars’ of world finance capital’ (Lenin 1973, 71–​72).

Capital Export Drawing further on Hilferding’s work (and in this instance also on the work of Hobson) Lenin emphasized the importance of the export of capital. In the era of monopoly capitalism, the lure of high profits that could be drawn from the so-​called backward

60   Murray Leigh Noonan countries was impossible to resist. In addition to high profits, other factors promoted capital exports, factors such as the lack of capital in the less developed countries, cheap raw materials, cheap land, and low wages. Moreover, the established capitalist nations were finding it difficult to find profitable investments in their home economies; a situation that Lenin termed ‘overripe’ capitalism (Lenin 1973, 73–​74). Each of the major capital-​exporting countries had their preferred zones where they sent their capital. The British sent their capital to their colonies mostly, whereas the French directed the major part of their capital exports to other parts of Europe and Russia. Germany, with little in the way of colonial possessions in 1910 sent capital to the United States and other parts of Europe as well (Lenin 1973, 75–​76). Having distinct zones of capital export marked out, and with colonies subservient to particular colonial powers, Lenin concluded that two things were apparent concerning the capitalism and imperialism of that conjuncture. The first was that cartels, trusts, syndicates, and monopolist capitalist combines had divided the world up among themselves economically. Second was that the Great Powers had divided up the world’s territories among themselves; that is, the geopolitical division of the globe had been accomplished (Lenin 1973, 79, 89).

Economic Division of the World by Capitalist Combines The concentration of capital and the appearance of cartels, syndicates, and trusts were not just confined to national economies. With the increasing export of capital, the widening of spheres of influence and the more intricate and extensive connections between colonies and the colonial powers, the next step was a movement ‘towards an international agreement among [the capitalist] combines and towards the international formation of cartels’ (Lenin 1973, 79). Lenin furnished a number of examples of the carving up of the world by the capitalist combines. Citing the electrical industry in Germany and the United States among other examples, Lenin demonstrated how the merged corporations in Germany and the United States reached agreement to apportion various national markets among themselves. Competition between the giant electrical trusts of Germany and the United States ceased when the 1907 agreement came into effect. Agreements between giant conglomerates were subject to change, though, when the economic might of one of the signatories to an agreement altered substantially (Lenin 1973, 80–​82).

Geopolitical Division of the World By 1900, the partitioning of the world by the Great Powers had been completed. However, the struggle over the re-​partitioning of the globe did not cease. Lenin acknowledged that colonies had existed prior to the advent of capitalism and even during the early competitive stage of capitalism, but he argued that with finance capital and

Classical Marxist Imperialism Theory    61 monopolies dominating the advanced capitalist countries, the colonial policy of finance capital was essentially different from previous colonial policy (Lenin 1973, 97–​98). In order to gain exclusive access to raw materials and deny access to their rivals, monopolist capitalist combines were enthusiastic promoters of colonial acquisitions by their national governments. Having parcelled out the globe and facing the continuing pressure to maintain and extend their colonial possessions, the Great Powers had little room for manoeuvre. Conflict was the necessary result: ‘The question is: what means other than war could there be under capitalism of removing the disparity between the development of productive forces and the accumulation of capital on the one side, and the division of colonies and ‘spheres of influence’ for finance capital on the other?’ (Lenin 1973, 118, emphasis in original). Great Power rivalry necessarily led to war; reforms could not resolve the contradictions of imperialism. Revolution and the building of socialism was the only answer.

Imperialism Defined Lenin summed up his research and came up with a definition of imperialism: Imperialism is capitalism in that stage of development in which the dominance of monopolies and finance capital has established itself; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun; in which the division of all territories of the globe among the biggest capitalist powers has been completed. (Lenin 1973, 105–​106)

Imperialism in essence was the monopoly stage of capitalism, a stage where war between imperialist rivals was an inevitability. Monopoly capitalism or imperialism was moribund capitalism, its last or highest stage (Lenin 1973, 153). The evidence of the moribund nature of imperialism was readily apparent; it could clearly be seen in the horrors of the war that was then raging between two blocs of imperialist powers. Like Bukharin, Lenin argued that the only way out of the carnage of imperialism and imperialist war was proletarian revolution on a world scale. Unlike Bukharin, though, Lenin did not engage with the connections between imperialism and the state. Lenin concentrated on the economic basis of imperialism and the political side of his analysis of monopoly capitalism was kept to a minimum.

Strengths and Weaknesses of Lenin’s Imperialism One of the strengths of Lenin’s analysis is his succinct definition of capitalist imperialism. Another strength is that Lenin’s book is a coherent and lucid portrayal of the changes in global capitalism of the late nineteenth and early twentieth century and how

62   Murray Leigh Noonan those changes in capitalism (culminating in monopoly capitalism) spawned capitalist imperialism. Lenin’s arguments (and the same holds for Bukharin) were backed up with extensive supporting data, indicating the quality and extent of his research. The connections between monopoly capitalism, interstate rivalry, militarism, and war that Lenin’s fellow classical Marxists Hilferding, Luxemburg, and Bukharin had spotlighted were elaborated on and extended by Lenin in a clear, logical, and persuasive fashion. The lesson for the working classes of the world that Lenin drew from his analysis was that capitalist imperialism was a product of the monopoly capitalist stage of capitalism. Interstate rivalry, militarism, and war necessarily followed. The only way out of the global carnage was world proletarian revolution and the building of socialism. Reliance on reforms and bourgeois parliamentarism as promoted by Kautsky, was either naïve or tantamount to selling out the working classes for continuing servitude, misery, and slaughter. Lenin’s book was not theory for theory’s sake; it was also polemical and had a clear political message for the working classes of the world. There are some weaknesses in Lenin’s theorizing of imperialism. The export of capital aspect of Lenin’s theory it has been suggested, was problematic. As John Milios and Dimitris Sotiropoulos point out, Lenin opposed underconsumptionist theories of capitalist crises, yet in his proposition in his book about the export of capital to the less developed countries he contradicted previously held positions about underconsumption of the masses, the realization problem, home markets, and surplus capital (Milios and Sotiropoulos 2009, 24–​29).3 Other propositions of Lenin’s have attracted criticism too, such as the inevitability of interimperialist rivalry leading to war proposition, which, critics have argued, elevated the historically specific conditions found in the lead up to and during World War I to being an ‘immutable law’ of capitalism (Panitch and Gindin 2004, 5). Suffice it to say that there are a number of concerning and contentious aspects in Lenin’s book, a book which was never intended to be a fully developed theory of imperialism. It was intended to be a ‘popular outline’ confined ‘particularly [to] economic analysis of facts’ and due to tsarist censorship, ‘to formulate the few necessary observations on politics with extreme caution’ (Lenin 1973, 1). The paucity of political analysis and state theorizing in Lenin’s work (and the instrumentalist and economic determinist handling of the state by the other classical Marxists seen earlier) is perhaps the most glaring weakness of Lenin’s Imperialism.4 It is important to recognize the strengths and weaknesses of Lenin’s critical examination of the imperialism of his time. Contemporary Marxist thinkers have done this to good effect, using some of the positive aspects found in Lenin’s work as a foundation for their own analysis of twenty-​first-​century imperialism. The work of Milios and Sotiropoulos (2009), Callinicos (2009), Zak Cope (2019), and John Smith (2016) show how it is possible to understand the limitations of Lenin’s work (as well as the other classical Marxists), use what is relevant from that theorizing, and produce sophisticated Marxist imperialism theory.5 Lenin’s imperialism theory thus continues to have relevance as it still inspires the analysis of and fight against imperialism.

Classical Marxist Imperialism Theory    63

Continuity, Change and Relevance: The Classical Marxist Theories From the foregoing examination of the contributions of the four Marxists, a clear picture emerges of the positive and negative attributes of their critical engagement with capitalist imperialism. It has been shown that aspects of their writing on the subject continue to have relevance and inform current attempts to understand, explain, and critique the twenty-​first-​century variant. The classical Marxist theories of imperialism were and are important for showing how changes in capitalism led to monopoly capitalism, which in turn led to imperialism, bringing in its train, militarism and war. Since the early twentieth century, much has changed yet some things remain. We are still faced with global capitalism and imperialism, so the classical Marxist oeuvre on the subject can be used as a resource for those seeking to understand contemporary imperialism. What needs to be kept in mind, though, is that there have been substantial developments in the world since the early twentieth century. Geopolitically, the Great Powers are no longer and the United States, the post–​Cold War hegemonic power, is in decline. Since the end of the long boom of capitalism, the drive to maintain profitability resulted in the turn to neoliberalism and decades of attacks on the working classes of the advanced capitalist countries, a development which spread across the globe. The processes of de-​industrialization would have been perhaps unthinkable for the classical Marxists, too. The same could be said about the looming catastrophe of global climate change. These changes do not render the classical Marxist theories of imperialism irrelevant; it means that for those engaged in the fight against imperialism, a more nuanced and critical approach to the theoretical treasures they bequeathed us has to be adopted.

Notes 1. The following synopses of the writing on imperialism by Hilferding, Luxemburg, Bukharin, and Lenin is based on material in ­chapters 1 and 2 of the author’s book (Noonan 2017). 2. Luxemburg’s claim that militarism was a special province of accumulation has been shown to be mistaken. David Yaffe took this claim to task as well as the theorizing associated with the Permanent Arms Economy, proponents of which included Michael Kidron, among other things. Yaffe argued that theories concerned with the role of armaments production in capitalist economies were often deficient in their understanding of the importance of the tendency of the rate of profit to fall for capitalist crises. Arguments about the role of armaments production as somehow an investment outlet for surplus capital and thus a new source of surplus value are either explicitly underconsumptionist or ‘if consistently developed, are no more than a modified version of the Keynesian theory of effective demand’ (Yaffe 1973, 218).

64   Murray Leigh Noonan 3. Brewer, Howard and King, and Willoughby all have reservations about Lenin’s arguments about the export of capital (see Brewer 1990, 119; Howard and King 1989, 259; Willoughby 1986, 14). 4. For more on this, see Noonan (2017, 89–​ 90), Willoughby (1995, 328), Milios and Sotiropoulos (2009, 31–​32), Anievas (2016, 107–​109), Callinicos (2009, 70–​7 1), and Chibber (2004, 429). 5. Unfortunately, there are some who continue to insist that Lenin’s theory of imperialism is all that is needed to explain the current incarnation of imperialism. See (King 2018) for example, where critics of Lenin’s imperialism theory are given short shrift and their arguments are misrepresented among other things.

References Anievas, Alexander. 2016. ‘Marxist Theory and the Origins of the First World War’. In Cataclysm 1914: The First World War and the Making of Modern World Politics, edited by Alexander Anievas, 96–​143. Chicago: Haymarket Books. Brewer, Anthony. 1990. Marxist Theories of Imperialism A Critical Survey. 2nd ed. London: Routledge. Buchanan, H. Ray. 1976. ‘Lenin and Bukharin on the Transition from Capitalism to Socialism: The Meshchersky Controversy, 1918’. Soviet Studies 28, no. 1: 66–​82. Bukharin, Nikolai. 1973. Imperialism and World Economy. New York: Monthly Review Press. Callinicos, Alex. 2009. Imperialism and Global Political Economy. Cambridge: Polity Press. Chibber, Vivek. 2004. ‘The Return of Imperialism to Social Science’. Archives de Européennes de Sociologie 45, no. 3: 427–​441. Cohen, Stephen F. 1970. ‘Bukharin, Lenin and the Theoretical Foundations of Bolshevism’. Soviet Studies 21, no. 4: 436–​457. Cope, Zak. 2019. The Wealth of Some Nations Imperialism and the Mechanics of Value Transfer. London: Pluto Press. Day, Richard B, and Daniel Gaido, eds. 2012. Discovering Imperialism: Social Democracy to World War I. Translated, edited, and introduced by Richard B. Day and Daniel Gaido. Chicago: Haymarket Books. Hilferding, Rudolf. 1981. Finance Capital: A Study of the Latest Phase of Capitalist Development. Edited and with an Introduction by Tom Bottomore. London: Routledge and Kegan Paul. Howard, Michael, and John King. 1989. A History of Marxian Economics: Volume 1, 1883–​1929. Houndmills: Macmillan. King, Samuel T. 2018. ‘Lenin’s Theory of Imperialism Today: The Global Divide between Monopoly and Non Monopoly Capital’. PhD diss., Victoria University. Lee, George. 1971. ‘Rosa Luxemburg and the Impact of Imperialism’. Economic Journal 81, no. 324: 847–​862. Lenin, Vladimir I. 1973. Imperialism, the Highest Stage of Capitalism. Peking: Foreign Languages Press. Luxemburg, Rosa. 1971. The Accumulation of Capital. London: Routledge and Kegan Paul. Marx, Karl. 1973. Karl Marx: The Revolutions of 1848 Political Writings, Volume 1. Edited and Introduced by David Fernbach. Harmondsworth: Penguin Books in association with New Left Review.

Classical Marxist Imperialism Theory    65 Milios, John, and Dimitris Sotiropoulos. 2009. Rethinking Imperialism: A Study of Capitalist Rule. Houndmills: Palgrave Macmillan. Milios, John, and Dimitris Sotiropoulos. 2014. ‘Revisiting the Classical Theories of Imperialism: From “Underconsumption” in Global Capitalism to the “Imperialist Chain” ’. Spectrum Journal of Global Studies 6 (1):1–​16. Nettl, Peter. 1966. Rosa Luxemburg. Vol. 2. London: Oxford University Press. Nettl, J. P. 1969. Rosa Luxemburg. Abridged ed. Introduction by Hannah Arendt. New York: Schocken Books. Noonan, Murray. 2017. Marxist Theories of Imperialism: A History. London: I.B. Tauris. Panitch, Leo, and Sam Gindin. 2004. ‘Global Capitalism and American Empire’. In The New Imperial Challenge Socialist Register 2004, edited by L. Panitch and C. Leys, 1–​42. London: The Merlin Press. Smith, John. 2016. Imperialism in the Twenty-​First Century Globalization, Super-​Exploitation, and Capitalism’s Final Crisis. New York: Monthly Review Press. Willoughby, John. 1986. Capitalist Imperialism, Crisis and the State. Chur: Harwood Academic Publishers. Willoughby, John. 1995. ‘Evaluating the Leninist Theory of Imperialism’. Science and Society 3: 320–​338. Yaffe, David S. 1973. ‘The Marxian Theory of Crisis, Capital and the State’. Economy and Society 2, no. 2: 186–​232. doi: 10.1080/​03085147300000009.

Chapter 4

Mar xist Th e ori e s of Imperiali sm i n t h e P ost– ​C old Wa r E ra Efe Can Gürcan

The collapse of the Soviet Union had created an enabling environment for discrediting Marxism as an outmoded paradigm. The influence of Marxism was thus gravely overshadowed by culturalist perspectives such as postmodernism and poststructuralism. Among other concepts that were dismissed from key social-​science debates for being associated with so-​called orthodox Marxism was imperialism. Yet, it did not take too long for imperialism debates to be strongly rekindled. The 2000s started out with the enunciation of the Bush doctrine (2001–​2009) and its belligerent application in the wars on Afghanistan and Iraq. Imperialist aggression kept its pace with the 2011 Syrian and Libyan crises: the gravest humanitarian crisis since World War II (Gürcan 2019). In this context, the current world situation testifies to nothing but the ever-​increasing relevance of imperialism in global politics. The rise in historical relevance of imperialism prompts us to shed systematic light on the bulk of knowledge that has been taking shape since the early 2000s, which constitutes the main objective of this chapter. How have Marxist theories of imperialism been evolved in the post–​Cold War era? How do they inform us about contemporary forms of imperialism? The present chapter focuses on these questions to argue that post–​Cold War theories of imperialism have developed in two distinct waves. To be explored in the first section of this chapter, the first wave was triggered mostly by reactions to the offensive of what one could call the ‘globalist’, or ‘transnationalist’ camp, which finds its strongest expression in the thesis of ‘empire’ and transnational capitalist classes. This camp has to a great extent focused its efforts on portraying imperialism as an outdated concept that fails to adequately explain today’s world. This argument met with severe criticism on the part of Marxist scholars of imperialism, who centre their analyses on the contradictions of neoliberalism as the strongest manifestation of contemporary imperialism, where states continue playing a leading role. With the recent

68   Efe Can Gürcan decade, there has emerged a second wave of theorizing about imperialism that took off following the crisis of global capitalism since 2007/​2008 and the intensification of imperialist wars of aggression and interventionism in the so-​called Arab Spring conjuncture. This second wave lays stronger emphasis on the North–​South divide without overlooking the chief role of states, and redeploys Lenin’s terminology of uneven development, labour aristocracy, and super-​profits in the renewed context of neoliberalism. The second section of this chapter is entirely devoted to the second wave of Marxist theorizing about imperialism. The analysis of the aforementioned theories is based on the method of integrative review, which is ‘a form of research that reviews, critiques, and synthesizes representative literature on a topic in an integrative way such that new frameworks and perspectives on the topic are generated’ (Torraco 2005, 356). Integrative review uses the synthesized knowledge to obtain a more diversified and systematic theoretical approach to the topic under study (Torraco 2005; Whittemore and Knafl 2014). The overall aim is thus to reveal how different ‘streams of research [come] together to create a new formulation of the topic’ (Torraco 2005, 362). As such, the conclusion of this chapter reviews contemporary theories of imperialism as a whole by discussing how they can contribute to a multidimensional understanding of the phenomenon of imperialism in (geo)political, economic, and sociocultural terms.

The First Wave of Theorizing about Imperialism in the 2000s: Beyond Globalism Post–​Cold War theories of imperialism in Marxism developed in polemical discussions with what one could call the ‘globalist’, or ‘transnationalist’ camp. The globalist perspective into imperialism is perhaps best exemplified by the work of Michael Hardt and Antonio Negri, which contributes to the autonomist Marxist tradition in the literature. These authors assert that imperialism is an outdated concept that has lost its explanatory relevance in today’s world (Hardt and Negri 2001). The post–​Cold War era is instead characterized by the declining importance of nation states; therefore, no country—​not even the United States—​represents the centre of the imperialist system: Many locate the ultimate authority that rules over the processes of globalization and the new world order in the United States. Proponents praise the United States as the world leader and sole superpower, and detractors denounce it as the imperialist oppressor. . . . Our basic hypothesis, however, that a new imperial form of sovereignty has emerged, contradicts both these views. The United States does not, and indeed no nation-​state can today, form the center of an imperialist project. Imperialism is over. (Hardt and Negri 2001, xiii)

Marxist Theories of Imperialism in the Post–Cold War Era     69 Similarly, such concepts as the Third World, oppressed nations, and peripheral countries do not apply to today’s reality. In other words, the unevenness of the imperialist system leaves its place to a unifying process of capitalist development: The decline of the power of nation-​states and the dissolution of the international order bring with them the definitive end of the effectiveness of the term ‘Third World’. (Hardt and Negri 2001, 333)

According to Hardt and Negri (2001), imperialism is replaced by the so-​called empire, a new form of sovereignty that draws its power from transnational relations of market and production. Put differently, the empire corresponds to a decentralized formation devoid of any geographical centre of power: In contrast to imperialism, Empire establishes no territorial center of power and does not rely on fixed boundaries or barriers. (Hardt and Negri 2001, xii)

Such decentralization and deterritorialization were made possible by the rise of the information and services sectors under globalization. Overall, the power of capital is what brings the former imperialist countries together (Hardt and Negri 2001). William A. Robinson’s (2014) arguments are in line with the globalist thesis of the empire. In Robinson’s opinion, the defining characteristic of today’s capitalism lies in the so-​called transnationalization of capital and the bourgeoisie. He thus reasons that US military interventions benefit not only the US bourgeoisie; the entire world’s bourgeoisie indiscriminately reaps the benefits of US military aggression. Accordingly, Robinson sees no reason to insist on the explanatory function of imperialism, given that the inter-​state system no longer matters to the organization of capitalism itself. On the contrary, globalization leads to the creation of a so-​called transnational state with the involvement of international organizations such as the International Monetary Fund, the World Bank, and the World Trade Organization (Robinson 2014; Sen and Marcuzzo 2018). However, given the rise of multipolarity in global politics and the intensification of US imperialism even at the expense of many of its key transatlantic allies (Gürcan 2019), the globalist arguments of Robinson, Hardt, and Negri seem misguided and lacking in credibility. Ellen Meiksis Wood is a prominent figure confronting the globalist (counter)theory of imperialism. In her view, capitalist power is ever more concentrated and centralized in today’s imperialism (Wood 2003). The state assumes an extremely strategic role in the organization of contemporary capitalism: The fragmentation of the world into separate economies, each with its own social regime and labour conditions, presided over by more or less sovereign territorial states, is no less essential to ‘globalization’ than is the free movement of capital. Not the least important function of the nation state in globalization is to enforce the principle of nationality that makes it possible to manage the movements of labour by

70   Efe Can Gürcan means of strict border controls and stringent immigration policies, in the interests of capital. (Wood 2003, 136–​137)

Indeed, the United States constitutes the leading power of the imperialist system and is thus exclusively interested in maximizing the narrow interests of its own national bourgeoisie. In a world where multinational corporations are still nationally coordinated and require state support, it is no surprise that US-​based multinational corporations are organically tied to their home base. Their success depends on the active military and economic support of the state apparatus. By definition, strong multinational corporations are led by nation-​based headquarters: The first and most elementary point is that so-​called ‘transnational’ corporations generally have a base, together with dominant shareholders and boards, in single nation states and depend on them in many fundamental ways. . . . Globalization has been as much about preventing as promoting integration . . . Just as the state is far from powerless, multinational corporations are far from all-​ powerful. . . . The state, in both imperial and subordinate economies, still provides the indispensable conditions of accumulation for global capital, no less than for very local enterprises; and it is, in the final analysis, the state that has created the conditions enabling global capital to survive and to navigate the world. (Wood 2003, 135–​139)

In turn, David Harvey (2010) contends that imperialism assumes a contradictory character, shaped by a profit-​driven expansionism focused on short-​term gains and a territorial logic of power rooted in the uneven development of capitalism. This territorial logic clashes with its capitalist counterpart, since it potentially constrains global competition and capital movements: Each logic throws up contradictions that have to be contained by the other. The endless accumulation of capital, for example, produces periodic crises within the territorial logic because of the need to create a parallel accumulation of political/​military power. When political control shifts within the territorial logic, flows of capital must likewise shift to accommodate. States regulate their affairs according to their own distinctive rules and traditions and so produce distinctive styles of governance. A basis is here created for uneven geographical developments, geopolitical struggles, and different forms of imperialist politics. (Harvey 2010, 83)

Harvey argues that imperialism suffers from chronic crises of overaccumulation, rooted in the excess of production and money capital. In this regard, he refers to ‘spatio-​ temporal fixes’ to explain how the recurrent crises of capitalism are postponed through the creation of new investment opportunities: Overaccumulation within a given territorial system means a condition of surpluses of labour (rising unemployment) and surpluses of capital (registered

Marxist Theories of Imperialism in the Post–Cold War Era     71 as a glut of commodities on the market that cannot be disposed of without a loss, as idle productive capacity and/​or as surpluses of money capital lacking outlets for productive and profitable investment). Such surpluses can be potentially absorbed by (a) temporal displacement through investment in long-​term capital projects or social expenditures (such as education and research) that defer the re-​ entry of capital values into circulation into the future, (b) spatial displacements through opening up new markets, new production capacities, and new resource, social, and labour possibilities elsewhere, or (c) some combination of (a) and (b). (Harvey 2010, 109)

The imperialist system can postpone these crises through the method of accumulation by dispossession, described as the centralization of power and wealth via imperialist pillage (Harvey 2010). Military interventions and financial speculation are among the preferred methods of accumulation by dispossession. It also follows that such state-​ driven practices as privatization, large infrastructural investments, welfare expenses, foreign direct investments, and gentrification may serve as instruments of accumulation by dispossession and spatio-​temporal fix (Harvey 2010). Overall, one could argue that Harvey’s theory has the merit of systematically conceptualizing how neoliberalism functions as an organizing principle of today’s imperialism. It also reasserts the continued relevance of territorial or geopolitical explanations of imperialism within the Marxist tradition. Harvey’s theory is strongly echoed in the work of Alex Callinicos, who combines Harvey’s arguments with Lenin’s theory of imperialism. Callinicos suggests historicizing imperialism as an economic and geopolitical phenomenon that has been present since the 1870s: I prefer to conceptualize capitalist imperialism as the intersection of economic and geopolitical competition, a formulation that leaves open the different and changing forms in which this intersection has historically manifested itself. (Callinicos 2009, 138)

Central to Callinicos’s argument is the uneven development of capitalism, which is a root cause of inter-​state conflicts in the imperialist system. Following Lenin’s thinking, he thus rejects the globalist argument that the inter-​state system has been inevitably declining in importance (Callinicos 2009). Despite being inspired by Harvey’s work, Callinicos argues for the complementarity of the territorial and capitalist logics of power. Put differently, these logics do not necessarily contradict each other (Callinicos 2009). A case in point is how military interventions serve to improve the competitiveness of corporations based in a given country, while also tightening their grip on natural resources in foreign countries. In all, Callinicos’s intellectual challenge to the globalist camp reasserts the continuing relevance of the inter-​state system and Lenin’s thesis of uneven development, while pointing to the importance of geopolitical conflicts.

72   Efe Can Gürcan Another serious challenge to the globalist camp comes from Leo Panitch and Sam Gindin (2004). Following a similar logic to Wood, Harvey, and Callinicos, they emphasize the persisting relevance of nation states based on the argument that ‘the American state can only rule this order through other states’ (Panitch and Gindin 2004, 75). States are among the leading agents that shape the imperialist system through legal regulations, infrastructural arrangements, and military interventions. This being said, Panitch and Gindin (2004) do not categorically refute the globalist thesis of transnationalism. Instead, they argue that economic relations embodied in the imperialist system are increasingly taking on a transnational character. However, Panitch and Gindin’s arguments are nuanced from globalism in that, according to them, these transnational relations are in the end controlled by the United States: The left needs a new theorization of imperialism, one that will transcend the limitations of the old Marxist ‘stagist’ theory of inter-​imperial rivalry, and allow for a full appreciation of the historical factors that have led to the formation of a unique American informal empire. This will involve understanding how the American state developed the capacity to eventually incorporate its capitalist rivals, and oversee and police ‘globalization’—​i.e. the spread of capitalist social relations to every corner of the world. (Panitch and Gindin 2004, 12)

This conviction rules out the prevalence of interimperialist rivalry in today’s imperialist system, which in turn goes against Callinicos’s position that would also validate the Sino-​Russian challenge to the United States beyond any kind of misguided transnationalist bias (Gürcan 2019). Moreover, these authors believe that US hegemonic decline is an illusion and that the United States is still able to maintain its hegemonic status by co-​opting or militarily coercing other states into preserving the imperialist system (Panitch and Gindin 2012). Even so, they add that the imperialist system is not exempted from grave crises. US-​led neoliberal policies have failed to deliver on their promise of economic growth; instead, they have intensified global socioeconomic inequalities. This situation leads to rising US military aggression and creates a favourable environment for the proliferation of anti-​systemic resistance, albeit only from below at the level of alternative social and political movements rather than geopolitics (Panitch and Gindin 2004). Panitch and Gindin refute the main tenets of the classical Marxist theory of imperialism, based on the argument that the presence of high consumption and investment opportunities in the West rules out the thesis of underconsumption, the falling rate of profit, and overaccumulation. Instead, the authors attribute the current development of imperialism to global competition rather than monopolization. Moreover, Panitch and Gindin disagree with Lenin in that imperialism is not yet at its final stage and that the world is actually going through the earlier phases of imperialism. What is more, they suggest establishing a clear distinction between the concepts of capitalism and imperialism. In their account, capitalism has much to do with international competition, whereas imperialism is factored into the equation when states intervene in international

Marxist Theories of Imperialism in the Post–Cold War Era     73 competition (Panitch and Gindin 2004, 16–​20). In other words, imperialism cannot be merely explained by reference to economic phases and crises. It is best understood as an extension of Marxist state theory: Capitalist imperialism, then, needs to be understood through an extension of the theory of the capitalist state, rather than derived directly from the theory of economic stages or crises. And such a theory needs to comprise not only inter-​imperial rivalry, and the conjunctural predominance of one imperial state, but also the structural penetration of former rivals by one imperial state. This means we need to historicize the theory, beginning by breaking with the conventional notion that the nature of modern imperialism was once and for all determined by the kinds of economic rivalries attending the stage of industrial concentration and financialization associated with turn-​of-​the-​century ‘monopoly capital’. (Panitch and Gindin 2004, 18–​19)

Certainly, the authors’ suggestion to give due attention to the political-​sociological aspects of imperialism—​by reference to Marxist state theory—​is worthy of particular consideration. However, their account cannot provide convincing reasons for discarding the fact that monopoly capitalism constitutes a chief characteristic of the imperialist system. As John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna (2011) reveal, monopoly capitalism does not necessarily eliminate competition, which mainly occurs in the form of oligopolistic rivalry on a global scale. Even less convincing in Panitch and Gindin’s arguments is the belief that the current imperialist system gives no room to geopolitical competition, which fails to explain growing multipolarity between Western and Eurasian capitalist powers (Gürcan 2019). This unfounded belief is also repeated elsewhere: The continuing centrality of the American state in the global economy was in fact reinforced as the [2007/​2008] crisis unfolded. . . . It is notable that, the conflicts that have emerged today in the wake of the greatest capitalist crisis since the 1930s are taking shape, not only in Europe but much more generally, less as conflicts between capitalist states and their ruling classes than as conflicts within capitalist states. (Panitch and Gindin 2012, 330)

The Second Wave of Theorizing about Imperialism Following the Crisis of Global Capitalism One might observe that imperialism has been back onto the agenda in the 2010s, in parallel to the crisis of global capitalism since 2007–​2008 and military interventions in the conjuncture of the so-​called Arab Spring (Gürcan 2019). One of the earliest

74   Efe Can Gürcan interventions in this debate was that of Ernesto Screpanti, who revived the globalist perspectives on imperialism. Screpanti believes that today’s imperialism is qualitatively different from that of the nineteenth and twentieth centuries, since today’s capital accumulation takes place in the context of a global market: Contemporary globalization is bringing about a type of imperialism that differs fundamentally from those of the nineteenth and twentieth centuries. . . . Nowadays capital accumulates in a global market. One of its dominant interests is therefore to dismantle all the barriers, obstacles, and political pressures that states can place in its way. Whereas in the past every nation’s monopoly capital took advantage of its state’s drive to imperialist expansion, because it could use this as a way to enlarge the domestic market, today the boundaries of national empires are seen as obstacles to commercial expansion and accumulation. . . . I call this new form of capitalist domination of the world global imperialism. (Screpanti 2014, 9)

As such, capital’s interests lie in abolishing both national borders and state intervention in the economy. Capital has acquired tremendous power, to the extent that corporations no longer need state protection against foreign competition (Screpanti 2014). Screpanti (2014) insists that ongoing geopolitical rivalries cannot be understood within the framework of capital accumulation. He makes a bold Hilferdingian or Kautskyian prediction that geopolitical rivalries will soon give place to a universal peace within global capital, with the rise of some kind of stateless governance: Inter-​ imperial rivalries are not irreconcilable, nor fundamental; they are not produced by capitalist accumulation. Geopolitical conflicts can be overcome without hampering accumulation . . . today’s great capitalists have a fundamental interest in overcoming inter-​imperial rivalries rather than exacerbating them, even though certain capital sectors of certain nations frequently seek to exploit the outdated imperial ambitions of the political classes. (Screpanti 2014, 51)

As such, Screpanti (2014) infers that Chinese, US, and European capital share the same material interests in liberating global markets, which was empirically quite questionable at a time when the Trump administration and several European countries were pursuing protectionist policies, while also waging a Cold War against China. Yet, for Screpanti there is no doubt that China and other key emerging economies will soon join the ranks of the imperialist centres: At least one trend seems clear: in the near future China and other big emerging countries will have joined the imperial Center. (Screpanti 2014, 206)

Screpanti goes so far as to argue that the labor aristocracy of the Global North is no longer a tenable thesis, since neoliberalism has globalized inequalities and all countries are subjected to similar conditions. Moreover, Screpanti absurdly assigns secondary importance to imperialist military interventions:

Marxist Theories of Imperialism in the Post–Cold War Era     75 In global imperialism the use of military force by the capitalist Center to put down and control the Periphery has certainly not ceased, but it is becoming of secondary importance compared to the regulatory mechanisms that work via the ‘natural’ laws of the market. The global empire needs no emperor. (Screpanti 2014, 10–​11)

The revived Marxist debate on imperialism was continued by James Petras and Henry Veltmeyer. They offer a much more original contribution by pointing to the excessive attention paid to the structural aspects of imperialism at the expense of their political-​sociological counterparts (Petras and Veltmeyer 2016). According to Petras and Veltmeyer, imperialism cannot be isolated from the study of class formation process and the political formation of dominant classes besides its geopolitical and geo-​economic aspects: Most theorists of imperialism resort to a form of economic reductionism in which the political and ideological dimensions of imperial power are downplayed or ignored, and categories such as ‘investments’, ‘trade’ and ‘markets’ are decontextualized and presented as historically disembodied entities that are comparable across space and time. Changes in the configuration of class relations and associated dynamics are then accounted for in terms of general economic categories such as ‘finance’, ‘manufacturing’, ‘banking’ and ‘services’ without any analysis of the political economy of capitalist development and class formation, or the nature and sources of financial wealth—​illegal drug trade, money laundering, real estate speculation, etc. . . . Contemporary theorizing about imperialism generally ignores the sociopolitical and ideological power configurations of imperial policy. (Petras and Veltmeyer 2016, 13–​14)

Therefore, key areas of imperialism such as investment, trade, markets, finance and banks, production, and services should be revisited through a political-​sociological lens. Petras and Veltmeyer (2016) also add that the role of the state and public policies must be placed at the centre of our analyses of imperialism. Contrary to Screpanti (2014), moreover, Petras and Veltmeyer (2016) insist that the military aspects of imperialism and nation states have retained their relevance. As such, they contend, ‘So-​called globalization grew out of the barrel of a gun’ (Petras and Veltmeyer, quoted in Kumbamu 2010, 144). Another original contribution to the new imperialism debate comes from Prabhat Patnaik and Utsa Patnaik (2017), who offer a valuable addition to the thesis of uneven development, as represented by the likes of Lenin, Emmanuel, and Amin. According to them, the birth of modern capitalism was greatly facilitated by the temperate climate in Europe; however, these climatic conditions do not allow core capitalist countries to produce strategic commodities such as cotton, sugar cane, coffee, and tea. This situation eventually led to a growing geographical asymmetry between Europe and tropical economies (Patnaik and Patnaik 2017). Advances in transportation technology and the growing rate of capital accumulation ended up further consolidating Europe’s dependence on trade with tropical economies. Patnaik and Patnaik argue, ‘if tea, coffee, cocoa, cane sugar, chocolate or vanilla flavoured ice-​cream and confectionery, fresh vegetables, fruits and flowers, and imported seafood all disappeared,

76   Efe Can Gürcan their supermarket shelves, especially in winter, would be bare except for cereals and dairy and meat products, which are all that northern countries can produce in abundance’ (Patnaik and Patnaik 2017, 187). As such, under a free-​trade regime, tropical economies capitalized on their own comparative advantage in agricultural production and other primary commodities. However, the unit cost of production and the prices of these commodities tend to increase in parallel with increases in demand for them. A major reason is that the mass production of such commodities damages the quality of arable land. Core capitalist countries see this situation as an important threat to the value of their currencies, which encourages them to pursue imperialist income-​ deflating policies in the periphery (e.g., neoliberalism and military interventions). These policies also serve to prevent the periphery from consuming these products (Patnaik and Patnaik 2017). John Smith follows a similar line of argument centred on inequalities between affluent and poor countries. He re-​asserts the vitality of Lenin’s often misrepresented analysis of imperialism, which originally centres on the North–​South divide: Most strands of western Marxism, including many claiming adherence to Lenin’s legacy, have disregarded Lenin’s insistence on the economic and political centrality of the division of the world into oppressed and oppressor nations, dwelling instead on Lenin’s argument that in its economic essence imperialism is monopoly capitalism. (Smith 2016, 228)

Smith remarks that Lenin’s real contribution to the theory of imperialism can only be understood if one unites imperialism’s ‘economic essence—​monopoly capitalism and its political essence—​the division of the world into oppressed and oppressor nations’ (Smith 2016, 233) by reference to Marx’s theory of value. In his analysis of contemporary imperialism, Smith (2016) focuses on how the production of T-​shirts, coffee mugs, and iPhones in developing countries allows core capitalist countries to extract super-​profits. These profits are made possible thanks to overpriced sales despite low production costs. In this context, Smith argues that multinational corporations rely on outsourcing activities in developing countries by decreasing the value of labour. Smith refers to this process as ‘global labor arbitrage’: Global labor arbitrage—​super-​exploitation—​that is, forcing down the value of labor-​ power, the third form of surplus-​value increase, is now the increasingly predominant form of the capital-​labor relation. (Smith 2016, 250)

He remarks that advances in transportation technology have particularly created a favorable environment for outsourcing and global labour arbitrage, which serve to ‘replace higher-​paid domestic labor with low-​wage Southern labor, exposing workers in imperialist nations to direct competition with similarly skilled but much lower paid workers in Southern nations, while falling prices of clothing, food, and other articles of

Marxist Theories of Imperialism in the Post–Cold War Era     77 mass consumption protects consumption levels from falling wages and magnifies the effect of wage increases’ (Smith 2016, 45). Zak Cope’s (2019) crucial contributions to contemporary imperialism theory are in line with Smith’s arguments. Samir Amin’s notion of imperialist rent finds strong echo in Cope’s (2019) theory as ‘super-​profits’, which essentially serve to embourgeoise the working class of the Global North: Imperialism is conceived as a historical and ongoing transfer of wealth from the poorest to the richest countries in the world economy through the mechanisms of colonial tribute, monopoly rent and unequal exchange. Imperialism produces an international class structure characterised by the unequal occupational division of labour and the unequal remuneration of labour internationally such that mass embourgeoisement may be observed in the leading imperialist countries. (Cope 2019, 2)

Besides the fact that core capitalist countries such as the United States, Britain, and other western European countries are the world’s most militarized states, their working class is historically, culturally, and sociologically conditioned to support imperialist wars of aggression. This situation is explained by reference to the working class’s dependence on super-​profits in the Global North (Cope 2019). Worthy of mention in this regard is how retirement accounts in the Global North are mostly invested in stocks and bonds: We must conclude, therefore, that many workers in the North have invested heavily in stocks and bonds through their retirement account. These workers’ economic and class interest is not as workers with nothing to sell but their labour-​power. Rather, metropolitan workers’ retirement years are directly linked to the wellbeing of imperialist capitalism. Large parts of the working population of the metropolitan countries live, or will live as rentiers on their pension capital. (Cope 2019, 84)

Moreover, the Northern working class is able to organize in larger unions thanks to a more enabling legal environment, which allows them to achieve greater concessions with sustained resort to reformism. In Cope’s account (2019, 14), super-​profits are extracted through such direct mechanisms as ‘war, plunder, taxation, profit repatriation and transfer pricing, typically mediated through the state in combination with industrial and financial capital’ (Cope 2019, 14). In turn, indirect value transfer is obtained through the transformation of values into prices of production and actual market prices, brain drain, illicit capital flows, Northern trade barriers, dept repayment, unfavourable terms of trade, and trade-​related intellectual property rights (Cope 2019). Finally, Cope (2019, 149) points out that the competition between the labour aristocracy of the Global North and the working masses in the Global South has been intensified, to the extent that it also plays an important role in rising xenophobia and fascism within the working class of the Global North.

78   Efe Can Gürcan

Review and Discussion This chapter has mapped out the development of Marxist thinking on imperialism and identified its conceptual cornerstones in the post–​Cold War era. My analysis indicates that contemporary Marxist theories continue to revolve around Lenin’s earlier formulation of imperialism, focusing most of their efforts on improving its explanatory relevance. Moreover, contemporary theorizing seems to have developed as a polemical enterprise against globalist, or transnationalist, tendencies within Marxism. With rare exceptions, such as Michael Hardt and Antonio Negri, William A. Robinson, and Ernesto Screpanti, contemporary theorists accentuate the persisting relevance of nation states and the inter-​state system by resituating these issues in the context of neoliberalism. An integrative reading of these theories suggests that imperialism can be understood as a multidimensional phenomenon with (geo)political, economic, and sociocultural aspects. Politically speaking, imperialism can be said to represent a combination of state formation processes and class struggles on a global scale, as is highlighted by James Petras, Henry Veltmeyer, Leo Panitch, and Sam Gindin, not to mention Ellen Meiksins Wood. At the geopolitical level, crucial to understanding imperialism are global alliances, diplomatic struggles, wars, and global conflicts for hegemony, which are pointed out in David Harvey’s and Alex Callinicos’s works. These elements are all embodied in today’s multipolarization process and the transformation of global governance mechanisms (Gürcan 2019). In sociocultural terms, moreover, one could take into account how imperialism colonizes civil society, co-​opts social movements, and legitimizes its actions based on Petras and Veltmeyer’s approach (see Gürcan 2015, for similar analyses). Finally, the structural-​economic character of imperialism cannot be omitted. No hegemonic state can survive, prevail in geopolitical conflicts, or retain its cultural appeal without a sound economic basis. Relatedly, the economic foundation of imperialism lies not only in competition between monopolies but also in neoliberal transformations, stagnation and crisis, unequal exchange, and imperialist rents. There has been developing an exciting area of research tackling these issues thanks to pioneering works by the likes of Zak Cope, John Smith, and the Patnaiks. This being said, future research on imperialism also calls for a comprehensive and integral approach that takes into account the aforedescribed multidimensionality.

References Callinicos, Alex. 2009. Imperialism and Global Political Economy. Cambridge: Polity Press. Cope, Zak. 2019. The Wealth of (Some) Nations: Imperialism and the Mechanics of Value Transfer. London: Pluto Press. Foster, John Bellamy, Robert W. McChesney, and R. Jamil Jonna. 2011. ‘Monopoly and Competition in Twenty-​First Century Capitalism’. Monthly Review 62, no. 11: 1–39.

Marxist Theories of Imperialism in the Post–Cold War Era     79 Gürcan, Efe Can. 2015. ‘The Nonprofit-​Corporate Complex: An Integral Component and Driving Force of Imperialism in the Phase of Monopoly-​Finance Capitalism’. Monthly Review 66, no. 11: 37–53. Gürcan, Efe Can. 2019. Multipolarization, South-​South Cooperation and the Rise of Post-​ Hegemonic Governance. New York: Routledge. Hardt, Michael, and Antonio Negri. 2001. Empire. Cambridge, MA: Harvard University Press. Harvey, David. 2010. The New Imperialism. Oxford: Oxford University Press. Kumbamu, Ashok. 2010. ‘Farewell to imperialism? A critical sociological study of empire’. In Imperialism, Crisis and Class Struggle: The Enduring Verities and Contemporary Face of Capitalism, edited by H. Veltmeyer, 133–154. Leiden: Brill. Panitch, Leo, and Sam Gindin. 2004. Global Capitalism and American Empire. London: Merlin Press. Panitch, Leo, and Sam Gindin. 2012. The Making of Global Capitalism: The Political Economy of American Empire. London: Verso Books. Patnaik, Utsa, and Prabhat Patnaik. 2017. A Theory of Imperialism. New York: Columbia University Press. Petras, James, and Henry Veltmeyer. 2016. The Power and Resistance: US Imperialism in Latin America. Leiden: Brill. Robinson, William A. 2014. Global Capitalism and the Crisis of Humanity. Cambridge: Cambridge University Press. Screpanti, Ernesto. 2014. Global Imperialism and the Great Crisis: The Uncertain Future of Capitalism. New York: Monthly Review Press. Sen, Sunanda, and Maria Cristina Marcuzzo, eds. 2018. The Changing Face of Imperialism: Colonialism to Contemporary Capitalism. New York: Routledge. Smith, John. 2016. Imperialism in the Twenty-​First Century: Globalization, Super Exploitation, and Capitalism’s Final Crisis. New York: Monthly Review Press. Torraco, R. J. 2005. ‘Writing Integrative Literature Reviews: Guidelines and Examples’. Human Resource Development Review 4, no. 3: 356–​367. Whittemore, R., and K. Knafl. 2014. ‘The Integrative Review: Updated Methodology’. Journal of Advanced Nursing 52, no. 5: 546–​553. Wood, Ellen Meiksins. 2003. Empire of Capital. London: Verso Books.

Chapter 5

Theorie s of I n ternational T ra de a nd E c onomic Impe ria l i sm Bill Dunn

Introduction Trade can be exploitative. As Marx says, it should not be surprising that this outrages mainstream sensibilities. If the free-​traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same gentlemen also refuse to understand how within one country one class can enrich itself at the expense of another. (Marx 1977, 269)

But the possibility of trade exploitation raises important questions. First, there are a series of questions around when and whether trade relations are exploitative and how we would know. Marx also famously contrasted exploitative relations of production with apparently harmonious relations of exchange. The history of trade imposed by force confirms there is nothing intrinsically harmonious about trade. Typically, however, exchange appears symmetrical, a voluntary buying and selling according to price. The trade balance equals exports minus imports, implying an equivalence. This also makes measuring any trade exploitation profoundly difficult. Often we have to read trade-​exploitation backwards from its effects. This raises the second set of questions about the relations between trade and other dimensions of international inequality; of political power, corporate colonialism, finance, and so on. In practice the different processes are inextricably connected, but it is necessary to distinguish them analytically, if their specific effects are to be evaluated,

82   Bill Dunn and necessary to distinguish them politically, if appropriate targets of opposition are to be identified and alternative economic strategies evaluated. Third, this also points towards neglected questions of the relations between the international and the domestic, between trade and exploitation in production, between nation and class. An influential line of reasoning, following Emmanuel (1972), sees class and national exploitation as straightforwardly opposed. Indeed, for Emmanuel, the working class in the core countries is the prime mover and beneficiary of the trade-​ based exploitation of the periphery. But patterns of trade and within-​country inequality are complex and changeable. The following sections address these three sets of issues without purporting to offer anything close to definitive answers. It is suggested, however, that critics of mainstream theory and of the current trade regime need to avoid simply inverting the liberal enthusiasm with a blanket opposition to ask instead more specific questions about whether and when trade is exploitative, about its relation with other dimensions of political and economic power and about who benefits within as well as between countries. Trade raises questions which cannot be regarded as settled, and there is important critical research to be done.

Is Trade Exploitative? For the economic mainstream, trade is self-​evidently mutually beneficial. Why would individuals trade unless they thought they would gain? By extension, why would countries trade unless they gained? The conventional stories of specialization and comparative advantage show the possibilities of national benefits while the textbook equations and graphs, depicting an opportunity-​possibility frontier pushed outwards, neatly transform the stories into a mathematical truism. A powerful literature undermines the free-​traders’ claims. Dunkley (2004) and Sheppard (2005), for example, identify deeply problematic assumptions on which the theory of comparative advantage hangs. All theory abstracts from reality, but mainstream trade theory abstracts so radically that it breaks any tether to the real world. Among other things, historical plausibility disappears. As Findlay and O’Rourke describe, ‘the greatest expansions of world trade have tended to come not from the bloodless tâtonnement of some fictional Walrasian auctioneer but from the barrel of a Maxim gun, the edge of a scimitar, or the ferocity of nomadic herdsmen’ (2007: xviii). The Atlantic slave trade and the trade in opium imposed on China provide particularly profitable examples. The dependency tradition identifies how local economies were transformed and ‘underdeveloped’ to serve the imperatives of trade (Frank 1970, 1978; Rodney 1974). Even trade specialisms entered into voluntarily, once taken, can leave countries forced to trade (Daly 1996). Today we specialize in selling bananas or microchips to good advantage and can import more cheaply the necessities we yesterday produced ourselves. Tomorrow the bottom falls out of the banana or

Theories of International Trade and Economic Imperialism    83 microchip market and those necessities become unaffordable. Short-​term gain may also incur long-​term costs which are harder to quantify. Forests are logged, indigenous knowledges are privatized and patented, farmland in hungry nations is turned over to producing flowers for European supermarkets. There can be unequal exchange and unequal ecological exchange (Brolin 2006; Foster and Holleman 2014; Ciplet and Roberts 2019). But there is a danger of critics simply flipping the trade narrative from one of mutual benefits, of trade as an unalloyed good, into a zero-​sum or even negative-​sum narrative of trade as an unalloyed bad, at least for poorer countries. Trade becomes both the consequence and the cause of poorer countries’ poverty. Trade is always and everywhere exploitative and, as the following sections discuss, trade exploitation trumps both other aspects of international political economy and domestic social relations. I have previously argued for putting trade inequalities ‘in their place’ (Dunn 2017), which is not to suggest they are unimportant but that they need to be analysed alongside wider socioeconomic relations and critically evaluated rather than assumed. Exploitation is a contested concept, denied any objective meaning by both mainstream economics and postmodern social theorists. It is often used loosely and pejoratively, and I first want to introduce important, broadly Keynesian, ideas about why poorer countries are disadvantaged in the international trading system but which, given their Keynesian provenance, make no claim that this is an objective exploitation. This is then contrasted with ideas of unequal exchange, of a Marxist provenance, which do claim such an objective exploitation. The Prebisch-​Singer thesis (Prebisch 1950; Singer 1950) is usually interpreted as an explanation of declining terms of trade for primary products relative to manufactured ones. Both the original contributions say more than this. Singer (1950) indeed identifies a low elasticity of demand for both raw materials and food, which tends to mean falling relative prices. But he also identifies the opportunity costs of diverting technology to primary production rather than industry, limited multiplier effects within export-​oriented economies, which make wage repression a rational national strategy, and the way primary-​commodity-​market volatility militates against strategies of industrialisation. More broadly, Singer describes the relatively greater importance of trade for poorer countries, especially in relation to their surpluses and therefore their greater vulnerability to its vicissitudes. Prebisch (1950) begins with a broader argument about poorer country disadvantage within a US-​dominated financial system but develops a narrower argument about changing terms of trade based on wage rates and imperfect labour markets. He suggests there is a ratchet-​effect which raises wages in rich countries. Workers’ conditions rise during booms but, protected by unions and democratic welfare states, do not fall accordingly in slumps. In poor countries, fresh labour supplies from the countryside and repressive states render labour markets more competitive. With largely implicit assumptions about pricing mechanisms and the ability of companies to pass-​on their costs, the price of rich-​country-​produced goods tends to rise relative to those from poor countries. It is apparent that this is not specifically a model of different products,

84   Bill Dunn although an international division of labour means that primary products are disproportionately produced within the poorer countries. Others have added to the catalogue of primary product disadvantage. For example, Robinson (1979) identifies the monopsony power of buying corporations and Dos Santos (1970) the development of synthetic substitutes for raw materials. Rubber provides the classic example. These Keynesian analyses provide potentially powerful depictions of change and become susceptible to empirical scrutiny. Evidence from the twentieth century and especially from about 1950 to 1990 confirmed a steep decline in the prices of most primary goods, helping to establish the prestige of the Prebish-​Singer thesis. Evidence since the 1990s, and also from the nineteenth century, is more mixed (Ocampo and Parra-​ Lancourt 2010). Oil prices are a notorious exception, but other fuel prices and many food prices also rose substantially in recent decades, potentially benefitting exporting economies while often hitting the poorest consumers the hardest. The evidence is therefore somewhat ambiguous, although it is compatible with claims that many poorer countries, and many of the poor within them, suffered worsening conditions because of trade. As earlier, the Keynesian nature of the Prebisch-​Singer thesis allows no imputation that this involves an objective exploitation or that any one price was ever fair. This contrasts with powerful ideas of unequal exchange based on value theory. These claim a discrepancy between value and price and exploitation as an objective economic fact. Emmanuel (1972) usually provides the starting point for modern discussions, although he acknowledges many precedents for the idea and later rejects the Marxist underpinnings of his initial statement. However, the framing in Marxist terms is both easiest to follow and seems to provide a necessary basis for a claim of inherent inequality and exploitation. Capitalist competition, for both Marx and Emmanuel, tends to equalize profit rates. For Marx, this meant that firms did not receive the value their own workers produced but only a ‘fair’ share of the total, once differences in capital spending were taken into consideration. Emmanuel says that the same equalization of profit rates occurs across national borders. But where, within countries, competition also tends to equalize wage rates, across borders there is no such tendency. Capital is internationally mobile. Labour is not. Therefore, if capitalists in both core and periphery are to receive the same profit rates, the higher costs of labour must be factored-​in to the price of rich-​country products, and the lower cost of poorer-​country labour into those of poorer-​country products. As core and periphery trade with each other, the poor sell cheap and buy dear. Exchange is unequal. The idea has echoes of Prebisch’s (1950) wage-​based account of changing terms of trade, and Emmanuel is emphatic that the differences are not based on the nature of the goods. But this now precisely depicts exploitation based on a divergence from some (unrealized) value-​equivalent exchange. Rich-​country products sell at more than their value, poor-​country products at less. Workers in rich countries receive more than the value of the labour power they sell, those in poor countries receive less.

Theories of International Trade and Economic Imperialism    85 For Emmanuel and many followers this trade-​based exploitation becomes the primary dynamic of the global economy (Wallerstein 1974; Amin 1974). Once established, ‘the superprofit from unequal exchange ensures a faster rate of growth’ (Emmanuel 1972, 130). ‘The impoverishment of one country becomes an increasing function of the enrichment of another, and vice versa’ (1972, 130). This is a big, important and provocative claim. It is hard to evaluate. Value, for Marx, ‘does not have its description branded on its forehead; it rather transforms every product of labour into a social hieroglyphic’ (1976, 167). The point is that value and price are not immediately equal. Significantly, Emmanuel acknowledges that productivity differences could offset difference in wages and indeed he saw the early years of innovation in the industrial revolution, combined with what remained low wages, working to the advantage of poorer-​country importers. Only in the 1860s, as rich-​country workers organized, did unequal exchange take effect. Amin (1974) makes the same point, while pushing the date back to a historically more plausible 1880s. Emmanuel adds that by the twentieth century, productivity advantages lay with the periphery; for example only they could efficiently grow tropical fruit, industrial goods could be made anywhere. Unfortunately, either there is an incomplete division of labour, in which case the rich-​country products would only be expected to sell if productivity differences indeed outweighed those in labour costs. (Monopolistic practices and rich-​country protections might change this, but Emmanuel insists these are quite separate issues.) Alternatively, there is a complete international division of labour, in which case it becomes impossible to tell. If we are comparing different goods, tropical fruit with industrial goods, it requires another analytical leap of faith to insist their prices vary systematically from their value (Janvry and Kramer 1979). Because any discrepancies between value and price do not present themselves immediately, any evaluation of claims of unequal exchange depends on indirect evidence. The grandest claims are probably those of Wallerstein, who invokes unequal exchange as a long-​term explanation of international inequality stretching back over centuries. Again, trade is the ‘secret of the success of the core’ (1974, 219). There is little doubt that both trade and international inequality rose spectacularly over the last 500 years. Unfortunately, wage and cost differentials are hard to evaluate prior to the nineteenth century, but, at best, such a reciprocal enrichment of the core and impoverishment of the periphery seems to impute an implausibly vast wealth to the periphery prior to imperialism and trade. Evidence improves from the nineteenth century and again shows a simultaneous rise in trade and international inequality. If unequal exchange begins as a systematic process in the second half of the nineteenth century, it may still struggle to explain how trade could be a prime cause of the wealth of rich-​country nations, which had already established a significant economic lead by that time, however much it would later be exaggerated. But trade can now plausibly be seen as contributing to the enrichment of the core and impoverishment of the periphery. Figure 5.1 plots average income for Latin America, Asia, and Africa against the average of twelve leading western European countries from 1820 to 2000. As trade rose in the nineteenth century, so did inequality. A similar concurrent rise in trade and inequality is apparent in the

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1950

1973

2000

1

Latin America Asia Africa World trade, 1913 = 100 (right hand axis)

Figure 5.1  Regional per capita wealth relative to western Europe and the rise of world trade, 1820–​2000. Sources: Calculated from Maddison (2003), Federico and Tena-​Junguito (2016). Note: The time series axis is non-​linear and trade levels are plotted on a logarithmic scale.

post–​World War II period. The stagnation of trade from 1913 to 1950 saw Latin America, if not the other poorer regions, doing relatively well. The post–​World War II period is worth a brief further comment. Measured as a proportion of GDP, trade was recovering from historically low levels. Of course, vital materials may have been extracted, exploitatively, from poorer countries (Magdoff 1969), even if these represented a small part of the total value. Quantitatively, however, there is a problem interpreting growth in terms of trade exploitation. Trade growth exceeded economic growth, allowing conventional narratives that the latter was ‘trade-​led’, but even if unequal exchange implies a gross undercounting, it is hard to see it transferring much value, particularly from poorer countries, whose trade then represented a small proportion of the global total. This low poorer-​country share also highlights a neglected aspect of claims of unequal exchange that the same logic should encompass all trade between countries with different wages. Japanese GDP per capita in 1950, for example, was only one-​fifth that of the United States (Maddison 2003), and its subsequent trade was not conspicuously damaging. With trade levels at such low levels, it seems reasonable to hypothesize that growth was substantially endogenous. Poorer regions as well as rich grew extraordinarily quickly by historical standards. Unequal exchange may have contributed to, but can hardly sufficiently explain, economic growth or growing international disparities. The subsequent period presents different conceptual challenges. World trade rose to unprecedented levels. International inequality also fell steeply. This was far from universal. Much of Africa, in particular, fell further behind, but in aggregate, and particularly for many Asian countries which increased their international trade, growth was rapid.

Theories of International Trade and Economic Imperialism    87 Figure 5.2 tests claims of trade’s differential impacts on countries according to their wealth for the period between 1980 and 2019. It plots growth against a variable constructed by multiplying country per capita wealth relative to the global average by the country’s average trade level (relative to GDP). The point of this interaction term is to produce a variable which becomes more strongly negative in poor countries, and more positive in rich countries, the more they trade. Countries with close to median incomes or with low levels of trade have values close to zero according to this variable. (Logged values are used for statistical purposes for both trade to GDP ratios and per capita wealth, because both are lower bound at zero and the distributions therefore highly skewed.) If my interpretation of unequal exchange is right, this should anticipate most countries in Figure 5.2 lying along a diagonal running bottom-​left to top-​right. The absence of such evidence is, of course, at most weak evidence of absence, but it might at least raise questions. Formal linear regression models, both over the whole forty-​year period, and over shorter periods, and including the trade and wealth variables as well as the interaction term, similarly fail to produce any significant results. This period of rapidly rising trade and falling international inequality becomes hard to interpret in a simple framework in which rich countries gain at the expense of the poor. This prompts a final note on trade, exploitation, profit, and growth. Emmanuel posited equal rates of profit in different countries, by definition. But he also suggested that capital was ‘sucked-​up by a siphon effect, towards active markets and high levels of consumption’ (cited in Brolin 2006, 215). In the most recent period, there were

Figure 5.2  Annual average per capita growth against the interaction of trade and wealth, 1980–​2019 Source: Calculated from World Bank (2020). Note: some countries labelled for illustrative purposes; ‘core rich-​country group’ includes Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Israel, Netherlands, New Zealand, Portugal, Spain, UK, and US.

88   Bill Dunn huge net capital inflows as well as higher (endogenous) levels of investment within poorer countries. Again within this general pattern there is huge unevenness, with China dominating the aggregates. The shift of production locations nevertheless suggests that, in more and more industries, socially necessary labour time conceived globally is now being determined by poorer countries. This seems compatible with the declining terms of trade many of them experienced. Important elements of the unequal exchange argument look convincing. But this now sees capital being attracted to the higher rates of profit associated with lower wages, so unequal exchange coincides with, and plausibly leads to, increased savings and investment and growth. As often, Robinson’s aphorism that ‘the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all’ (1964, 46), seems to be confirmed.

Changing Trade Relations in the Context of State, Corporate, and Financial Power The previous section suggested that it is hard to show unequal exchange empirically. The next two sections discuss how this is also because it is hard to separate trade from other dimensions of political economy, from other dimensions of inequality between, and within, countries. Hard to disentangle in practice, the distinctions between trade and other dimensions of the international economy, politics and society are important conceptually. This is true in a negative sense in the way mainstream accounts ride roughshod over their own assumptions. For example, comparative advantage is extrapolated to proclaim the benefits of foreign investment (Caves et al. 1993), forgetting that comparative advantage relies on assumptions that capital does not cross national boundaries. The distinctions also matter politically. They matter in terms of policy. As will be discussed later, some developing countries adopted the whole liberalizing package, welcoming trade openness, foreign direct investment, and financial inflows. Others have been more selective and it may be worth asking whether some combinations work better than others. The distinctions also matter in terms of an oppositional politics. Should the focus be on debt, and campaigns against it, for financial regulation, or against the structures of trade. If the last, on what basis? Is the problem too much liberalization, with the World Trade Organization condemned for its advocacy and locking-​in of free trade (Dunkley, 2004), or too little, the WTO condemned for liberalizing only inconsistently, allowing rich-​ country exemptions (Bhagwati 2005; Nwoke 2020)? Both claims may articulate important partial truths, and the WTO double standards are themselves worth emphasizing. But critics need a consistent story if it is to be convincing. This chapter is concerned with trade and I try to avoid trespassing too egregiously into other domains discussed

Theories of International Trade and Economic Imperialism    89 elsewhere in this book, but trade inequalities are better understood in the context of a broader political economy. It is worth first re-​emphasizing that history matters and there is path dependency to economic relations. Mainstream models of trade specialization based on factor ‘endowments’ typically ignore how these were created in the first place. Again Marx is scathing: ‘You believe perhaps, gentlemen, that production of coffee and sugar is the natural destiny of the West Indies. Two centuries ago, nature, which does not trouble herself about commerce, had planted neither sugar-​cane nor coffee trees there’ (1977, 269). Trade relations established by imperial power can endure long after the formal retreat from empire. Most ambitiously, Wallerstein (1974) and the World Systems tradition depicts an international division of labour enforced politically, with the coherence of European states and thence their political power as early as the fifteenth century, rather than economic or technological superiority, allowing them to dominate, thence to profit and prosper, at the expense of the rest of the world. As before, trade seems insufficient to account for subsequent Western prosperity, however devastating it could be for the periphery. But it is surely right to identify mutually reinforcing spatial ‘lock-​ins’ of economic and political power. Ideas of circular and cumulative causation, originating in the institutional economics of Veblen and Myrdal, may be ostensibly less radical but no less useful against the complacency of mainstream approaches. They contrast with the superficial epistemologies of atomistic individuals pursuing rational self-​interest, without regard for the way in which those individuals’ rationality is socially constructed. They also contrast with the superficial assumptions of equilibrium. Rather than small changes being automatically ‘corrected’, small changes often lead to bigger ones. Even the incidental and accidental become permanent features of the economy. Similar themes have been reworked and formalized in new trade theory, associated particularly with the work of Krugman. In the first instance concerned generally with economic geography and agglomeration, by extension these ideas add time and space and changing structures of investment to conventional Heckscher-​Ohlin models (Krugman 1993). Krugman also engages with Marxist theories of imperialism, albeit with simplifying assumptions and a mathematical formalism which the originators would hardly recognize. Krugman constructs a ‘model [which] naturally gives rise to a two-​stage pattern of development that bears a striking resemblance to a Hobson-​Lenin view of imperialism’ (1990, 94). Initially small economies-​of-​scale advantages reinforce manufacturing in the core and allow it to export to the periphery. Industry in the core expands, at the expense of agriculture. But once the core becomes completely specialized, foreign investment into the periphery becomes more profitable. Imperialism enters a new phase. The idea of different phases or stages raises important questions of interrelation between separate but related processes, of dynamic change and of how and when paths are broken. Patterns of wealth and exploitation can be reinforcing, circular, and cumulative, but then run up against barriers or be overwhelmed by other forces, such as the exhaustion of local agriculture, the development and use of wage gaps, the undermining of monopolies of investment, or technological innovation. The implication is that rather

90   Bill Dunn than simply being self-​reinforcing, with trade inequalities reproducing ever-​bigger trade inequalities, they can develop internal contradictions and be in dynamic interaction with other aspects of political economy which can send the economy lurching in new directions. The diverse and sometimes conflicting pressures might also create spaces for policy alternatives, successful trade niches, or policies which eschew the market logic. Within a dynamic, competitive global system, any such strategic orientations are themselves insecure and always liable to undermining by structural change either within local or global economies, but the point is that diverse and non-​congruent political economic forces destabilize trade relations. As more subtle writing in the dependency tradition acknowledges, trade is therefore misunderstood as simply an imposition on poorer countries (Cardoso and Falleto 1979). Despite vast international asymmetries of wealth and power, there remain social contests, choices, and alternatives. Without attempting an adequate review, a few themes are worth emphasizing. First, states strategize, albeit not in conditions of their own choosing. States intervene within their domestic economies and the stories of successful trade-​led development, notably in East Asia, are misinterpreted as evidence in favour of free trade. Second, it remains an asymmetrical system in which rich and powerful states exert an often overwhelming influence, for example in the WTO and in the proliferation of regional and preferential agreements. Usually couched in terms of trade, these agreements often reach far beyond trade to secure corporate property rights and to limit poorer countries’ room for policy manoeuvre. Third, although states are inescapably involved in trade, the textbook presentation in which states trade, with each other, involves a profoundly misleading state-​centric vision, shared by much of the ostensibly critical thinking (Skocpol 1977). The next section considers within-​country divisions, but from the beginning it is largely corporations rather than states that trade. This is immediately true in that corporations are the trading companies, from the colonial enterprises of the Dutch and British East India companies to the shipping companies and airlines today. It is also true in the broader sense that the overwhelming majority of trade today takes place within corporate networks, either between or within firms. These involve a spectrum of organization and market relations (Gereffi et al. 2005) including direct within-​firm transfers. Other contributors to this volume deal with this more adequately, but, apart from anything else, such corporate transfers can render trade statistics profoundly unreliable as customs declarations, adjusted for tax convenience, often bear little relation to real costs (Sikka and Wilmott 2010). Corporate interests are unlikely to align neatly with national ones, let alone with those of the majority of the population. Trade relations are also profoundly shaped by finance. The conventional story of comparative advantage, which treats trade as barter between countries, becomes profoundly misleading. By definition, it excludes imbalances. Perhaps more clearly than anywhere, international trade makes a nonsense of mainstream beliefs that money is neutral, beliefs that money does not matter. Again, it is impossible to do justice to the many ways in which money does matter, but it is possible to highlight a few important themes.

Theories of International Trade and Economic Imperialism    91 First, trade imbalances can have lasting effects. Shaikh (1979, 1980) makes a powerful case that even momentary trade deficits can become permanent, forcing countries into prolonged debt and interest repayment. Historically, indebtedness has been the lot of many developing countries, a further drain on already scarce resources. Today, poorer (and smaller) countries suffer worse credit ratings and must pay more to borrow. An aversion to trade deficits has understandably become a commonplace. There are reasons to be cautious. In an accounting sense, the current and capital accounts are simple reciprocals of each other, and capital inflows may be crucial drivers of growth. Within domestic economies, it is equally commonplace that borrowing is a fact of successful economic life, and in principle there seems little reason to assume international credit relations are fundamentally different. For 139 poorer countries for which data were available between 2000 and 2018, there is virtually no correlation (r =​0.06) between the average current account balance and GDP growth (calculated from World Bank 2020). Indeed, extending the comparison with corporate debt, any differences may favour national debtors, much harder than firms to declare bankrupt. Second, even while stopping well short of bankruptcy, the experience of the debt crises, especially the Latin American–​centred crisis of 1982 and the East Asian–​ centred crisis of 1997, became the means by which indebted countries were levered-​ open. This engendered lasting transformations, to both the affected countries and the global economy. Table 5.1 shows the rises in trade particularly in the major American countries. The story of the Washington Consensus and the imposition of IMF structural adjustment packages is sufficiently notorious to need little repetition. Among other things, an export orientation, and often an export-​surplus orientation, became necessary to service the debts. What Adam Smith (1999) lampooned as an ancient mercantilist prejudice in favour of money surpluses, now became part of the liberalizing agenda. In aggregate, developing countries became net creditors rather than debtors. As usual, the aggregates are dominated by China, but many other countries ran systematic trade surpluses, as Table 5.1 shows for post-​crisis Korea, Malaysia, and Thailand. Third, this points to the importance (and to the ambiguities) of currency regimes and currency hierarchy to international trade. The nineteenth-​century gold standard is widely seen as contributing to stability and to the earlier era of trade globalization. By the end of the century, an overvalued pound may still have served the financial interests of the City of London and industrial importers of vital raw materials like cotton. But gold became a ‘barbarous relic’ (Keynes 1923, 138) from the perspective of Britain’s national economy, undermining national competitiveness as other economies, principally the United States, achieved faster productivity growth or, like France, devalued their currencies. Today, the United States enjoys privileges of seigniorage, through the dollar and US-​Treasury-​paper holdings of other countries, notably those export-​surplus poorer countries. This allows the United States to run systematic deficits. But if the United States gets something for nothing, or at least for cheap, much as Britain may have done in the late nineteenth century, the overvalued currency erodes the national bases

92   Bill Dunn Table 5.1 Trade and Finance, Selected Countries, 1982–​2018 Argentina Brazil Mexico Indonesia Korea Trade openness (exports +​ imports: GDP)

Malaysia Thailand

1982

15.6

15.9

24.1

48.7

60.2

110.5

47.5

1996

21.5

15.6

50.4

52.3

52.7

181.8

84.3

2013

29.3

25.8

60.8

48.6

78.7

142.7

132.5

2018

30.7

29.4

80.4

43.0

76.7

130.5

120.9

Current account balance (as percent of GDP)

1982

–​2.79

–​5.79

–​3.19

–​5.91

–​7.07

–​13.38

–​2.74

1996

–​2.49

–​2.73

–​0.61

–​3.37

–​4.01

–​4.42

–​8.03

2013

–​2.38

–​3.23

–​2.47

–​3.19

5.64

3.47

–​2.10

2018

–​5.25

–​2.20

–​1.88

–​2.94

4.50

2.12

5.62

External debt (as percent of GDP)

1982

55.3

35.3

50.1

23.8

...

...

34.0

1996

41.7

22.0

39.7

58.3

...

...

63.3

2013

27.7

19.8

32.8

29.8

...

...

38.5

2018

56.1

30.3

38.0

37.6

...

...

35.1

Financial openness

1996

0.82

0.11

0.41

0.48

0.23

0.30

0.36

2013

0.16

0.41

0.39

0.50

0.93

0.18

0.30

Sources: Jahan and Wang (2016), World Bank (2020).

of production. Conversely, poorer countries may manipulate their currency values, more easily achieved on the downside, to increase their competitiveness and their dollar holdings, at the cost of imports and domestic consumption but with potentially positive impacts on growth rates. Fourth, recent decades saw the global economy experience both trade and financial liberalization but without the processes following parallel trajectories. For example, Table 5.1 shows steep rises in trade in the Latin American countries and Thailand, which also achieved marked levels of debt reduction, at least to 2013, and moves from trade deficits to surpluses in Korea, Malaysia, and Thailand, but not in the other countries. Brazil and Korea became more financially liberalized, although Brazil’s rise in openness occurred up to 2006, after which there was considerable retrenchment. It is possible for poorer country states to adopt different strategies, for example to restrict finance, while becoming more open to trade, as seen in Argentina, Malaysia, and Thailand. So trade experiences influence and are influenced by the broader political economy, by asymmetrical global power relations, by corporations, by finance, and by much else in complex, indeterminate, and contestable relations. If this is an obvious truism, it is one forgotten by both mainstream trade theory and much oppositional writing which presents trade as a ‘thing in itself ’, with unique powers of its own, for good or ill, and which can also be studied without looking too much behind national borders (Dunn 2020).

Theories of International Trade and Economic Imperialism    93

Shifting Class and National Relations This final section considers trade in relation to intranational relations, particularly those of class. This focus leaves much unsaid. For example, trade impacts profoundly on gender relations and on the environment. Nevertheless, class issues, however unfashionable they have become, highlight the insufficiency of thinking of trade inequalities in purely national terms. Most immediately, they foreground how national growth rates are a problematic measure of economic success or failure. Selwyn (2020) makes the fundamental point that growth is predicated on labour’s exploitation. This may be reckoned a price worth paying but at best there are tough questions about who is doing the reckoning and decisions about trade-​offs between present costs and prospective future gains. There are also important questions about the relation between domestic relations and any trade exploitation, which have disappeared from much of the critical trade theory. Emmanuel insists that his ‘subject is exploitation of nation by nation not man by man’ (sic; 1972: 330). As seen earlier, he posits the core working class’s ability to overcome its exploitation, as culpable for trade exploitation and peripheral poverty. International and not intranational exploitation becomes the main dynamic and political problem. Similarly, for Wallerstein, wage labour in the core is genuinely free. Free labour is the form of labour control used for skilled work in core countries whereas coerced labour is used for less skilled work in peripheral areas. The combination thereof is the essence of capitalism. When labour is everywhere free, we shall have socialism. (Wallerstein 1974, 127)

Most radical critics of trade are more cautious but an emphasis on national exploitation often lets the intranational differences fall out of view. This was not always the case. The early Marxist theorists of imperialism raised the problems of class and nation without necessarily providing satisfactory answers. Notably, Lenin’s (1975) Imperialism, with debts to Hobson, saw labour’s relative poverty and the weakness of domestic consumption as a crucial driver of imperial overseas investment. Imperialism also provided cheap resources and new markets. The gains from empire then enabled imperial capital to buy-​off a labour aristocracy. The coincidence in the post–​World War II period of rising working-​class affluence, with decolonization and low (although rising) levels of trade would tend to weaken the second strand of the argument about labour’s gains. Emmanuel’s own criticisms of the lost internationalism of US workers identify this as occurring from the 1930s to 1960s, a period of relatively low trade, long after he understands unequal exchange as having become established. It seems entirely possible that the gains from trade might buy-​off sections of labour in the rich countries, but there are other resources and social pressures which can win the allegiance of labour

94   Bill Dunn aristocrats. More broadly, what are surely complicated, mediated, relations appear to have attracted insufficient attention over the last 100 years. What seems remarkable in this context is how orthodoxy, through the Stolper-​ Samuelson theorem, attempts to articulate trade with class, while most radical trade theorists say very little. Very briefly, Stolper and Samuelson (1941; Samuelson 1948) identify a powerful logic according to which the owners of those factors of production within a country, in which that country is relatively abundantly endowed, would be expected to gain from trade. They gain new markets for their products. The owners of relatively scarce factors of production would be expected to lose. They suffer increased competition from cheaper producers in countries where the relevant factors are more abundant. An important argument then associates recent rises in inequality in rich countries with rising trade (Reich 1991; Wood 1994, 1998; Krugman 2008). Most of the literature emphasizes that the already lowest-​paid, unskilled, workers in rich countries are further undermined by trade as they are outcompeted by the unskilled of poorer countries. Meanwhile, the skilled are in relative abundance in rich countries and provide the basis for those countries’ comparative advantage. Their wages rise with trade and therefore so does income inequality. The gains to capital expected by these models would work in the same direction, although this has been less prominent in the recent literature. There may be counteracting factors as workers enjoy cheap imported consumer goods (Leamer 2012), but as firms switch to exploiting cheaper, more compliant, workers in developing countries the wage share of national income declines. Growth in the rich country economies may decline, but corporate profits soar. There are problems with these arguments about inequality in relation to rich countries. The rise in inequality in the United States began long before substantial rises in trade with countries with much lower incomes (Krugman 1995). Even if the trade with low income countries now looks more compatible with the evidence, there is an awkward discrepancy in the causal narrative (Lawrence 2008; Dunn 2015). Across rich countries, patterns of changing inequality bear little relation to patterns of trade (Dunn 2011, 2015). Skills are heterogeneous and the mainstream argument, which simply equates skill with pay becomes circular in this context. Any increase in income inequality becomes evidence of skill polarization. Locating rising inequality in an essentially rational market process, ignores crucial other realities of politics and shifting class power. Patterns of changing inequality in poorer countries are still harder to interpret in conventional terms. Figure 5.3 plots changes in trade and changes in income inequality between 1990 and 2019. Data for disposable income inequality, in particular, need to be treated cautiously, they are often imputed and there is considerable uncertainty surrounding the values (Solt 2019) although looking at within country trends over may provide at least a reasonable approximation. The mainstream does identify at least some powerful forces pulling in different directions. According to the Stolper-​Samuelson framework, the corollary to the declining position of the unskilled in rich countries should be rising wages where labour is relatively more abundant. Income inequality should fall. The picture becomes more complicated because, properly, the Stolper-​ Samuelson theorem and the

Theories of International Trade and Economic Imperialism    95

Gini coefficient disposable income

0.6

0.4

0.2

–6

–4

–2

0 0

2

4

6

–0.2

–0.4 trade (as percentage of GDP)

–0.6

Figure 5.3  Change in trade and income inequality, 1990–​2019*, as annual trends, 120 developing countries. Source: Calculated from World Bank (2020), Solt (2019). Note: *Accepting a minimum of ten years’ of simultaneous data, circle size represents country GDP.

Heckscher-​Ohlin theorem of factor endowments, from which it is derived, are three-​ factor models involving capital, labour, and land. So in countries primarily exporting manufactured goods, landowners would lose from trade openness and the implications for overall inequality would depend on landowners’ relative wealth. In China, for example, regional inequalities have indeed accounted for a substantial proportion of the overall change but declining consumption shares of income would suggest that labour also lost in relative terms. Mainstream accounts also predict rising inequality based on skill-​biased-​technological change (Acemoglu 2003; Babones 2010). The different variables allow for complex patterns. But the econometric work admits that experiences remain hard to square with the theories (Dreher and Gaston 2006; Hellier 2013). For a critical political economy it is unsurprising that mainstream theories fail to explain the observed complexity and there is a long, critical tradition linking trade and inequality within poorer countries. Again I want to suggest that while trade exerts pressures, these are mutable. A powerful rationale, already identified by Singer (1950), sees export-​oriented success as predicated precisely on low wages, which in turn limit domestic consumption and reinforce the export orientation. For most of the dependency literature too, trade is both predicated upon and reinforces peripheral low wages and poverty. Perhaps most clearly, Frank (1970, 1978) articulates a process whereby intranational inequalities reproduce the international as chains of core and periphery extend within the peripheral economies. A comprador, peripheral ruling elite gains a share of the profits from super-​exploitation. The national and international exploitation become mutually reinforcing. But Raffer (1987) raises perhaps the most telling question

96   Bill Dunn of theories predicated on unequal exchange. Why not simply increase wages to escape international exploitation? Unsurprisingly, poorer-​country elites have not embraced wage rises, although such possibilities might suggest a complex interaction of class and national exploitation and that struggles for improved conditions within poorer countries are not inimical to any putative national interest. Perhaps most fundamentally, the complexity of changing inequality remains insufficiently explained by an emphasis on trade alone. It is apparent in Figure 5.3 that there is little correlation between changing trade and changing income inequality with countries in every quadrant. Nor is there any obvious relation with countries’ factor endowments. Among the largest countries, China and India both saw substantial rises in both trade and income inequality. Several others, including Argentina, Brazil, and Mexico saw rising trade and falling inequality. The variation perhaps serves as a warning not to overgeneralize the relation between trade and within-​country inequality. This is not to exonerate trade, the pressures it imposes, particularly on poorer countries, on poorer-​country businesses, and poorer-​country workers and peasants. But falling income inequality in many countries does suggest that trade pressures are contestable rather than simply being an inexorable imposition. There is space for struggle and for winning alternative orientations including more egalitarian orientations.

Conclusion This chapter attempted to identify vital questions of trade and economic imperialism. It suggests that trade can be exploitative but that exploitation is a contested concept too easily associated with economic regress, where it might better be associated with dynamic, if uneven, growth. Mainstream economics, in which rational individuals make utility maximizing decisions, which sum to socially optimal outcomes are particularly ill equipped for understanding trade; how its present is bequeathed from an often predatory imperial past, how it remains intertwined with relations of state, corporate, and financial power; and how it intersects with contested domestic social relations. But if the mainstream seldom even conceives of such questions, critical accounts need to recognize that they often remain open questions and that major research work is needed to develop more satisfactory answers.

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Theories of International Trade and Economic Imperialism    97 Babones, Salvatore J. 2010. ‘Trade Globalization, Economic Development and the Importance of Knowledge as Education’. Journal of Sociology 46, no. 1: 45–​61. Bhagwati, Jagdish N. 2005. ‘Reshaping the WTO’. Far Eastern Economic Review, January/​ February. Available at: http://​www.columbia.edu/​~jb38/​papers/​pdf/​FEER_​Final_​Edited_​ by_​Restall_​and_​Bhagwati.df Brolin, John. 2006. The Bias of the World: Theories of Unequal Exchange in History. Lund: Lund University. Cardoso, Fernando Henrique, and Enzo Falleto. 1979. Dependency and Development in Latin America. Berkeley: University of California Press. Caves, Richard E., Jeffrey A. Frankel, and Ronald W. Jones. 1993. World Trade and Payments. 6th ed. New York: Harper Collins. Ciplet, David, and J. Timmons Roberts. 2019. ‘Splintering South: Ecologically Unequal Exchange Theory in a Fragmented Global Climate’. In Ecologically Unequal Exchange, edited by R. S. Frey et al. Palgrave Macmillan, Cham. https://​doi.org/​10.1007/​978-​3-​319-​89740-​ 0_​11, pp 273–​305 Daly, Herman. E. 1996. Beyond Growth: The Economics Of Sustainable Development. Boston: Beacon Press. Dos Santos, Theotonio. 1970. ‘The Structure of Dependence’. American Economic Review 60, no. 2: 231–​236. Dreher, Axel, and Noel Gaston. 2006. ‘Has Globalisation Increased Inequality?’. Econstor Working Paper No. 140. www.econstor.eu. Dunkley, Graham. 2004. Free Trade: Myth, Reality and Alternatives. London: Zed. Dunn, Bill. 2011. ‘The New Economy and Labour’s Decline: Questioning Their Association’. In Trade Unions and the Global Crisis: Labour’s Visions, Strategies and Responses, edited by M. Serrano, E. Xhafa, and M. Fichter. Geneva, International Labour Office., pp. 63–​78 Dunn, Bill. 2015. Neither Free Trade nor Protection: A Critical Political Economy of Trade Theory and Practice. Cheltenham: Edward Elgar. Dunn, Bill. 2017. ‘Class, Capital and the Global Unfree Market: Resituating Theories of Monopoly Capitalism and Unequal Exchange’. Science and Society 81, no. 3: 348–​374. Dunn, Bill. 2020. ‘For a Critical Political Economy of International Trade’. In A Research Agenda for Critical Political Economy, edited by B. Dunn. Cheltenham: Edward Elgar, pp 77–​90. Emmanuel, Arghiri. 1972. Unequal Exchange: A Study of the Imperialism of Trade. London: New Left Books. Federico, Giovanni, and Antonio Tena Junguito. (2016). World trade, 1800–​1938: a new data-​ set. European Historical Economics Society, Working Papers, No. 93 available at: https://​eco​ npap​ers.repec.org/​paper/​heswpa​per/​0093.htm. Findlay, Robert, and Kevin H. O’Rourke. 2007. Power and Plenty: Trade, War, and the World Economy in the Second Millennium. Princeton: Princeton University Press. Foster, John Bellamy, and Hannah Holleman. 2014. ‘The Theory of Unequal Ecological Exchange: A Marx-​Odum Dialectic’. Journal of Peasant Studies 41, no. 2: 199–​233. Frank, Andre Gunder. 1970. ‘The Development of Underdevelopment’. In Imperialism and Underdevelopment, edited by Robert I. Rhodes. New York: Monthly Review, 4–​17. Frank, Andre Gunder. 1978. Dependent Accumulation and Under-​Development. London: Macmillan. Gereffi, Gary, John Humphrey, and Timothy Sturgeon. 2005. ‘The Governance of Global Value Chains’. Review of International Political Economy 12, no. 1: 78–​104.

98   Bill Dunn Hellier, Joël. 2013. ‘The North–​South HOS Model, Inequality and Globalization’. In Growing Income Inequalities: Economic Analyses, edited by Joël. Hellier and Nathalie Chusseau. Basingstoke: Palgrave Macmillan, 107–​146. Jahan, Mrs Sarwat., and Daili Wang. 2016. Capital Account Openness in Low-​Income Developing Countries: Evidence from a New Database. International Monetary Fund Working Paper. Available at: https://​www.imf.org/​en/​Publications/​WP/​Issues/​2016/​12/​31/​Capital-​Account-​ Openness-​in-​Low-​income-​Developing-​Countries-​Evidence-​from-​a-​New-​Database-​4449 Janvry, Alain, and Frank Kramer. 1979. ‘The Limits of Unequal Exchange’. Review of Radical Political Economics 11, no. 3: 3–​15. Keynes, J. Maynard. 1923. A Tract on Monetary Reform. In The Collected Writings of John Maynard Keynes, edited by Elizabeth Johnson and Donald Moggridge. Cambridge University Press doi:http://​dx.doi.org/​10.1017/​UPO97​8113​9520​638. Krugman, Paul. 1990. Rethinking International Trade. Cambridge, MA: MIT Press. Krugman, Paul R. 1993. Geography and Trade. Leuven: Leuven University Press. Krugman, Paul. 1995. ‘Growing World Trade: Causes and Consequences’. Brookings Papers on Economic Activity 1(Spring): 327–​377. Krugman, Paul R. 2008. ‘Trade and Wages, Reconsidered’. Brookings Papers on Economic Activity, Spring, 103–​154. Lawrence, Robert Z. 2008. ‘Comment on Krugman, P.R. (2008) Trade and Wages, Reconsidered’. Brookings Papers on Economic Activity, Spring, 149–​153. Leamer, Edward E. 2012. The Craft of Economics: Lessons from the Heckscher-​Ohlin Framework. Cambridge, MA: MIT Press. Lenin, Vladimir Ilyich. 1975. Imperialism, the Highest Stage of Capitalism. Peking: Foreign Languages Press. Maddison, Angus. 2003. The World Economy: Historical Statistics. Paris: OECD. Magdoff, Harry. 1969. The Age of Imperialism. New York: Monthly Review Press. Marx, Karl. 1976. Capital: A Critique of Political Economy: Volume 1. Harmondsworth: Penguin. Marx, Karl. 1977. Selected Writings. Edited by D. McLellan. Oxford: Oxford University Press. Nwoke, Chibuzo N. 2020. ‘Rethinking the Idea of Independent Development and Self-​Reliance in Africa’. African Review of Economics and Finance 12, no. 1: 152–​170. Ocampo, José Antonio, and Mariángela Parra-​Lancourt. 2010. ‘The Terms of Trade for Commodities since the Mid-​19th Century’. Revista de Historia Económica/​Journal of Iberian and Latin American Economic History 28, no. 1: 11–​43. Oxfam. 2002. Rigged Rules and Double Standard. Accessed 2 March 2007. http//​:www.oxfam. org.uk. Prebisch, Raul. 1950. The Economic Development of Latin America and Its Principal Problems. New York: United Nations. Raffer, Kunibert. 1987. Unequal Exchange and the Evolution of the World System: Reconsidering the Impact of Trade on North–​South Relations. New York: St Martin’s Press. Reich, Robert. B. 1991. The Work of Nations. London: Simon & Schuster. Robinson, Joan. 1964. Economic Philosophy. Harmondsworth: Penguin. Robinson, Joan. 1979. Aspects of Development and Underdevelopment. Cambridge: Cambridge University Press. Rodney, Walter. 1974. How Europe Underdeveloped Africa. Washington: Howard University. Samuelson, Paul. A. 1948. ‘International Trade and the Equalisation of Factor Prices’. Economic Journal 58, no. 230: 163–​184.

Theories of International Trade and Economic Imperialism    99 Selwyn, Ben. 2020. ‘Economic Growth and the Ideology of Development’. In A Research Agenda for Critical Political Economy, edited by B. Dunn. Edward Elgar, 35–​46 Shaikh, Anwar. 1979. ‘Foreign Trade and the Law of Value: Part 1’. Science and Society 43, no. 3: 281–​302. Shaikh, Anwar. 1980. ‘Foreign Trade and the Law of Value: Part II’. Science and Society 44, no. 1: 27–​57. Sheppard, Eric. 2005. ‘Constructing Free Trade: From Manchester Boosterism to Global Management’. Transactions of the Institute of British Geographers 30, no. 2: 151–​172. Sikka, Prem, and Hugh Willmott. 2010. ‘The Dark Side of Transfer Pricing: Its Role in Tax Avoidance and Wealth Retentiveness’. Essex Business School, February. Singer, Hans W. 1950. ‘The Distribution of Gains between Investing and Borrowing Countries’. American Economic Review 40, no. 2: 473–​485. Skocpol, Theda. 1977. ‘Wallerstein’s World Capitalist System: A Theoretical and Historical Critique’. American Journal of Sociology 82, no. 5: 1075–​1090. Smith, Adam. 1999. The Wealth of Nations, Books IV–​V. London: Penguin. Solt, Frederick. 2019. ‘The Standardized World Income Inequality Database, Version 8’. Harvard Dataverse. https://​doi.org/​10.7910/​DVN/​LM4​OWF. Stolper, Wolfgang. F., and Paul. A. Samuelson. 1941. ‘Protection and Real Wages’. Review of Economic Studies 9, no. 1: 58–​73. Wallerstein, Immanuel. 1974. The Modern World-​System: Capitalist Agriculture and the Origins of the European World-​Economy in the Sixteenth Century. New York: Academic Press. Wood, Adrian. 1994. North–​South Trade, Employment and Inequality: Changing Fortunes in a Skill-​Driven World. Oxford: Clarendon. Wood, Adrian. 1998. ‘Globalisation and the Rise in Labour Market Inequalities’. Economic Journal 108, no. 450: 1463–​1482. World Bank. 2020. ‘Databank’. https://​datab​ank.worldb​ank.org/​sou​rce/​world-​deve​lopm​ent-​ ind​icat​ors#.

Chapter 6

Capitalism , Im pe ria l i sm, and Cri se s Shireen Moosvi

What is now called a ‘business cycle’ or a periodic revisiting of crises, each marked by sudden spurts of bankruptcies and sharp descents in market prices, has been a regular feature of the history of capitalism, even in its mercantilist (and early colonial) phase—​ its beginning marked, for example, in England, by the ‘South Sea bubble’ of 1720. With the onset of the Industrial Revolution in England in the latter half of the eighteenth century, the periodic crisis became one of production, that is, of a huge apparent mismatch between excessive supply and receding demand. Adam Smith, despite the acuteness of his perceptions, was, perhaps, just too early to grasp the issue posed by these irregularly spaced bouts of ‘overproduction’. In 1776, when he published his first edition of An Inquiry into the Nature and Causes of the Wealth of Nations,1 he was still concentrating on ‘manufacture’, that is, the increase of production secured through increasingly detailed specialization of labour rather than on the onset of skill-​eliminating machinery. But by the time David Ricardo, the next great name in economic theory, published his Principles of Political Economy and Taxation (1817, with additions published in 1821), the Industrial Revolution had transformed England into a fully capitalist nation, though the railway age was yet to come.2 In his fundamental contribution, Ricardo made no direct reference to the business cycle, possibly because the Napoleonic wars in Europe had created enough economic disturbances to dwarf other factors. Nevertheless he propounded an important theory, which could offer an explanation of the periodic crisis. This was his finding that ‘the natural tendency of profits, then, is to fall’.3 This happens, he argued, because while in industrial production there is no inherent cause for increasing costs owing to expansion of scale, the costs are bound to increase as the wage-​content of the costs relatively rises owing to a rise in labour subsistence costs, due, in turn, to the diminishing returns in agriculture through its extension to less fertile land.4 It was this imbalance between agriculture and industry that could, so one could deduce from this conclusion, bring about a crisis through a failure of industrial firms, as profits went on declining. On the other hand, one could argue, from his

102   Shireen Moosvi chapter on machinery which Ricardo added later to his work (1821),5 that an increasing use of machinery by dispensing with a large part of labour employed by the capitalists in order to maintain their rate of profit, was also likely simultaneously to restrict the market for capitalists to the extent that the labourers lost their purchasing power. But Ricardo himself, as we have mentioned, never extended his thesis of the falling rate of profit to erect any theory of crisis, even as a hypothesis. Almost simultaneously with Ricardo, Sismondi in his Nouveaux principes de l’economie politique, 1819, dealt directly with the phenomenon of recurring crises. He held that the economic crisis was the inevitable result of the anarchy of industrial production where every capitalist had his own anticipation of the market, the weakness of demand being caused by underpayment of labour and the drive for ever-​increasing profits by the capitalists. The contradictory elements inherent in capitalism were thus a constant factor behind supply outstripping demand and so generating a collapse of the market.6 From here the mantle was taken over by Karl Marx. More than any theorist before him, he held the periodic crisis to be the hallmark of capitalism. While Marx’s detailed treatment of the problem of economic crises does not appear anywhere in his major works, it is fortunate that we possess a long treatment of the subject in his notes posthumously published as Theories of Surplus Value, from manuscripts that are now treated as volume 4 of Capital.7 To put it very briefly, Marx’s position was that capitalists tend to increase their ‘constant capital’ (invested in machinery, land, raw materials, etc.) at the expense of ‘variable capital’ (invested in wages) to increase their profits. But this involved the capitalist economy in a perpetual contradiction: The drive for profits went on constricting the market formed by demand from the wage-​labourers. In time, a sectoral ‘overproduction’ of commodities grows into a multisector one, the rate of profit continually falls, and then a general crisis results. It could be described as an ‘underconsumption’ theory, but the ‘underconsumption’ here is one created by the capitalists’ unrestrained drive for profits. It could be argued that there were two factors which could still impede the path to a general crisis, both related to the gains made from colonialism, the initial form of modern imperialism. The entire colonial project yielded a huge constant tribute to the metropolitan world, which Marx himself described in a much neglected chapter of Capital, volume 1, as a form of ‘primitive accumulation of capital’.8 A quick reading of Marx may suggest to the reader that he was speaking only of the mercantilist period; but this is not the case: he cites an illustration from India of as late as 1866, in the same portion of Capital;9 and in a letter of 1881 he spoke of an annual acquisition of gratuitously acquired commodities by Britain from India, that amounted to ‘more than the total sum of income of 60 millions of agricultural and industrial labourers of India’.10 Now it can legitimately be argued that a flow gratis of primary products from colonies (shown by surplus imports into England from West Indies and India to have amounted as much as over 46% of Britain’s gross capital formation in 1801),11 could still have to a great extent stalled any domestic tendency of the rate of profit towards decline—​though ‘stalling’ might not, of course, amount to absolute prevention.

Capitalism, Imperialism, and Crises    103 The second factor delaying the onset of a general crisis could have been the expansion of markets through forced acquisitions of colonies, under the banner of what has been justly called ‘The Imperialism of Free Trade’.12 Here the concentration is on the forced openings of markets of agrarian countries by metropolitan industrial powers, Britain again being the main actor. In the case of China, it was for thrusting Indian opium, a colonial product, into the throats of the Chinese that the two Opium Wars of the mid–​ nineteenth century were primarily undertaken by Britain. It could, however, be said that by the 1860s colonial expansion of European powers had reached its limit as far as populous agrarian countries were concerned. And so Marx’s prediction in January 1873 of an ensuing crisis that would ‘drum dialectics into the heads of the mushroom upstarts of the new holy Prusso–​German Empire’,13 came to be only too true with a suddenness that probably even surprised the grim prophet. For by June 1873 Vienna was reporting bankruptcies that soon spread to Germany and, then, to all advanced industrial countries, marking the onset of the Great Depression. Just when Marx was about to pen these prophetic words in 1873, there came in the early 1870s the practically simultaneous formulation of the theory of marginal utility in separate works by W. S. Jevons, Carl Menger, and Léon Walras. The new wisdom seemed to make any market recession primarily based on individuals’ personal appraisals rather than their actual resources. A critic can fairly say that the marginal utility theory was only an arithmetical refinement, and not a refutation, as claimed, of the labour theory of value. Yet it became the starting point of the Austrian school’s wholesale departure from ‘classical’ thought, with constant insistence on bypassing the conflict of interest between capital and labour. Bohm-​Bawerk’s description of capitalism as ‘roundabout’ production (1889), not one of a particular form of exploitation of labour, was duly followed by J. A. Schumpeter’s Theory of Economic Development (1913), where the constant disturbance in capitalist economies was expressly seen as a sign of constant progress. Schumpeter argued that production and consumption tend to correspond in a normal ‘circular flow’. But this flow is broken constantly by the activity of the ‘entrepreneurs’ who innovate, whether by use of mechanical inventions or new forms of organization of ‘factors of production’ or simply by a larger scale of organization. He wrote as if the entrepreneurs did not need exclusively to be capitalists, but admitted that his notion arose out of reports of the activities of capitalist ‘promoters’ of new enterprises. Inherent in this theory was a fresh explanation of business crises. One may suppose that if a number of entrepreneurs broke the circular flow, leading, say, to a sudden fall of prices in several sectors, a financial crisis, out of bad debts, for example, was bound to follow. This was not, however, as Schumpeter himself saw it: The disturbance of the circular flow would first lead to a ‘boom’, but then, as production in time exceeded purchasing power, there would be a crisis, relieved only by the next ‘swarm’ of entrepreneurs entering the market; and altering the existing circular flow.14 It needs to be said that Schumpeter was apparently much less conservative than his older Austrian colleagues, and could afford to imagine that in a ‘communist’ society too entrepreneurs would need to be present in order to secure a continuous pace of development, yet they would then work not for personal gain, but for the public good.15 One can imagine that in that case, though the

104   Shireen Moosvi ‘circular flow’ of the economy would be affected, there would be no loss caused to it by any sudden windfall of entrepreneurial profit. Even at the time that Schumpeter published his path-​breaking essay that seemed, perhaps unjustly, to offer a sturdy defence of capitalist anarchy in the name of innovation, it seemed to many that not enterprising geniuses but conservative moneyed men were now ordering everyone about in the highest echelons of capitalism. A recognition of this came in an outstanding work, Finance Capital by Rudolf Hilferding (1910), in which the author argued that financiers had now taken the leading positions in the capitalist enterprises as against the factory-​owners of an earlier time.16 Though this marked an important advance in Marxist economic analysis, here we are naturally concerned only with how the new developments had occurred and their relationship with the business cycle. There were clearly two sources of entry of high finance into industry: the stock exchange and the banks. Marx had already taken note of the way the joint stock companies were making use of other people’s money for their capital through stock exchanges, though Engels noted that the stock exchanges had not then acquired the dominant position that these were to achieve by the 1890s. The extensive participation of the public enhances the value of shares and enables capitalists to draw on small savings as well as effect takeovers of successful firms. In effect, they contribute immensely to a concentration of capital (Marx’s ‘centralization’). Simultaneously they reduce the availability of small savings in times of constriction of demand during a crisis.17 The role of banks also became increasingly prominent. By the deposits they received, they could command huge financial resources from which they could lend to firms and then step into positions of control. It was this phenomenon that Hilferding particularly underlined. But it was not only a simple matter of the banks’ investing their primary deposits and acquiring control of enterprises. By advancing loans, which were deposited again with them by the borrowers, they went on creating further credit. Such ‘money creation’ by banks was classically investigated in 1930 by J. M. Keynes.18 Since such money-​creation is bound to have inflationary consequences, it actually amounts to a forced burden on the public for the benefit of the bankers and capitalists—​an aspect textbook economics seems largely to ignore. The constriction on consumers’ demand that it naturally imposes becomes an important factor behind ‘underconsumption’, the other face of ‘overproduction’ that could lead to a crisis. Simultaneously with the emergence of ‘finance capital’ there was witnessed a huge increase in the size of manufacturing and trading firms. This took place not only because of economies of scale in manufacturing, but also because of both the market reach and credit availability at the command of the larger firms. The result was the dominance over several sectors of the economy by a small number of large firms. Thus came monopoly, which, as is recognized by economists, tends to restrict production, stopping at the stage where marginal revenue equals marginal costs, against the situation under free competition, when production goes on till the marginal cost equals price, which would mean a much larger output.19 Large monopoly firms could coalesce across national borders and also force their national states to act in their interest. The conflicts between great

Capitalism, Imperialism, and Crises    105 monopolist firms once the colonial world had been divided up among the great powers could lead to a new form of crisis—​war. Even well before World War I, there was a strong wind blowing for many years against Free Trade amid calls for a new imperialism to protect or extend the territories and markets controlled by the favoured imperial power. The outbreak of war of 1914–​1918 between Britain and Germany, the two leading capitalist powers besides the United States, was not, therefore unpredicted, preceded as it was by a furious naval race between the two nations. As early as 1915 Nikolai Bukharin explained the economic background to the war, stressing the power of the monopolistic trusts, controlled by finance capital, over the conduct of the state that led to a crisis to be resolved not by means of market competition but by armed force.20 V. I. Lenin’s famous Imperialism, the Highest Stage of Capitalism, published in 1917,21 identified the triumph of monopoly within capitalism with the drive to capture both the sources of supply and markets by force, rather than ‘free trade’; and this could lead only to conflict with rival capitalist powers.22 Germany’s defeat in 1918 decided the issue in favour of its British, US, and French rivals. A regime of reparations was imposed to hamstring German industry, and seemingly a crisis that had cost millions of lives had ended in a result in favour of the economic supremacy of the victors. But weaponry could not check the march towards overproduction and so to a straightforward economic crisis. On 29 October 1929 occurred the sensational Wall Street Crash, when shares on the New York Stock Exchange shed their prices so heavily that share prices declined to half on average within a month and sank further subsequently, with no recovery in sight for over three years. Bank failures led to a continuous rush of withdrawals of deposits initiating further bank failures. Prices in the United States by 1933 had fallen by over 30% (wholesale prices index); industrial production had declined by nearly 40%, unemployment as a percentage of the labour force rose from a little over 3% to nearly 25%; corporate profits—​in the severest blow to Big Capital—​fell from $10 billion to just $1 billion. No wonder that in constant dollars, the United States’ gross national product fell from 203.6 billion in 1929 to 141.5 billion in 1933—​a decline of over 30%!23 The crisis equally affected Europe, with England, banker to the whole world, having to go off the gold standard.24 Economic science was also hard hit. Laissez-​faire, the foundational principle of all the dominant schools in economics, including the votaries of the Marshallian synthesis, had no credible solution to offer in a situation which every day produced news of a further descent into the mire. Soviet Russia seemed in its isolation to have escaped the crisis, but then it had put an end to capitalism itself. The moment for John Maynard Keynes had arrived, with his message that the State must resolutely intervene, even taking over capitalistic enterprises themselves, if need be, in order to save capitalism. One passage from Keynes, perhaps tells it all: It seems unlikely that the influence of banking policy in the rate of interest will be sufficient by itself to determine an optimum rate of investment. I conceive therefore, that a somewhat comprehensive socialization of investment will prove the only

106   Shireen Moosvi means of securing an approximation to full employment, though this need not exclude all manners of compromises and of devices by which public authority will cooperate with private initiative. But beyond this no obvious case is made out for a system of State Socialism which will embrace most of the economic life of the community. It is not the ownership of the instruments of production which it is important for the State to assume. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic rate of reward to those who own them, it will have accomplished all that is necessary.25

While Keynes has since received much approbation for the depth of his economic analysis, and the brilliance of his proposals for state action, it remains doubtful if any government in the aftermath of the 1929 crisis really followed his advice. Perhaps the New Deal measures by President F. D. Roosevelt, initiated in 1933, to pull the United States out of the Depression came closest to some of his ideas. In his homeland, it was only much later that the Labour Government (1945–​1950) followed him, rather than Marx, in creating a limited ‘Socialist Britain’ after the destruction wrought by World War II. To return to the crisis of 1929–​1932, it can be argued that it, in fact, prepared the ground for the next disaster—​and that was World War II. One of the measures by which regimes in crisis-​ridden countries could check the fall in demand was to create employment by injecting more credit to finance it, by merely printing money or by increased taxation. In Germany the Nazis effected this mainly by increased military expenditure: in annual terms it rose from $ 0.5 billion in 1935 to $ 2.5 billion (planned) in 1938, the latter amounting to two-​thirds of the national revenue.26 Other countries, such as Japan and France, also heavily increased their military budgets during the same period. Obviously, such heavy military expenditure offered no returns unless the army could be used to seize resources from other countries. This is precisely what the Nazis proceeded to do and so brought on World War II (1939–​1945), which ultimately all the capitalist powers joined in addition to Soviet Russia, which was attacked by Germany in 1941. In terms of people killed and uprooted from their homes the war remains an unprecedented phenomenon, with over 40 million fatalities. An ideology of national and racial chauvinism was also greatly connected with its outbreak, but economic facts also led to it; and, in this sense, like its precursor of 1914–​1918, it belongs to the history of capitalist crises. There was one thing further common in the crisis of 1929 and the World War breaking out in 1939; they both greatly affected the agrarian regions of Asia. Unlike the previous commercial crises, like the Great Depression, the fall in grain prices in 1929–​1932 led to large numbers of peasants losing their lands through failure to pay rent.27 And unlike World War I, its successor in 1939–​1945 engulfed the larger part of Asia besides Europe and the Mediterranean. One of its major political consequences, namely, ‘decolonization’, an irreversible process through both armed and peaceful popular struggles, immediately after the war created a new situation in which it appeared that Western (or, as we now say, Northern) dominance of world economy could continue only through

Capitalism, Imperialism, and Crises    107 economic means, rather than by mainly military control, though these were not by any means excluded. In order to comprehend the new situation, and the potential for crisis built into it, one has to go back to a brilliant revolutionary theorist (and martyr), Rosa Luxemburg and her work, the Accumulation of Capital, published in German in 1913.28 Luxemburg begins by accepting Karl Marx’s division of production under capitalism in two parts, or ‘departments’, Dept. I being means of production, and Dept. II, consumer goods. The bulk of consumer goods are sold to workers who can only buy as much as they have received in wages from the capitalists. They cannot, therefore, provide any larger market to enable an expansion or additional accumulation of capital. Capitalists, as a class, must therefore, draw from additional labour and markets by exchange with and intrusion into the non-​capitalist sectors of the home economy (e.g., comprising peasants and artisans) or outside the country. Only thus could capitalism expand. But by this process of expansion capitalism continuously narrows and undermines the very external market that had enabled it to expand. The process must therefore generate ‘periodical economic catastrophes or crises’.29 Even if one lays aside Luxemburg’s assertion of incompleteness in Marx’s formulations, a position of hers bitterly attacked by another later victim of terror, Nicolai Bukharin,30 her important contribution lies in pointing out that as the market of goods for capitalism went on expanding in the non-​capitalist world it was bound to encounter situations where the non-​capitalist sector became so dependent on it that a crisis in capitalism would also undermine it by depriving it of the demand on which its production had now come to depend. Rosa Luxemburg drew a picture of financial as well as forcible intrusions of Western capitalist powers into the larger outer non-​capitalist world.31 In the world after World War II, the process of capitalist penetration of the Third World took place at a steady pace, along with the process of ‘de-​colonization’. As long as the space for expansion remained large, no economic crisis worth the name occurred for more than half a century. But the expansion itself had certain basic built-​in contradictions. The first arose out of a major imbalance in capitalism’s expansion. What Marx called Department I (machine building, industries, now including electronic and precision manufactures as well) remained concentrated in the metropolitan counties, whereas Department II (consumer goods manufacture) was increasingly shifted to Third World countries. A path-​breaking recognition of this in academia came with Arghiri Emmanuel’s Unequal Exchange, 1969,32 a book which did not receive as much notice as it should have.33 The author did not follow a Marxist framework, and, indeed, even considered the increase in real wages in advanced countries as a force outside the capitalists’ control, treating wages as ‘the independent variables of the system’.34 Characteristic in this respect was the end of the cotton textile industry of England that had been ‘the leading sector’ of the country’s epoch-​making Industrial Revolution.35 It seemed, indeed, as if the pressure of this unstoppable process of improvement in real wages in advanced countries led capital to move to ‘Third World’ countries, where labour costs were minimal. As a result, the prices of manufactured products of the West, confined more and more to complex machinery (with increasing portion devoted to

108   Shireen Moosvi electronic manufactures), rose steadily, while the prices of primary products and lower-​ level manufactures declined in proportion. It has been calculated that with 1913 as base (=​100), prices of manufactured products of developed countries rose to 275 in 1953 and 285 to 1967–​1968, while prices of primary products from ‘developing countries’ stood at 163 and 153 in the corresponding years.36 This increasing devaluation of the Third World’s products was thus accompanied by an increasing gulf in wage levels. Despite some improvement in real wages in China and India, enhancement of wage-​levels in the West far outpaced them in absolute terms. The difference between GDP per person employed in the United States over the corresponding figure for China more than doubled in terms of constant dollars (from $22,318 to $49,437), while in respect of India the increase was still higher (from $22,238 to $58,870, in constant dollars (1990). As for West European countries, the amount of increase amounted to more than one and a half times the 1950 figure ($10,254 to $25,927 in respect of China, and $10,174 to $27,598 in respect of India).37 This meant that not one section, but the whole working class in the most advanced capitalist countries, had now turned into an ‘aristocracy of labour’,38 and that there was being generated a constant enlargement of the market in those countries for goods from industrializing countries of the Third World produced by workers with much less remuneration. This was fully consistent with Marx’s perception of unequal exchange, which must happen in relations between countries with varying labour costs.39 To Emmanuel such a situation involved not only ‘unequal exchange’, but an ‘imperialism of trade’, on the part of the West, both phrases appearing in the title of his book. Yet trade was surely not the only mechanism through which imperialist exploitation took place. As Prabhat Patnaik has noted, the real cause lay in the continuing monopoly of the crucial assets enjoyed by the West, a monopoly enabling it to dictate terms to the rest of the world. It is this source of power which leads to ‘income deflation’ in the Third World, of which we gave previously very striking figures. Very aptly, Patnaik sums it all up when he says: ‘Imperialism is associated, above all, with the imposition of income deflation on the ‘outlying regions’’.40 For us the wonder lies in the fact that the system with its immense contradictions should have continued for over forty years or more after World War II without a serious disturbance of the inequitable economic equilibrium so established. The reason may, perhaps, lie in the Cold War, which kept large parts of state incomes devoted to military expenditure thereby maintaining a large economically useless but employment-​creating complex in the advanced capitalist countries. The final victory was capitalism’s, partly for the reason that the economies of the Soviet Union and its allied East European states could not cope with the burden imposed on them by the Cold War; and this combined with a popular protest, led to their collapse in 1989–​1991, the countries thereafter passing under openly pro-​‘business’ regimes. The wilful conduct of most of them, especially the neocapitalist regime in Russia, caused a spate of unparalleled unemployment stretching from East Germany to Vladivostok, and lasting for a number of years—​a veritable economic collapse, which few students of ‘business cycles’ appear to have studied.41

Capitalism, Imperialism, and Crises    109 The slogan ‘globalization’, perhaps, represented capitalism’s spirit most accurately upon its seemingly final triumph. Essentially, this meant that the field was cleared for Western capital to enter developing countries that had so far been resisting foreign direct investment. By 1998 foreign capital stock in developing counties had grown to 21.7% of their GDP as against only 4.4% of their much smaller GDP in 1973.42 But signs of instability too made their appearance. Already, during the 1980s the United States’ own ‘foreign assets’ had been dwindling, until these came to nil in 1988. It could be argued that the US economy was doing so well that its investments abroad were returning home! But within ten years, by 1998, its foreign debt had risen to $1.5 trillion, or 20% of its GDP. The United States, whose economy was undoubtedly the main driving engine of the capitalist world, now became the major debtor nation of the world. Its annual trade deficits grew from $164 billion in 1999 to $489 billion in 2003. Inside it the ease with which foreign goods and capital flowed in promoted a reckless consumerism that witnessed its most dramatic expansion in an unrestrained housing ‘boom’. The crisis of 2007–​2009 arose initially out of this boom. Some facts were undisputed. Property prices had continued to rise as banks went on extending loans against mortgages. When their own funds were not sufficient, they sold their mortgages to foreign banks, thus attracting a large amount of foreign bank investment. No one cared to see this could not last. When in the autumn of 2007 property prices collapsed, banks could not enforce their mortgages; and a collapse of major US and European banks was imminent unless not only the United States but also the major European states came out to support the banks concerned with public funds. It was all too reminiscent of autumn 1929, except that governments rushed more quickly to save the bankers with public money than they had in 1929. They did not save, however, the small home-​owners and prevent the general constriction of demand that followed. China, which in the meantime, had become the Workshop of the World, seems to have learned its lesson as its exports to the United States and Europe were necessarily affected by the slump. Pursuing commitment to ‘Socialism with Chinese [read Keynesian!] Characteristics’, it began to raise domestic wages and income levels to enlarge the home market, in order to absorb an increasingly large part of its own industrial product. No lesson seems to have been learned by the United States. Its debt to China now reportedly exceeds 3 trillion dollars! The loud commitment to globalization and unrestricted trade and capital flow, so much on everyone’s lips twenty years ago, were by 2020 hardly ever heard, with ​President Trump (US president from 2017 to 2021) imposing protective tariffs, withdrawing from commercial commitments, and imposing sanctions and bans on Chinese and other foreign companies and countries. It is a measure of the continued dominance of the United States in the world economy, that most industrialized or industrializing nations (except apparently China and Russia) submitted in practice to all these restrictions. The United States may, perhaps, even one day repudiate its debt to China—​at least, this was reportedly once under consideration.

110   Shireen Moosvi Whether such measures will save America and the world from another slump like that of 2007–​2009 remains doubtful, since the US trade deficits continue to add to its debt burden, and the day of reckoning may not be far off. What is interesting today also is that China seems bent on inverting Emmanuel’s theory of unequal trade. From a country mainly specializing in consumer goods industries (Marx’s Department II), it has become a major producer of machinery and electronic instruments for the world, with increasing inventions of its own in practically every sphere, as the increasing numbers of international patents won by it show. Its expanding internal market may one day give it a strength unmatched by the North’s economies. What effect this immense change will have on what Schumpeter called ‘the stable circular flow’ of the world’s economy is not certain, once such a new and giant entrepreneur as China has entered the field. The complicated history of imperialism, capitalism, and business cycles is, therefore, hardly over, and the future remains, as ever, full of unpredicted surprises.

Notes 1. Adam Smith issued the first edition of his work in 1776, but inserted important additions and changes in the second edition in 1778. A comprehensive text of his work was edited by E. C. Cannon (1904). 2. I have used a London reprint of this work: Ricardo ([1817/​1821] 1911/​1950). 3. Ricardo ([1817/​1821] 1911/​1950, 71). 4. One may, perhaps, reframe Ricardo’s argument the following way: Competition is bound to lead to an ever-​increasing volume of production and so to a fall in prices of industrial products. So long as prices of all goods fall, the capitalists’ profits would not, in substance, be affected, since their costs would also correspondingly decline. But—​and this is the crucial point in Ricardo’s analysis—​costs would not correspondingly decline in the case of produce needed for feeding workers and for providing raw materials, such as minerals, where the law of diminishing return would apply. Owing to this, wages and raw material costs cannot fall in tandem with industrial prices; and this would adversely affect the rate of profit, not only in formal monetary terms, but also in substance. 5. Forming pages 263–​271, barely eight pages, in the Dent & Co. edition (Ricardo [1817/​1821] 1911/​1950), although he remarked (263) that it was ‘a subject of great importance, and one which appears to have been never investigated in a manner to lead to any certain satisfactory result’. 6. See the analysis of Sismondi’s views in Roll (1945, 235–​242). 7. These notes form part of a critique of Ricardo’s views on production and consumption. See also, for an exposition of Marx’s views on economic crisis, Dobb (1940, 79–​126). 8. Marx ([1887] 1938/​1945). Perhaps, in current English the word ‘primary’ would more accurately correspond to the sense in which Marx used the adjective ‘primitive’. In simple terms it means capital acquisition from outside the circle of capitalist production and so takes place even when capitalism is well established in the metropolitan country. 9. Marx ([1887] 1938/​1945777 n).

Capitalism, Imperialism, and Crises    111 10. Marx and Engels (1956, 408). 11. There are two important papers by Patnaik (2000, 2006). For the nature and total value of tribute from India alone during the first half of the nineteenth century, see Habib (2013). 12. This was the title of a pioneering essay by Gallagher and Robinson ([1953] 1970). 13. Preface to the second German edition of Capital, Vol. 1 (Marx [1887] 1938/​1945, 1:xxxi). 14. These remarks are based on Schumpeter ([1913] 1961), a translation of his 1913 work. The last chapter in it is titled ‘The Business Cycle’. Schumpeter later published a separate work, Business Cycles (1939). 15. Schumpeter ([1913] 1961, 145). 16. Published in German as Das Finanzkapital, Vienna, 1910. For its English translation, see Hilferding ([1910] 1981). Hilferding was murdered by the Gestapo in 1941, while a fugitive in France. 17. For a long note by Engels, titled ‘The Stock Exchange’, see Marx (1959, 3:84–​86). 18. Keynes (1930). 19. See Benham (1955, 2, 7, 307–​310) and Dobb (1946–​1947, 322–​326), for an abstract model of monopolist economy. 20. Bukharin’s Imperialism and World Economy, with some additions and V. I. Lenin’s introduction (1917) is available in English (Bukharin 1973). 21. Available in English in several editions, including Lenin ([1917] 1982). 22. In stressing the new emphasis on force as against free market relations to establish one nation’s monopoly, Lenin seems ([1917] 1982, 74) to overstress the free traders’ opposition to colonialism; saying: ‘between 1840 and 1860, the leading British bourgeois politicians were opposed to colonial policy’ (Lenin’s emphasis). This is precisely what the essay by Gallagher and Robinson ([1953] 1970) sets out to refute. 23. These are all textbook facts. See, for example, Fite and Reese (1981, 509 et seq.). 24. For an analytical summary of the 1929–​1933 crisis, see Dobb (1946–​1947, 330–​334). 25. Keynes (1936, 378). 26. Cf. Heaton (1948, 713). 27. As in India, cf. Palme Dutt (1947, 215–​216). 28. Available in English translation: Luxemburg (1951). Her reply to her early critics came in The Accumulation of Capital, an Anti-​Critique (1972). Luxemburg was murdered by German ‘nationalists’ in 1919. 29. Luxemburg (1951, 467). Admittedly not everything is crystal clear in Luxemburg’s argument. If anything capitalists themselves buy of consumer goods from the surplus they have obtained cannot add to what Marx called ‘variable capital’, such would be the case also with goods sold in non-​capitalist markets unless corresponding labour migration also occurred to lay the basis for variable capital. One misses this point in Irfan Habib’s analysis of Luxemburg’s theory (Habib 2003), though it was raised by Bukharin in the article to which reference is made in the next note. 30. Bukharin (1972, 162–​169). Also see Sweezy (1992/​1962, 202–​207). 31. See Luxemburg (1951, 419–​445). However, her theory led Luxemburg to offer a rather narrow definition of imperialism as ‘the political expression of the accumulation of capital in its competitive struggle for what remains still open of the non-​capitalist environment’ (446).

112   Shireen Moosvi 32. The fuller title being Unequal Exchange: A Study of the Imperialism of Trade (Emmanuel [1969] 1972). 33. But for Andre Gunder Frank, who in his Dependent Accumulation and Underdevelopment (1979, 103–​109), devoted a number of pages to a summary of Emmanuel’s main findings. 34. Emmanuel ([1969] 1972, 118). The stark difference in wages in 1950 is illustrated by the following figures for GDP per employed person, region-​wise, in 1950 (in terms of US dollars, 1990): United States, $23,615; twelve European countries, $23,605; India, $1,377; and China $1,297 (Maddison 2001, 349–​350). 35. Cf. Beckert (2014, 428). 36. Barrat Brown (1974, 251). Even the currencies of developing countries were heavily undervalued, as later international attempts at adjusting national income figures, to comparative purchasing power capacities of the various currencies were later to show. 37. Worked out from figures provided by Maddison (2001, 349–​350). 38. The phrase ‘aristocracy of labour’ was used by Lenin to indicate the better-​paid section of the working class. For its present extension to the entire working class of the West—​or the North, as is now becoming the favourite designation of advanced capitalist countries, see Cope (2019, 132–​148). 39. For the two relevant passages from Marx, see Bukharin (1972, 244–​245). 40. Patnaik (2016, 77). 41. For the circumstances leading to Soviet collapse and resulting situation, see Ahmad (2017). It was well said by an observer of post-​Soviet Russia: ‘in peace time, never have so many fallen so far’. 42. Maddison (2001, 128). For the situation under globalization, post-​1990, see esp. Ghosh (2017). See also Bagchi (2005, 305–​337), for relevant information and analysis.

References Ahmad, Aijaz. 2017. ‘Fallouts of 1989’. In Interpreting the World to Change It: Essays for Prabhat Patnaik, edited by C. P. Chandrasekher and Jayati Ghosh, 86–​121. New Delhi: Tulika. Bagchi, Amiya Kumar. 2005. Perilous Passage: Mankind and the Global Ascendancy of Capital. New Delhi: Oxford University Press. Barrat Brown, M. 1974. Economics of Imperialism. Harmondsworth and Baltimore: Penguin. Beckert, Sven. 2014. Empire of Cotton: A New History of Global Capitalism. UK: Allen Lane. Benham, Frederic. 1955. Economics. 5th ed. London: Pitman. Bukharin, Nikolai. [1915] 1973. Imperialism and World Economy. New York: Monthly Review Press. Bukharin, Nikolai. 1972. Imperialism and the Accumulation of Capital. Edited by K. J. Tarbuck, translated by R. Wichmann. New York: Monthly Review Press. Cope, Zak. 2019. The Wealth of (Some) Nations: Imperialism and the Mechanics of Value Transfer. London: Pluto Press. Dobb, Maurice. 1940. ‘Economic Crises’. In Political Economy and Capitalism, 79–​126. London: International Publishers. Dobb, Maurice. 1946–​1947. Studies in the Development of Capitalism. London: Routledge. Dutt, R. Palme. 1947. India Today. Bombay: People’s Publishing House.

Capitalism, Imperialism, and Crises    113 Emmanuel, Arghiri. [1969] 1972. Unequal Exchange: A Study of the Imperialism of Trade. London: New Left Books. Engels, Friedrich. 1959. ‘The Stock Exchange’. In Karl Marx, Capital, Vol. 3, edited by Friedrich Engels, 84–​86. Moscow: Foreign Languages Publishing House. Fite, G. C., and J. E. Reese. 1981. An Economic History of the United States. 3rd ed., Indian reprint. New Delhi: Oxford & IBH Publishing. Frank, Andre Gunder. 1979. Dependent Accumulation and Underdevelopment. New York: Palgrave Macmillan. Gallagher, John, and Ronald Robinson. [1953] 1970. ‘The Imperialism of Free Trade’. Reprinted in Great Britain and the Colonies, 1815–​1865, edited by A. G. L. Shaw, 142–​163. London: Methuen. Ghosh, Jayati. 2017. ‘The Institutional Architecture of Imperialism in the Twenty First Century’. In Interpreting the World to Change It: Essays for Prabhat Patnaik, edited by C. P. Chandrasekher and Jayati Ghosh, 122–​135. New Delhi: Tulika. Habib, Irfan. 2003. ‘Capital Accumulation and the Exploitation of the Unequal World’. Social Scientist, New Delhi 9 (3–​4): 3–​26. Habib, Irfan. 2013. Indian Economy under Early British Rule, 1757–​1857. New Delhi: Tulika. Heaton, Herbert. 1948. Economic History of Europe. New York: Harper & Bros. Hilferding, Rudolf. [1910] 1981. Finance Capital: Latest Phase of Capitalist Development. Edited by Tom Bottomore. London: Routledge & Kegan Paul. Keynes, John Maynard. 1930. A Treatise on Money. Vol. 1. London: Macmillan. Keynes, John Maynard. 1936. The General Theory of Interest, Employment and Money. London: Macmillan. Lenin, V. I. [1917] 1982. Imperialism, the Highest Stage of Capitalism. Moscow: Progress Publishers. Luxemburg, Rosa. 1951. The Accumulation of Capital. Translated by A. Schwarschild. London: Routledge & Kegan Paul. Luxemburg, Rosa. 1972. The Accumulation of Capital, an Anti-​Critique. Edited by K. J. Tarbuck, translated by R. Wichmann. New York: Monthly Review Press. Maddison, Angus. The World Economy: A Millennial Perspective. Paris: OECD. Marx, Karl. [1887] 1938/​1945. Capital. Vol. 1. Translated by S. Moore and E. Aveling, edited by F. Engels (London); edited by Dona Torr. London: George Allen & Unwin. Marx, Karl, and Frederick Engels.1956. Selected Correspondence. Moscow: Foreign Languages Publishing House. Marx, Karl. 1968/​1975. Theories of Surplus Value, Part 2. Translated by S. Rayazanskaya. Moscow: Progress Publishers. Patnaik, Prabhat. 2016. ‘Globalisation, Inequality and Economic Crisis’. Studies in People’s History 3, no. 1 (June): 71–​81. Patnaik, Utsa. 2000. ‘New Estimates of Eighteenth Century British Trade and Their Relation to Transfers from Tropical Colonies’. In The Making of History, edited by K. N. Panikkar et al., 359–​402. New Delhi: Tulika. Patnaik, Utsa. 2006. ‘The Free Lunch: Transfers from Tropical Colonies and Their Role in Capital Formation in Britain during the Industrial Revolution’. In Globalization under Hegemony: The Changing World Economy, edited by K. S. Jomo, 30–​70. New Delhi: Oxford University Press. Ricardo, David. [1817/​1821] 1911/​1950. The Principles of Political Economy and Taxation. London: Dent & Sons.

114   Shireen Moosvi Roll, Erich. 1945. A History of Economic Thought. 2nd ed. London: Faber & Faber. Schumpeter, Joseph A. [1913] 1961. The Theory of Economic Development. New York: Oxford University Press. Schumpeter, Joseph A. 1939. Business Cycles. New York: McGraw Hill. Smith, Adam. [1776] 1904. An Inquiry into the Nature and Causes of the Wealth of Nations. 2 vols. Edited by E. C. Cannon. London: Methuen. Sweezy, Paul M. 1992/​1962. The Theory of Capitalist Development. London: Dennis Dobson.

Chapter 7

The Cl ash of I nterpretat i ons World-​Systems Analysis and International Relations Theory Chamsy El-​O JEILI and Patrick Hayden

Introduction This chapter explores Immanuel Wallerstein’s world-​systems analysis (WSA) against arguments from the major paradigms of international relations (IR) theory. Although realism and liberalism are the principal analytic frameworks in thinking about IR, Marxist and Neo-​Marxist theories have challenged their separation of the political from the economic, insisting that political relations within the international system must be understood as ultimately conditioned—​unevenly and contradictorily—​by the structure of capital accumulation as a global phenomenon. Anderson (1983) once suggested that the Marxist tradition was unmatched in terms of intellectual scope and moral force. Within that tradition, Wallerstein’s project is unrivalled in these terms, constructing a grand theoretical scheme that seeks to map the world as a system from the fifteenth century until today, generating a research programme characterized by ‘daring questions and provocative statements’ (Therborn 2000, 266), and driven by a prophetic-​utopian passion that vigorously calls for the emancipatory transformation of that system. A sociologist by trade, Wallerstein’s theory-​building ambition extended far beyond society, understood in a methodologically nationalist sense, to the realm of world power relations, the sphere of IR theory. With this in mind, we bring WSA into critical conversation with the IR theoretical traditions of realism and liberalism. Although the domain of IR theory is now robustly diverse—​flourishing in the aftermath of the post-​positivist debates in the 1990s that coincided with postmodern challenges across the human sciences generally—​variants of realism and liberalism still occupy centre stage in IR

116    Chamsy El-OJEILI and Patrick Hayden thinking. While there is no scope within this chapter to deal with an expansive spectrum of IR theories, and without wanting to overstate the supremacy of realism and liberalism, these two paradigms nonetheless remain the principal interlocutors and foils for WSA, particularly through the latter’s developmental links with Marxism and dependency theory. We begin, then, by staging a framing encounter between WSA and realism and liberalism, exploring key discrepancies as well as certain congruences around units of analysis, agents, structures, and power. Our thesis here is that elemental differences between these worldviews reflect the ways in which their disciplinary origins put into play diverging approaches to economics and politics, and history and change, in world affairs. We follow up our comparative reading of the international division of labour and the interstate system with a discussion of more recent challenges posed to WSA around major geopolitical transformations, such as globalization and the collapse of ‘really existing socialism’. Here we show how such transformations seemed to herald a new world in which the analytical and normative underpinnings of Wallerstein’s work appeared beset by enormous ‘reality problems’ (Alexander, 1995). In tracking the relationship between these transformations and Wallerstein’s work, our intention throughout is to mount a critical defence of WSA as a compelling framework for making sense of world political and economic life.

Foundational Disparities, Competing Worlds of Thought WSA and IR theory emerge from and inhabit very different intellectual and political spaces. One aspect of this spatial separation is disciplinary. Wallerstein and Arrighi, two preeminent WSA thinkers, are sociologists, and WSA is more likely to be encountered in sociology, development studies, or political science departments than in IR programmes. In its dominant origins story, Sociology and its new object of analysis, society or the social, is initially located at the intersection of three modern revolutions—​ the Enlightenment, the French Revolution, and the Industrial Revolution—​and their attendant transformations, as well as in the work of three founding fathers, Marx, Durkheim, and Weber. By contrast, IR’s foundational story is frequently narrated as an almost timeless meditation on the interactions between different social orders, indebted to a range of premodern, early-​modern, and modern thinkers (Thucydides, Machiavelli, Grotius, Hobbes, Locke, Kant, Clausewitz) who purportedly understood politics as separated into ‘domestic’ and ‘international’ realms. First institutionalized academically in 1919, IR initially was formed as a practical discipline in the aftermath of World War I by a first ‘great debate’ between ‘idealists and realists’, over the origins of war and peace in international affairs (Bull 1972; Smith 1995). Beyond such convenient fictions, both disciplines were only securely and expansively institutionalized after World War II, developing rapidly in the 1960s and 1970s, and both were shaped, in various ways, by the war and by the coordinates of the immediate postwar period (Burchill and Linklater 2013; Wagner 2001). At that time, within American sociology, Parsonian structural functionalism exerted significant intellectual

The Clash of Interpretations    117 influence, while sociological thinking about the world more widely centred on the tradition–​modernity polarity, articulated, most prominently, in modernization theory. By contrast, the field of IR theory in the war’s aftermath was shaped by signal works by Carr ([1939] 1942) and Morgenthau ([1948] 1973), viewed as telling blows in the self-​consciously realist case against ‘idealist’ and ‘utopian’ imaginings of a future world order freed, or at least more free, from conflict and violence (Wilson and Long 1996). In Carr’s critique, the idealist position coincides with a number of strands of liberal optimism about modernity—​internationalism; faith in public opinion, education, and reason; the priority of moral principles; the benefits of free trade, evolution, and progress; and voluntarism. We find such optimism in the early sociology of Spencer and Durkheim, where irrationality, conflict, and violence are viewed as atavistic residues that might, by modern means, be overcome. Exemplary of such liberal optimism from the vantage point of IR’s ancestry, is Kant’s ‘revolutionist’ delineation (as contrasted, in Martin Wight’s (1991) famous categorization, to the ‘realist’ and ‘rationalist’ traditions) of the conditions and circumstances required for perpetual peace (Doyle 1986). The influential early twentieth-​century liberal internationalist Norman Angell expressed this deep-​ rooted Kantian faith in the liberal project when he declaimed that ‘physical force is a constantly diminishing factor in human affairs’ (1911, 129). A number of core assumptions are characteristic of the liberal paradigm. First, as noted, we find an Enlightenment-​accented optimism about the possibilities for peace, cooperation, and material progress premised on constitutional protections of individual rights and liberties, capitalism, democracy, and international law. Second, liberalism in IR is often viewed as taking an ‘inside-​out’ approach, beginning with the preferences, values, and political structures of states and their domestic regimes and moving from here to consideration of the realm of international politics (Burchill 2013; Moravcsik 2008; Viotti and Kauppi 2010). Third, in terms of the physiognomy of states and the conduct of international affairs, liberals frequently hold to a pluralist and interdependent view of politics, considering the role of a number of actors, especially intergovernmental and international non-​governmental organizations, rather than focussing narrowly on states themselves (Moravcsik 2008; Viotti and Kauppi 2010). Today, such broadly liberal assumptions and commitments undergird a cosmopolitanism that responds positively, though not uncritically, to contemporary globalization, to the possibilities opened by the thickening of international trade, the spread of liberal democratic political systems, and the expansion of human rights discourse (Beitz 1999; Archibugi and Held 2011). In Carr’s ([1939] 1942, 14) canonical formulation, stood against such liberal ‘wish-​ dreams’ was a realist view that depicted world politics as a realm of the struggle for power and interests. Often posing as a tough-​minded, world-​weary, ‘hard ruthless analysis of reality’ (Carr [1939] 1942, 13), realism frequently suggests a diagnosis of political life that transcends the modern period, and something of a cyclical view of history that keeps faith in the notion of patterns of behaviour that remain constant in human beings and society (Gill 2008; Lebow 2001). In Wohlforth’s view (2008), realism advances four central propositions. First, realists contend that politics is about human beings in groups (Carr [1939] 1942, 123), whose cohesion generates conflict with other groups. The

118    Chamsy El-OJEILI and Patrick Hayden most important of such collectivities, and the crucial unit of analysis for IR, are sovereign states (Carr [1939] 1942, 290; Waltz 1979, 94). Typically, states are viewed as ‘unitary actors’ (Waltz 1979, 118) situated in the same structural context and exhibiting recurrent patterns of behaviour influenced primarily by external factors such as the distribution of power in the international system—​contrary to the inside-​out orientation of liberalism. Neorealists such as Waltz (1979, 96) contend that these units share a ‘functionally undifferentiated’ character in terms of their interactions within the international system, and offensive realists like Mearsheimer (2014) suggest that states should be treated as akin to ‘billiard balls’ (18) of different size whose positions relative to one another is the only change accommodated by the international system. Second, states as unit-​level actors are understood to act in an ineliminably egoistic manner, according to self-​interest (Wohlforth 2008). For ‘classical’ realists, this egoism is the ‘result of forces inherent in human nature’ (Morgenthau, [1948] 1973, 3), with human beings depicted as restlessly striving to maximize their wealth, status, and power, in absolute or relative terms. For structural realists, on the other hand, the constraints of the material structure of the international system are key to explaining this egoism; in recasting Waltz’s neorealism, however, later structural realists suggest a central role for social, economic, environmental and military interactions in shaping the system in which states act (Buzan, Jones, and Little 1993; Mearsheimer 2013; Waltz 1979). A third proposition concerns the crucial structural feature inclining states as rational, unitary actors towards egoism—​anarchy (Wohlforth 2008). The absence of a strong central authority above the units in the realm of international politics makes conflict and warfare a permanent possibility and state security or survival a perpetual challenge. In such an anarchic situation, a fourth realist proposition, power politics, becomes central. As Morgenthau ([1948] 1973, 27) contended, ‘International politics, like all politics, is a struggle for power’. The absence of a central authority in the international system, the possession of military capacity by all states, and the uncertainty regarding other states’ intentions, mean that the key to survival is the accumulation of power as a zero-​sum game (Mearsheimer 2014). These points taken together indicate that even if states are thought as of as unitary actors, it is clear not all states are equally capable in the struggle for power. Realism, then, tends to focus on the Great Powers, as those with the ‘largest impact on what happens in international politics’ (Mearsheimer 2014, 5). The ubiquitous pursuit of power has a pronounced impact on the relative capabilities of states, which means that the balancing of power between ‘major’ and ‘minor’ players will characterize the international system’s structure at any given time—​with different combinations of the uneven distribution of power between states resulting in unipolar, bipolar, or multipolar systems. Here, contemporary realists disagree about the thrust of state interests—​towards maintenance of the status quo or the pursuit of hegemony—​and over evaluations of whether bipolarity or multipolarity is most conducive to reducing conflicts and enhancing the stability of an anarchic system (Mearsheimer 2013, 2014; Waltz 1979). Both realism and liberalism share a common constitutive premise with WSA, namely, that the modern world system has been decisively structured around and

The Clash of Interpretations    119 by the state as the primary political actor and form of political organization in the interstate system, even as the state has undergone transformations in some aspects while remaining stable in others (Wallerstein 2011a). Beyond this shared supposition, however, the two paradigms provide quite striking contrasts to the WSA approach to international politics, as well as a number of perhaps surprising affinities. A first, crucial point of separation is that Wallerstein’s thought is unthinkable outside of the tradition of Marxist historical sociology, a tradition at a great distance from both liberalism and realism in IR theory inasmuch as these paradigms shy away from the radicality of Marxism’s system-​transforming hopes. Nevertheless, even here, we could mention two broad convergences: first, the priority given by both Marxists and realists to rivalry between groups, centred on power; second, the progressivism and optimism about modernity that Marxism shares with certain strands of liberalism (Therborn 2008). On this last, while, as Jameson (1984) notes, Marx sought to think modernity as progress and catastrophe all at once, Marx and Marxism are often taken to task for presenting a teleological philosophy of history, in which even the worst aspects of capitalism’s universalization are represented, ultimately, as progress. The other side of such a tendency can be found in Marx’s (1887, 712) insistence that ‘capital comes dripping from head to foot, from every pore, with blood and dirt’. More aligned with this latter set of emphases, in what Hobsbawm (1995) calls the Age of Empire, a number of third-​generation Marxian thinkers (Lenin, Luxemburg, Hilferding, Bukharin) pioneered systematic theories of imperialism that raised profound questions about the putatively progressive dynamics of capitalism—​monopoly, war, crisis, super-​exploitation of subject peoples, the taming of certain sectors of the working class—​suggesting the advent of something like capitalist decadence. Such questioning of capitalism as historically progressive was notably taken up in the postwar Latin American context, the backdrop, together with Third World rebellion, to dependency theory’s challenge to modernization verities. This, along with the ‘world-​revolution of ’68’, was the crucible in which WSA was formed (Goldfrank 2000). Alongside early work on African independence movements and the influence of dependency thinking, Wallerstein’s thought was shaped by encounters with German historical economy and, especially, Braudel’s school of French historiography. These influences are to the fore in two major contributions from 1974—​the first volume of The Modern World-​System and a long article in Comparative Studies in Society and History. In this work, Wallerstein breaks from the canonical sociological narrative concerning the advent of modernity, and from sociology’s societal unit of analysis. Breaking, too, from orthodox Marxist accounts of the genesis of capitalism, Wallerstein insisted that the story must begin earlier—​in ‘the long sixteenth century’, 1450–​1640. Additionally, a new, total unit of analysis, Wallerstein argued, was required—​the world-​system—​ which emerges in this period. This world-​system is, above all, a world-​economy—​the ‘basic linkage between the parts of the system is economic’ (Wallerstein 1974a, 15)—​ and the character of the world economy is capitalist: a single division of labour, a world market, production for sale and profit, and, fundamentally, the core system dynamic

120    Chamsy El-OJEILI and Patrick Hayden of the endless accumulation of capital, which shapes all aspects of social organization (Wallerstein 1980a, 2005). Expanding on Frank’s metropolis-​satellite pairing, Wallerstein contends that the accumulation of capital entails the movement of wealth between three tiers of the world-​ economy’s division of labour: core (strong states, variety, and specialization in profitable monopolized production), periphery (weak states and engaging in labour-​intensive, lower-​ranking, and less profitable production), and semi-​periphery (situated between exploiters and exploited). This appropriation of wealth through unequal exchange is mobile and conflictual, and, over time, this struggle entails something of a circulation of elites (Wallerstein 1974a, 2005). The modern inter-​state system constitutes a subsystem of the world-​system, and interactions between states entail a complex balance of power process involving not only political and military capabilities but, even more crucially, deeply intertwined economic and commercial capabilities. In this scheme, the uneven distribution of power manifests as the subordination of relatively weaker peripheral states to the dominant core states, playing out the social division of labour and associated class antagonisms of the capitalist world-​economy at the international level. Here, WSA clearly parallels neorealism’s emphasis on the distribution of capabilities between different states as the main explanatory variable in system-​level analysis of international developments. As Wallerstein (1974b, 399) puts it, capitalism and a world-​economy of ‘multiple polities’ or states in an anarchic system ‘are obverse sides of the same coin’. However, in WSA power is understood, first and foremost, as economic power—​a hierarchical division of labour, exploitation of working classes by ruling classes, but hierarchy and exploitation also lifted upwards and extended to the level of states (Davenport 2011). Furthermore, states are understood in an instrumental way in reference to the logic of the global market, functioning, domestically, to ensure the interests of ruling groups against subalterns, and, at a world-​systemic level, as a ‘means of assuring certain terms of trade in economic transactions’ (Wallerstein 1974a, 16) in the battle between different owner-​ producers in the world-​ economy (Wallerstein 1980b, 114). What Wallerstein’s concept of the international division of labour is for economics, a second major concept, the inter-​state system, is for politics. At the apex of power in the inter-​state system is a hegemonic state. This hegemonic state is viewed by Wallerstein in characteristically functionalist terms, as maintaining stability within the system, a power that is ‘able to establish the rules of the game in the interstate system, to dominate the world-​economy (in production, commerce, and finance), to get their way politically with a minimal use of military force (which however they had in goodly strength), and to formulate the cultural language in which one discussed the world’ (Wallerstein 2005, 58). This hegemony, while necessary, is temporary—​because it is expensive and abrasive, because others tend to catch up (innovations and monopolies do not last), and because of struggles within a fundamentally conflictual system (Wallerstein 2005). Historically, for Wallerstein (1974a, 1980b), there have been three hegemons within the world-​economy: first the United Provinces, dominant from about 1625 to 1675; then, after a struggle for hegemony between Britain and France, Britain, decisively from 1815; then, after a further struggle between America and Germany, America from 1945.

The Clash of Interpretations    121 WSA is deeply concerned with identifying and theorizing long-​term, non-​teleological (Wallerstein 1983, 97–​110) change within the world-​system, as a kind of bifurcating movement between necessity and freedom, without succumbing to facile liberal progressivism (Wallerstein 1995, 49). Transformation is connected, most crucially, to market forces and the struggle between those who dominate and those who are dominated within the system—​classes, status groups, business organizations, different tiers of states—​but this struggle is fundamentally shaped, too, by cyclical rhythms and secular trends operative within the world-​system (Wallerstein 1980b, 2005). Secular trends include geographical expansion, commodification, the mechanization of production, and proletarianization, while cyclical rhythms refer to the inevitable contradiction between supply and demand, and capitalism’s movement between A and B phases of expansion and contraction. During phases of contraction, especially in periods of intensive struggles for hegemonic succession, conflict frequently rises, and, here, thinkers within the WSA paradigm have sought to incorporate reflection on the relative autonomy and effectivity of the military dimension in international affairs (for instance, Chase-​Dunn 1998; Chase-​Dunn and Grimes 1995). Nonetheless, while there is a clear parallel between Wallerstein’s emphasis on the struggle for wealth and power in the capitalist world economy and the realist attention to geostrategic competition over security and survival, a significant discrepancy obtains between the former’s insistence on global system-​dominance and the latter’s assertion of the autonomy of territorially sovereign states. Drilling more deeply, the contrasts separating WSA and IR realism are striking. For example, while anarchy is a central assumption shared with realism, anarchy in the world-​system is, most centrally, the anarchy of capitalism. The role of the hegemon is crucially linked to taming the effects of anarchy and, again, Wallerstein’s contentions about hegemony in the modern world-​system differ substantially from the predominant realist analyses of bi-​or multipolarity. Structural realism only accounts for the operation of ‘self-​help’ interstate rivalry, while WSA reveals how dominant core states also have a common interest in keeping the world-​system relatively stable so that they may collectively exploit the weaker states in the periphery (Wallerstein 2005, 56). These differences are, though, auxiliary to the most crucial point of separation between WSA and realism—​the conceptualization of power. Here, Wallerstein (1980a, 20) grants the realm of formal politics only a ‘certain autonomy’, in stark contrast to Morgenthau’s ([1948] 1973, 5) foundational claim about politics as ‘an autonomous sphere of action’. Mearsheimer’s (2014, 12) contention, ‘What money is to economics, power is to international relations’, expresses the gulf in interpretations. For WSA, this equation reifies world politics as a domain separable from the economic and occludes the social basis of power relations (Gill 2008), which are to be found in relations of exploitation within the international division of labour. WSA also places, much more convincingly than either realism or liberalism, unequal power among states within historical context. Between the eighteenth and early twentieth centuries, European powers jostled in their imperial rivalries not only to dominate vast swathes of the non-​European world but also to drag these parts of

122    Chamsy El-OJEILI and Patrick Hayden the world into the capitalist world-​economy. Reflecting on the particular historical circumstances of this coercive process of global expansion, Wallerstein (2011a, 129) pointedly observes that incorporation ‘into the capitalist world-​economy was never at the initiative of those being incorporated’. The power asymmetries characterizing contemporary inter-​state relations of the core, semi-​periphery, and periphery must be understood as a product of social interconnections during a long globalizing process, culminating in a decisive geographical and occupational division of labour throughout the modern world-​system. Wallerstein’s historical observations about how hegemonic powers secured their geopolitical ascendency prior to the great waves of formal decolonization—​therefore making it impossible for newly independent states to de-​link from the world economic system—​raise questions about not just the realist view that unequal power applies at all times and under all conditions but also the liberal assumption that deeply structured power relations of domination and inequality can be remedied by incremental institutional reform, commercial integration, and modification of individual behaviour.

Globality, Imperialism, Liberalism, Socialism Today It is often suggested that realism suffered a significant setback with the collapse of ‘really existing socialism’ and the coming of a new age of globalization (Donnelly 2013). The fall of the Soviet Union appeared to dislocate a discourse built upon the assumption of an irretrievably bipolar or multipolar world. Furthermore, the apparent intensification of world connectedness seemed to be transforming the world, including the bases and operation of power (Held and McGrew 2002). Commentators such as Ohmae (2000), for instance, suggested that realism’s exclusive focus on state-​centredness was becoming a ‘nostalgic fiction’. If the collapse of the socialist alternative and the growth of globalization challenged realism’s explanatory purchase on international reality, such transformations seemed to herald a dramatic comeback for liberalism through the 1990s, often in the form of a neoliberalism wedded to free trade, market efficiency, the removal of trade barriers, regional specialization, and a regulatory framework of governance generating individual risk and competition. Most famously framed by Fukuyama (1992) as the ‘end of history’, the period of ‘happy globalization’ (in Outhwaite and Ray 2005, 19) saw neoliberalism forge a set of finance-​driven, interrelated market societies. With globalization and neoliberalism thereby dovetailing, neoliberals hailed the pacifying, democratizing, and wealth-​creating possibilities of unrestricted markets. Meanwhile, on a rather different normative register, a liberal cosmopolitanism, often critical of the disembedding of economics and the lagging of global politics relative to the global economy, found much to be hopeful about in the emergence of global civil society and growing advocacy for global distributive justice (Caney 2005). The reinvigoration of liberal hopes for markets, democracy, human rights, and internationalism, alongside contemporary globalization, raises important critical questions for WSA. Is WSA, along with realism, too state-​centric to offer insights into a world in

The Clash of Interpretations    123 which state power is mutating, if not declining, and transnational networks are playing an increasingly important role in social life? Are three broad tiers enough to encompass the complexity of the world of globalization (Sanderson 2005)? Is the static immiseration position inherited from dependency theory adequate when faced with the rising power, say, of the BRICS nations since the mid-​2000s (Nadkarni and Noonan 2013)? And after the events of 1989–​1991 in the East, does Wallerstein’s socialism belong to a bygone era, as the communist challenges disappear from our collective horizons? In the face of the escalation of globalization-​ talk from the 1990s, Wallerstein remained unmoved. While we may be seeing the intensification of world connectedness, globalization is not new but is a crucial dimension of the world-​system since its initial emergence around 1450, and a founding presupposition of WSA. This, in turn, leads us to the cultural-​ideational genesis of the globalizing world-​system that found form in what Wallerstein calls the ‘geoculture’. Wallerstein (2011b, xvi) defines geoculture as ‘a set of ideas, values, and norms that were widely accepted throughout the system and that constrained social action thereafter’. The geoculture constitutes the hegemonic ideas, representational discourses, and normative images that helped globalize and universalize the modern world. The dominant modern geoculture, according to Wallerstein, is the centrist liberalism that emerged after the French Revolution, whose gradual triumph over the other main contending ideologies of ‘conservativism’ and ‘radicalism’ played a privileged role in the formation of the world-​system’s political economy (especially through the various ideologies of ‘development’ propelled by the scramble for overseas territories). Centrally, as the source of ‘values that are widely shared throughout the world-​system, both explicitly and implicitly’ (Wallerstein 2011b, 177), liberal developmentalism has served as a cultural-​symbolic subsystem helping to bind, normalize, legitimize, and transmit the social reproduction of the inherently inequitable world-​system—​at least, that is, until the events of 1968 unleased new anti-​ systemic movements that increasingly challenged liberalism’s reign. Wallerstein thus comprehends the world-​system as an expressive, material-​representational totality, in which each constituent element—​states, the semi-​periphery, the hegemonic power, and geoculture itself—​is also (re)constituted historically in terms of the reproduction of the system as a whole. Viewed through Wallerstein’s longue durée optic, therefore, contemporary globalization-​talk is ideological in the critical sense, a ‘buzzword’ of current political discourse (Wallerstein 2003, 9). More widely, little that has happened since the late 1980s has fundamentally shifted Wallerstein’s assessment of the contemporary modern world-​system: the system remains, above all, a capitalist world-​economy, whose fundamental dynamic is the endless accumulation of capital; America remains the hegemonic power in the system, though this power is in decline (Wallerstein 2006a); liberalism remains the dominant geoculture, though it too is in its death throes (Wallerstein 1995); states continue to struggle to move up tiers within the international division of labour; the movement between these tiers, for instance, in the case of contemporary China, is no more remarkable or unusual than the historical movement from peripheral to core status of the United States (Chase-​Dunn and

124    Chamsy El-OJEILI and Patrick Hayden Grimes 1995); the expansion of financial flows or the shifts to new leading products are cyclical trends repeated over the course of hundreds of years. Notwithstanding such continuities, the landscape of the contemporary world-​ system is unique in a number of ways. Here, as Chase-​Dunn and Inoue (2011, 407) suggest, Wallerstein has leaned towards the ‘apocalyptic and . . . millenarian’. In particular, a number of trends are reaching asymptotes that are exacerbating crisis tendencies in the system: the de-​ruralization of the world, and the impossibility of running away from growing workers’ power; the growing costs of inputs—​for instance, because of ecological exhaustion; the rising infrastructure bill; the burdensome costs associated with growing democratization (health, education, and guaranteed life-​time income); a first-​time reversal of the modern tendency of growing state power (Wallerstein 1995, 1999); and the absence of any likely hegemonic replacement for a declining US power (Wallerstein 2005, 2006a, 2010, 2011c). The world-​system, in short, appears to have reached a terminal point, a new moment of decadence, or of bifurcating futures—​socialism or barbarism (Wallerstein 2003, 2004a). From the 1970s, a number of competing Marxian accounts took issue with WSA—​for instance, Brenner’s (1977) charge that Wallerstein had focussed on the division of labour and exchange, at the expense of class and production. More recently, as Keucheyan (2013) notes, within the field of critical theory, we see the flourishing of a number of novel accounts of imperialism, at some remove from WSA. One bloc within this literature (Panitch 2000; Petras and Veltmeyer 2001; Harvey 2003; Anderson 2017) insists that we are in a period of decisive American unipolarity where the very pivot and axis of everything encompassed by contemporary globalization is American power, in its various forms. In a somewhat converging analysis, Robinson (2011a, 2011b, 2018) argues that the emergence since the 1970s of a new global capitalism has rendered WSA’s territorial conception and simple international division of labour-​interstate system analysis outmoded. A new transnational faction of the capitalist class has emerged hegemonic, its interests utterly beyond any particular nation state. Alongside the transnationalization of capital and the formation of a transnational capitalist class, we see too, an emergent transnational state apparatus, encompassing institutions such as the WEF, WTO, IMF, International Bank of Settlements, UN, European Central Bank, and the G7. This incipient transnational state does not mean the death of the nation state, which still has a function in the accumulation of capital, but such states are increasingly becoming nodes and transmission belts in a wider transnational system of capital accumulation. More cautious around globalizing transformations but making some aligned analytical suggestions is the neo-​Gramscian work of Cox (1983) and Gill (2008), which underscore the constant, conflictual making and remaking of world order. Seeking to break from the instrumentalism and economism of orthodox Marxism, Cox and Gill view states not as mere functional tools of pre-​constituted ruling classes, but, instead, as sites of struggle. Hegemony is one possibility arising from such struggle, but the concept is used in a manner quite distant from WSA, to signify a particular intertwining of economic, political, and cultural-​ideological power. Rule, under these lights, is more clearly an ongoing, turbulent set of processes centred on the relations of force in

The Clash of Interpretations    125 concrete situations. In practice, this approach tends to lead to more differentiated and complexified accounts than those characteristic of Wallerstein. Critical of Wallerstein’s mechanical and economistic explanatory efforts, as well as of the thesis of waning US power, Gill (2008) seeks to foreground struggle in an ongoing war of position in the social transformation of US hegemony 1945–​1965, which subsequently comes undone. Yet if the dominance of American hegemonic power waned briefly, it was again reinforced through the language and values of a neoliberal capitalism appropriating the concept of ‘globalization’ as an ideological cover and obscuring the division of the world into core and periphery (cf. Wallerstein 2003). How does Wallerstein’s work fare under these critical gazes? Against some of the critiques emerging from the contemporary globalization literature (Sanderson 2005), WSA does not deny the efficacity of endogenous dimensions in the positioning of states within the international division of labour, and neither does Wallerstein deny movement across tiers within the world-​economy or argue for a static immiseration position. Instead, WSA foregrounds the indispensability of often-​underexamined exogenous factors, and it insists on the permanence of polarizing tendencies within the world-​ economy, a position that is still widely and solidly defended within the literature on global inequality today (see, for instance, Arrighi 2002; Chase-​Dunn 1998; Mann 2013; Pieterse 2005; Therborn 2012; Wade 2007). Similarly, Wallerstein is attentive to major changes over the lifespan of the world-​system—​such as shifting regimes of labour, production processes, balances between productive and financial capital, and conflicts between different factions of capital. With respect to political power, while Wallerstein acknowledges a contemporary break from the world-​systemic tendency towards the growth of state power, the short shrift he gives to death of the state/​pluralization of power arguments might be viewed as a sober counterweight to chronocentric globalist rhetoric. As Mann (2013) says, states remain the ‘entrenched regulators’ in a system still led by Northern states. This last point is significant from the long-​history perspective of WSA, in which postcolonial states both occupy a complex peripheral or semi-​peripheral place in asymmetric global power structures but also wield some influence through the delegitimization of Eurocentrism and racism. Wallerstein’s (1997, 2006a) strong commitment to contemporary criticisms of Eurocentrism in the human sciences—​including the postcolonial ‘provincialization of Europe’, attention to the connection between power and knowledge in thinking about the Third World, and the questioning of modernization theory’s progressivist optimism about development—​are core to his work from the start and are present in his conceptualization of geoculture’s ascent alongside the ills of European colonialism-​imperialism. Regarding the political realm, too, against long-​running charges (see, for instance, Skocpol 1977) around Wallerstein’s alleged economic determinism, in concrete analyses—​ for instance, on neoconservative-​ led military intervention (Wallerstein 2006b)—​Wallerstein clearly lends military and political factors a healthy degree of autonomy as historically contingent variables. At the same time, however, to insist on the crucial role of economic power is an essential corrective to the marginality of such power in realist and liberal thinking. Underscoring this role does not imply a

126    Chamsy El-OJEILI and Patrick Hayden transhistorical economic reductionism, so much as an insistence on the deterministic dynamics of capitalism itself, the dull and continual pressure exerted by profit, growth, and competition on all spheres of life, towards the autonomization and prioritization of the market realm. On the issue of hegemony, there is dispute even within the WSA paradigm (Amin 1994, 2003; Arrighi 2009), and the question of the polarity and prospects of our moment is an incredibly complex war of gods, around which various measurements of power provide little resolution, and in which Wallerstein’s position of declining US dominance remains a respectable option in the face of renewed Russian and Chinese assertiveness. Nevertheless, a broadening of the concept, in a neo-​Gramscian direction, we think, offers important advantages. From outside of the IR house of power, contestatory social movements are viewed by Wallerstein as able to shape the world-​system, in ways conflictual to the interests of capital. This is clearly spelt out in Wallerstein’s treatment of both the anti-​systemic movements in the period 1945–​1968 and the impact of the world-​revolution of 1968 in the decline of these movements, the rise of new anti-​systemic forces, and the concomitant challenge posed to liberalism as geoculture (Amin et al. 1990; Arrighi et al. 1989; Wallerstein 1991a, 1991b, 1995, 2002a, 2004b). Regarding frequent criticisms centred on the way in which Wallerstein’s totalizing and functionalist optics minimize the role of struggle, Wallerstein, while not engaging in comprehensive analysis (see, though, Arrighi and Silver 1999 and Silver 2005, for a more detailed WSA treatment), has continually argued the constitutive place of class and status group contestation, within and across state boundaries—​these categories not approached in a reified way as ‘eternal essences’ but as constantly forming, dissolving, and re-​forming (Balibar and Wallerstein 1991; Wallerstein 1980a, 2011b) against a backdrop of the changing world-​economy. In this regard, Wallerstein’s position and its ties to the ideational power of geoculture is not dissimilar, for instance, to IR constructivism’s understanding that conceptions of power and hegemony are as much about self-​created identities and ideologies or historically conceived (and contested) roles as about material attributes and circumstances—​ thereby highlighting the reciprocal influence of and relationship between structure and agency in the shaping of the world-​system. Taking these arguments in a more Gramscian direction allows us to interpret structures as historical products of recurrent patterns of actions and expectations that are socially constructed and ‘become part of the objective world by virtue of their existence in the intersubjectivity of relevant groups of people’ (Cox and Sinclair 1996, 149). An important last stop concerns Wallerstein’s undiminished socialism—​the moral-​ political engine driving his entire intellectual enterprise—​which, for some critics, presents an insuperable problem. In particular, as the horizon visible in the period of the construction of WSA faded—​Third Worldism, the New Left, the institutional power of Marxism—​and end of history, death of utopia, and socialism as totalitarianism narratives took hold in the West, a supremely confident, recharged liberalism consigned this aspect of Wallerstein’s thought to the dustbin of history—​Sanderson (2005, 204), for instance, saying of Wallerstein’s socialism that it is time to put away such ‘foolish things’. Over a decade later, though, especially after the Global Financial Crisis and

The Clash of Interpretations    127 the still-​unfolding devastation wrought by the Coronavirus Crash, Wallerstein’s refusal to yield has, we suggest, proven far-​seeing. On a theoretical register the intent of WSA is unmistakably universalist—​Wallerstein (2006a) emphasizing, in fact, not the end to universalism but a more universalist universalism that eschews the hypocrisies of Eurocentrism, embraces a ‘multiplicity of universalisms’, and empowers everyone against exploitation and inequality. In practical terms, the widespread return of vigorous (if often still small) further Left emphases and forces frequently appear close to the unorthodox, radically democratic, pluralist socialism charted by Wallerstein (1991a, 1991b, 1995, 2002b). The seeds of such a socialism were, for Wallerstein (2000, 2002b, 2004a), visible in what, in later years, he referred to as the ‘spirit of Porto Alegre’. This tremendous faith in cultivating the seeds of such a radically socialist ethos, this historical sense for long-​term possibilities generative of systems change, pluralistic universalism, and a better world for humanity, stands as the enduring legacy of WSA.

Conclusion Developed over four decades, Wallerstein’s WSA still stands strong, when set against competitor maps of the world issuing from the dominant schools of thought in IR. Pioneering a deeply historical and global framing of world affairs, WSA is a paradigm of vast ambition, and its bold conceptualization continues to offer both a framework for fruitful research and a map of power that informs activism. While the IR paradigms we have touched upon provide important vantage points from which to raise pressing questions, Wallerstein’s project still speaks urgently and in illuminating ways to those concerned with world affairs and looking to gain distance from both formalist liberalism and dehistoricized realism. On this score, Balakrishnan (2011) suggests that the shift from something like a 1990s end of history moment to the current moment of world turmoil vindicates the global and longue durée lenses that Wallerstein has so stubbornly worn. Similarly, after the negativity and self-​scrutiny of the postmodern moment (McLennan 2000), it is perhaps clear that, as Wallerstein (2004b, 189) presciently argued, there is no escaping macronarratives: ‘The only question is whether we are putting forward a defensible macronarrrative’. WSA’s capacious narrative, we suggest, is arguably unrivalled on the Left as a fluent, encompassing alternative to those of triumphant globalism, the clash of civilizations, and far-​Right identitarianism.

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PA RT T WO

I N T E R NAT IONA L P OL I T IC A L E C ON OM Y

Chapter 8

Neolibera l i sm, Gl obaliz ati on, a nd L ate Capita l i sm Capital, Ideology, and Making the World Market Toby Carroll

Introduction As with the 2007–​2008 global financial crisis (GFC) and the rise of populism, claims of neoliberalism’s impending demise are common once again. The COVID-​19 crisis has entailed dramatic shifts from business as usual, impacting the flow of goods and people and providing governments the opportunity to re-​legitimize themselves within a ‘post-​ political’/​‘end of history’ world with interventionist action on both the national security and economic fronts (Fukuyama 1992; Swyngedouw 2014, 122–​123). The swamping of health and other public services by the demands of the crisis has led to calls for a return of the state by social democrats and American liberals, while more explicitly market-​oriented proponents have endorsed temporary interventionist efforts of grand proportions—​as with quantitative easing during the GFC—​to support furloughing and reignite demand to get things ‘back to normal’ as quickly as possible. What both of these ostensibly opposing positions are interested in safeguarding, however, is a hegemonic ideological and institutional tendency that has reconfigured states and societies in the Global North and South over the last four decades and played a fundamental role in constituting a more complete world market than ever before: neoliberalism. This tendency has evolved through three key stages, with change propelled by contradiction, political resistance, and concomitant attempts to re-​ legitimize market-​ led policy. Each of these stages has been undergirded by important theoretical positions and their assumptions (especially those emanating from North American economics and their European antecedents), with later positions—​grounded in new institutional and

136   Toby Carroll behavioural economics—​emphasizing (limited) adjustments to reductionist rationality postulates long fundamental to orthodox economics. Despite being so central to understanding the current juncture, neoliberalism has proven conceptually challenging and controversial for some, even for scholars on the left (Dunn 2017).1 However, I argue that neoliberalism, in tandem with globalization and late capitalism, is crucial for making sense of a whole host of sociopolitical phenomena, including the most recent ascendancy and global spread of capital (including finance capital), the disempowerment of organized labour, the rise of inequality, the crowding out of developmental alternatives and the return of populism (both progressive and reactionary) (Carroll and Jarvis 2017). Synthesizing various contributions within political economy, neoliberalism is defined here as reverence for and application of market and market-​like discipline in the reorganization of state and society. This is a definition that demands moving beyond viewing neoliberalism in largely ideational terms or as some ostensibly sacrosanct script emanating from scholarly figures or particular bureaucracies at certain junctures. This is important for several reasons, not the least of which is that in both ideational and institutional senses neoliberalism has evolved beyond the ideas of the Mont Pèlerin Society (MPS), prominent US, European, and UK think tanks, the agendas of Margaret Thatcher and Ronald Reagan, or the Washington Consensus. It is also vital that we tie neoliberalism back to the social forces that have used it to reconfigure state and society to their advantage. One of the many dangers of viewing neoliberalism in relation to founding intellectual figures and their ideas or, indeed, policy emanating out of particular governments or bureaucracies at certain moments, is that capitalism and capital (as a social force)—​not to mention capital’s efforts to establish particular institutions to its advantage—​disappear, making the comprehension of neoliberalism’s rise and systemic function illegible. It is one thing for an idea or set of policy prescriptions to be conceptually powerful in isolation—​it is quite another for these to be vocally promoted by powerful interests and operationalized by bureaucracies at national and multilateral levels in a manner that fundamentally reshapes states and societies, supporting a level of global economic integration that now shapes lives almost ubiquitously. This last reality cannot be explained via an oversized focus on founding fathers and their ideas. Indeed, to do so is to elide the main event of our times. The embrace of neoliberal ideas and institutions must be understood, first and foremost, in relation to satisfying the interests of capital (de-​reifying ‘the market’, as it were) and the constitution of an increasingly all-​enveloping world market that permits transnational capital from the North unprecedented freedom and mobility to reorganize production to its advantage (leveraging labour cost advantages) and accessing resources and markets (Cammack 2019). Globalization, rather than some positive ideologically charged term (Chilcote 2002), is characterized here simply as the ever-​intensive patterns of economic integration made possible by important techno-​logistical developments and the legitimating ideas and institutions of neoliberalism (‘globalization’s superstructure’): the rules, policies, norms, ‘common sense’ assumptions, and organizations that serve, first and foremost,

Neoliberalism, Globalization, and Late Capitalism     137 the interests of the most powerful fractions of capital. Seen in this way, there is nothing automatically positive about globalization, reflecting as it does an order facilitating the exploitation of cheap labour, access to resources, and the opening of novel markets for transnational capital. Importantly, neoliberalism’s ascendancy and shape-​shifting, and the fomenting of globalization to which the former and latter are intimately tied, both need to be specified in relation to capitalism in its late capitalist form. Late capitalism is both a product and catalyst of successive rounds of neoliberalism and more intensive degrees of globalization. Late capitalism constitutes the latest stage of capitalism and is composed of the following: the ideological and institutional elements of neoliberalism; a particular set of social relations (with an intensified capitalist division of labour in which certain sections of capital have increased their power substantially, labour has seen its relative power significantly diminished, while vast pools of precarious and surplus labour have emerged); advanced means of production (such as artificial intelligence, robotics, and knowledge-​driven activities) in some settings and the opposite in others (labour intensive, low-​value-​adding activities; ‘uneven development’); the transnational disaggregation of production rendering non-​neoliberal development extremely challenging; heightened dynamics of competition (between and within states, sections of capital, and labour); regular crises; increased inequality; and environmental exploitation and damage on a vast scale. This chapter presents a historical materialist conceptualization of neoliberalism, globalization, and late capitalism as mutually reinforcing and politically produced. It moves beyond both Northern/​North Atlantic and ideational analyses, illustrating how evolving neoliberal pushes have been tied to realizing the interests of Northern transnational capital and the formation of a world market that combines both North and South on highly uneven terms. The first section presents some of the more useful understandings of neoliberalism, undergirding the subsequent analysis with necessary conceptual precision. The second section focuses on the political production of neoliberalism’s three key phases (neoliberalism 1.0–​3.0), detailing how each of these are symbiotically bound to the evolution and fomenting of globalization and late capitalism.

Defining Neoliberalism: It’s All About Capital (and Those That See It as a Positive Social Force), Stupid! While not the case now, earlier adherents, such as members of the MPS—​a network of right-​leaning intellectuals that met in Mont Pèlerin throughout the post-​war period to scheme ways to resist then-​dominant Keynesianism and leftist positions of various forms—​did once use the term ‘neoliberal’ positively and, indeed, self-​referentially (see, for example, Friedman quoted in Peck 2010, 3–​4). What demanded the prefix ‘neo’ was

138   Toby Carroll the need to distinguish a novel position from other forms of liberal philosophy and policy, such as elements of classical liberalism, more dogmatic laissez-​faire positions, and Keynesianism, with priority given over to the importance of economic competition and avoiding market intervention (Peck 2010, 48).2 In a contemporary sense, perhaps what most distinguishes neoliberalism from classical liberalism is the degree of attention given to economic freedom (in comparison to political freedom) and the celebration of ‘the market’ more generally. While liberalism has traditionally included a wide variety of positions that emphasize the individual, and political and economic freedom (many members of the MPS, for example, were selective proponents of political freedom3), neoliberals generally seek, first and foremost, to elevate economic freedom and market discipline, the latter entailing commodification and allowing the market to determine prices and the allocation of resources. It is in this last sense that neoliberalism is intimately tied to prioritizing competition and, policy-​wise, maintaining market competitiveness (of country, capital and individuals) via adopting particular reforms. The prioritizing of economic freedom, over and above political freedom, no doubt also derives from the manner in which neoliberalism escaped its ideological founding fathers in two important ways: first, as a political project supported and shaped by powerful segments of capital (the latter hardly wedded to political freedom when it impinges upon property rights) and, second, as an apparently technocratic policy agenda advanced by agencies such as the World Bank and International Monetary Fund (IMF) for countries to navigate a world in which powerful forms of capital were ascendant. While ‘true believer’ neoliberals have faith that prioritizing economic freedom is the best way to organize society and promote development, in policy circles globalized capitalism is assumed as the only developmental game left standing and neoliberal policies are deemed as crucial to compete within this order and attract foreign direct investment (FDI), as some divine ‘lifeblood’ of development (Ness 2016, 20–​21), and incentivize entrepreneurialism, for example. Moreover, as we will see, when actual-​existing neoliberalism has been implemented, the last thing technocrats and transnational capitalists want is to allow real political freedom (exercised by socialists or even a protectionist bourgeoisie, for example) to ‘distort’ market-​opening and marketizing reform agendas. Notably, efforts in the 1990s under the aegis of the post–​Washington Consensus were designed precisely to attend to the political economy of reform by deploying constrained forms of participation, partnership and ‘social protection’ to recraft state and society in a way that shielded certain state institutions from politics (see the next section). That neoliberalism is, first and foremost, concerned with economic freedom and, in practice, freedom for the most powerful forms of capital, does not mean that it is static, homogeneous or some libertarian doctrine hostile to the state. Indeed, it has manifested in different forms over time, with some first-​generation neoliberal thinkers and politicians holding more overtly extreme perspectives on the state and society, than later generations. However, despite this diversity, what unites these positions is their shared interest in placing the market at the centre of things. What has changed over time significantly relates to how the state is viewed (its ‘role’) and how market reform is to be realized (with brute force, the smashing of organized labour and

Neoliberalism, Globalization, and Late Capitalism     139 conditionality or with ‘participation’, ‘partnership’, and—​in the language of behavioural economics—​‘nudging’). Marxist geographer David Harvey defines neoliberalism, ‘in the first instance’, as ‘a theory of political economic practices that proposes that human well-​being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade’ (Harvey 2007, 2). This definition predominantly defines neoliberalism as a bundle of ideas and theoretical assumptions. However, Harvey extends this definition—​connecting theory and ideas with power, policy, and interests—​via his notion of ‘neoliberalization’, defining the latter ‘either as a utopian project to realize a theoretical design for the reorganization of international capitalism or as a political project to re-​establish the conditions for capital accumulation and restore the power of economic elites’ (Harvey 2007, 19; emphasis in the original). Harvey emphasizes the second of these ‘objectives’—​neoliberalization as ‘a political project to restore accumulation and class power’—​as dominant within this dualistic notion. He also explains the historical rise of neoliberalism and neoliberalization in relation to the crises of postwar ‘embedded liberalism’ (variously characterized in the developed world by Fordism, Keynesianism, and social democracy) and efforts by the most powerful sections of capital to restore super-​ profits and class power. Bob Jessop similarly argues for viewing neoliberalism as a political project, justified on philosophical grounds, that ‘seeks to extend competitive market forces, consolidate a market-​friendly constitution, and promote individual freedom’ (Jessop 2012, 1). Crucially, rather than seeing neoliberalism as any sort of monolithic project, Jessop gives considerable latitude to the precise form that neoliberalism takes in certain settings and under particular alignments of political forces engaged in struggles emanating out of specific historical pathways or ‘path dependencies’.4 Stephen Gill, working from a neo-​ Gramscian position, has long written in terms of disciplinary neoliberalism. For Gill, disciplinary neoliberalism constitutes a ‘mode of political economy that seeks to promote the power and disciplines of capital by reshaping global governance, state forms, regulation of markets and class relations more generally to favor large capital’ (Gill 2017, 638). Importantly, disciplinary neoliberalism in no way entails small or weak states—​ rather—​in some affinity with the concerns of the Ordoliberal tradition (see note 2), it demands repurposing states to the task of enforcing property rights and realizing the other interests of large capital (more on this later). What unites all three of these influential positions is the notion that neoliberalism must be understood in both ideological and politico-​material interest terms, with careful attention given to its actual-​existing manifestations in the policies and institutions that shape human behaviour, including those of the state. In sum, we can say the following: Neoliberalism entails theoretical and ideological reverence for the market as a superior means of allocating resources and organizing both state and society (in its most radical, though now marginalized, forms to the point where state and society are largely imagined away); In practice, neoliberalism involves the application of market and market-​like discipline via evolving policy sets desired by the dominant

140   Toby Carroll sociopolitical forces of our time: the most ‘competitive’ and mobile (transnational) segments of capital and their host states.5 This includes (though is not limited to) policies that seek to achieve the following: the privatization and commodification of services and infrastructure previously held in public hands; the elimination of interventionist and other regulatory efforts in terms of pricing; the liberalization of trade and capital flows; avoiding progressive or ‘excessive’ taxation; the protection of private property rights and equal treatment of international and domestic capital; the promotion of ‘flexible’ labour markets that permit, among other things, ease in hiring and firing workers; removing extensive regulatory impediments on commercial activity; the transformation of education towards building ‘human capital’ for market participation; and minimal forms of social protection to safeguard reform and minimize reform resistance. It is in eliminating borders and risks to capital that neoliberalism is rightly identified for its role in satisfying imperial interests and maintaining unequal exchange in a postcolonial world (see, for example, Cope 2019; Ness 2016). Without the market-​making and market-​opening agenda of neoliberalism and the institutions that accompany it, powerful segments of internationally mobile capital harking from the Global North simply cannot access labour, resources, and markets efficiently. One of the most important (and confusing) aspects of neoliberalism for students and scholars relates to how neoliberals and organizations advocating neoliberal policy view the state. How the state is perceived by neoliberals —​in both ideological and institutional terms—​has changed over time, especially as political challenges and contradictions to earlier rounds of market reform in the 1980s and 1990s emerged and new political and intellectual figures and, indeed, new market-​oriented policy agendas, ascended (Carroll 2010, 2012). In its earliest variants—​both as a set of ideas and a reform agenda, neoliberalism often involved avowedly hostile assaults on the interventionist state as a repository of ‘rent-​seeking’, inefficiency, and an encumbrance upon economic dynamism. However, as is elaborated in the next section, beyond the first generation of ‘roll-​back’ reforms of the Thatcher and Reagan periods and the Washington Consensus, over time neoliberalism has increasingly focussed on repurposing the state as an important bundle of institutions to be placed ‘beyond politics’ and to support ‘the market’. In contemporary policy vernacular, this is described as ‘market enabling’, with the state deemed central in establishing an ‘enabling environment’ for entrepreneurial and commercial activity. Here, drawing on the new institutional economics of scholars such as Douglass North, Elinor Ostrom, and Joseph Stiglitz (all Nobel laureates) that became considerably more influential in the 1990s, institutions are emphasized for their role in offsetting ‘market asymmetries’, ‘imperfect information’, and ‘transaction costs’ (reducing risks and disincentives to commercial activity) and providing minimum services to entail social reproduction and diminish the likelihood of resistance to ongoing reforms. This repurposing of the state entails ‘locking in’ these interests legally and constitutionally—​what Gill (2000) dubs ‘the new constitutionalism’—​ruling out alternative patterns of governance and development, and shielding these institutions from politics. Viewed as an entity that oversees and supervises market activity at ‘arm’s-​length’ (rather than one that replaces, displaces, offsets, or intervenes in the market), others

Neoliberalism, Globalization, and Late Capitalism     141 have dubbed the form of state demanded by modern neoliberal policy agendas as a ‘regulatory state’ or ‘competition state’ (Cerny 2016; Jayasuriya 2001).

Neoliberalism’s Key Phases and Their Relationship to Globalization and Late Capitalism Perhaps one of the best known periodizations of neoliberalism—​especially as applied to developed world contexts—​is Peck and Tickell’s (2002, 41–​43) notion of ‘roll-​back’ and ‘roll-​out’ neoliberalism. Here roll-​back and roll-​out respectively denote specific phases of neoliberal reform and their implications for the state. In a complementary sense, others working predominantly on neoliberalism’s diffusion beyond the developed world via development policy have periodized neoliberalism into three key phases, each of which has been propelled by political battles and legitimacy challenges. Within this developmental typology, we can locate what are frequently referred to as the Washington Consensus and the post–​Washington Consensus (with each bearing some relationship to the roll-​back and roll-​out categorizations, respectively), and a third (current) phase that colleagues and I have dubbed ‘deep marketization’. I draw upon each of these approaches in periodizing neoliberalism’s three overlapping and interwoven policy phases (neoliberalism 1.0–​3.0)6 in both the developed and underdeveloped worlds and the manner in which they have been formative in knitting together a world market and fomenting the attributes of late capitalism more broadly.

Neoliberalism 1.0 (late 1970s – mid 1990s): Dismantling embedded liberalism and the Third World project In a policy sense, neoliberalism 1.0 (the roll-​back/​Washington Consensus phase) begins in the late 1970s and early 1980s alongside grand contradictions in the global political economy—​including ‘stagflation’ (stagnating growth and rising inflation), declining profit rates for capital, and the opportunities and competitive threats presented by ‘newly industrializing countries’ in Asia (NICs). While neoliberal policies were implemented in Chile under the stewardship of ‘the Chicago Boys’ after the coup against Allende during Pinochet’s dictatorship (Dezalay and Garth 2002, 45–​46), the arrival of the Thatcher and Reagan governments set in train a tectonic policy shift in the United Kingdom and the United States, manifesting in sustained attacks on organized labour, Keynesianism, and attendant state forms. The shift in these two countries, and the related decline of interventionism in all its forms, would be accompanied by pivotal policy shifts within the international finance (‘development’) institutions (IFIs) in

142   Toby Carroll which developed countries and, in particular, the United States retained huge influence, and followed by market-​oriented policy shifts by other governments of both the left and right elsewhere. Neoliberalism 1.0 combined a response from the parties (largely) of capital in the North to the macroeconomic crises of the late 1970s and early 1980s with a pivotal switch towards imposing market reform with conditional lending in the South. The latter would counter demands for a New International Economic Order (NIEO) and facilitate the ‘demise of the Third World Project, . . . so opening up the countries of the South to the new geography of production, and, subsequently, novel patterns of exploitation as development’ (Prashad 2012, 5). For Colin Leys (2001, 34), Thatcher—​elected in 1979 and ruling for eleven years—​was not primarily responding to ‘forces operating in an already-​existing global economy’ but rather played a ‘leading part’ in constituting it, demonstrating how national class politics could catalyse a policy push that would play an important role in globalizing the world economy. Thatcher’s primary concern was to ‘save British capital from the threat posed by the Labour left and to reverse the social-​democratic penetration of the state and public life that had resulted from the post-​war settlement’ (Leys 2001, 34). However, a key part of the agenda also involved liberating British capital from its national binds to realize higher returns offshore and weaken the power of organized labour locally. Importantly, this push against labour would also be paired with important commodification efforts in the form of privatizing public housing, state utilities, infrastructure, and ‘contracting out’ of government services (Leys 2001, 34; Harvey 2007, 88). In the United States, Reagan’s election had also been preceded by macroeconomic crisis and a number of efforts (including significant reductions in capital gains and corporate tax rates, the targeting of inflation over the Keynesian preserve of targeting unemployment, and deregulation) that reflected a consolidating shift in class forces and accommodation of ‘the developing “supply side” consensus in Washington policy circles’ (Panitch and Gindin 2012, 14–​16, 163–​167). However, with Reagan’s victory, tax cuts to the working class were followed by ‘explicit class war’ ‘through cutbacks to welfare, food stamps, Medicare, public pensions, and unemployment insurance’. As in Britain, this was accompanied by assaults on organized labour (such as the breaking of the air traffic controllers’ strike and anti-​union appointments to key federal labour agencies), reinstating class discipline after a period of militancy and significant gains by labour (Panitch and Gindin 2012, 171–​172). Taken together, the agendas of these two leading Northern governments—​one former empire, one incumbent; both hosts to key bourses and with considerable power to act as rule-​makers for transnational capital—​to extinguish the power of labour and the ideas and institutions of the postwar period built around Keynesianism, social democracy, and the relative strength of organized labour (‘embedded liberalism’ (Ruggie 1982)), were a powerful harbinger of where things were heading. A world market was being born out of the death-​throes of Fordism and Keynesianism, with a sea change in ideas (especially those associated with economics and development) and class contestation playing important roles.

Neoliberalism, Globalization, and Late Capitalism     143 Importantly, the shifts in the United Kingdom and United States would dovetail with a ‘counter-​revolution’ in development policy that had begun in the 1970s but which gained hegemony in the 1980s, manifesting in key policy changes within the IFIs, most prominently the World Bank and IMF (Toye 1987, 22). Proposals to move towards structural adjustment policy-​based lending had been suggested from within the IFIs in the late 1970s, however these did not gain approval until after Reagan took office and the escalation of the debt crisis, with the latter enmeshing Northern lenders with debtor countries of the Global South (George 1989, 36). While Reagan and those within his administration were ideologically hostile to multilateral development agendas, crisis and the limitations of tackling it using bilateral means would push them back towards using the IFIs as key components for realizing US foreign policy objectives, including ensuring that debt repayment to Northern capital was prioritized and markets were opened (George 1989, 47–​55). In agreeing to extend funding to the World Bank, the US administration ‘moved to advance its own policy perspectives’, with US Treasury playing a typically outsized role in advocating for ‘greater adherence to open markets and greater emphasis on the private sector as the main vehicle of growth’ (Gwin 1997, 230).7 Importantly, there was agreement that lending be dependent upon policy reforms in recipient countries, establishing the conditions for the rise of policy-​based lending and structural adjustment (Gwin 1997, 230). This move towards market-​oriented conditional policy lending would be accompanied by the appointment of key neoliberal figures to influential positions within the IFIs and the disappearing of any remaining vestiges of structuralist thought (Colclough 1991, 22). While newly ascendant neoliberals within the IFIs were not all of one mind, or easily conflated with the positions of certain members of the MPS or those within the UK or US administrations, they were typically united in their hostility towards structuralist positions and identifying the state as a site of ‘rent-​seeking’ and market distortion. Concern for the difference in structures between the developed and underdeveloped worlds—​and tailored interventions addressing these—​would increasingly be displaced by the methodologically individualist and utility-​maximizing assumptions typical of rational choice theory and neoclassical economics. The policy set advanced by the World Bank and the IMF using conditional lending instruments such as structural adjustment programmes and their like would later be dubbed by John Williamson (1990) as the Washington Consensus. This raft of policies constituting neoliberal development policy 1.0 had at its core reforms oriented towards curtailing or ‘rolling-​back’ the state, especially in terms of interventionist economic activity, advocating marketizing and market-​friendly changes that would expose countries and their populations, often facing dire economic circumstances and under considerable socioeconomic duress, to both austerity and world market forces, and largely end postcolonial experiments with different developmental paths. Washington consensus policies included fiscal discipline (including austerity), the redirection of public expenditure towards areas of higher economic return, tax reform (moving away from progressive rates), privatization of state-​owned enterprises and utilities, deregulation, liberalization (of trade, capital flows, and interest rates), market-​determined currency

144   Toby Carroll rates, and secure property rights. As such, the agenda not only entailed an effort to curtail state interventionism in all its forms but also presented huge opportunities for well-​ connected domestic elites and transnational capital. Washington Consensus policies would first be implemented throughout the 1980s in sub-​Saharan Africa and Latin America, with brutal results for the poor and working classes. Later the very same policies would be key components in the ‘shock therapy’ applied to countries of the former Soviet Union and as part of bailout packages that targeted key components of the developmental states in Asia after the 1997–​1998 crisis. The outcomes of these policies—​which were tied to what then World Bank President Barber Conable would describe in 1990 as a ‘lost decade of development’ for the poor, and which included vast corruption in countries of the former Soviet Union (such as that associated with privatizations), and accusations from civil society activists and scholars of unnecessary and prolonged misery and economic stagnation—​would prompt a serious legitimacy crisis for neoliberalism 1.0 and the interests advocating it (SAPRIN Secretariat 1999; World Bank 1990, iv). However, the application of neoliberalism 1.0 in both the developed and developing worlds would play a key role in incorporating countries into one world market, setting in train pivotal competitive dynamics incentivizing further rounds of reform. This said, sustaining globalization in the face of often disastrous results for working-​class people and peasants, for example, would entail a grand rethink in both imperial countries and the institutions in which they held significant power.

Neoliberalism 2.0 (mid-​1990s to mid-​2000s): The repurposing of state and society in service of globalization Neoliberalism 2.0 arose with ‘Third Way’/​‘New Democrat’ positions (such as those associated with Tony Blair’s government and Bill Clinton’s administration) in the developed world and the rise of what became known as the post–​Washington Consensus in development circles. Fundamentally, neoliberalism 2.0 constituted an attempt by political elites and technocrats to re-​legitimize market-​led policymaking in the face of the contradictions and sociopolitical tensions of neoliberalism 1.0 and the intensifying impact of globalization that the former had catalysed. Notably, this response would initially be marshalled by liberals and governments of ‘the left’, with many of the key architects and proponents of the agenda viewing their efforts as a progressive counterforce to the earlier ‘market fundamentalist’ agendas of neoliberalism 1.0. In the Global North, globalization—​in no small way constituted by then rapidly expanding global value chains set in place by multinational enterprises from the Global North (World Bank 2020, 1, 3)—​was now increasingly identified by the likes of Clinton and Blair as a reality to be grappled with, necessitating further market-​oriented reforms and the pursuit of economic dynamism and competitiveness as a matter of survival.

Neoliberalism, Globalization, and Late Capitalism     145 The postwar emphasis upon equality of outcome locked in by organized labour, it was argued, would need to give way to the promotion of equality of opportunity (via a focus on education, for example, that would be mirrored in World Bank emphases upon accruing ‘human capital’ as key to social advancement). While the rhetoric of social justice remained apparent (in contrast to Thatcher and Reagan), in reality, Third Way approaches preferred workfare over welfare. Public–​private partnerships (or PPPs; a politically savvier approach to privatization that looked a little less like selling off the family silver) would be relied upon over public ownership and financing to facilitate greater participation of the private sector in the delivery of services and infrastructure. Coupled with this were free trade agreements (such as those of the World Trade Organization and regional and bilateral efforts such as the North American Free Trade Association [NAFTA]), all of which further cemented the globalization of economic relations and the interests of transnational capital, exposing workers and countries to world market forces. Not surprisingly, none of this would be an easy sell to workers and other activists—​ with strong resistance to free trade and other neoliberal agendas prominent at key meetings of the WTO (‘the Battle of Seattle’), the World Bank, and the IMF. Notable also in the North, new forms of public sector reform (‘new public management’ [NPM]) would be ‘rolled out’, entailing ‘lessening or removing differences between the public and private sector and shifting the emphasis from process accountability towards a greater element of accountability in terms of results’ (Hood 1995, 94). Rather than focusing simply on ‘rolling back the state’, the state would be reimagined around ‘private sector styles of management’, ‘contract-​based competitive service provision with internal markets and term contracts’, fiscal discipline, and forms of corporatization (96). Finally, financial deregulation would proceed apace during this period with, for example, the Gramm-​Leach-​Bliley Act (1999) dissolving the separation—​instilled during the Great Depression—​between commercial and investment banks in the United States. Third Way positions in the North would be coupled with an important push to re-​ legitimize market-​led notions of development in the South after the destructive experience with structural adjustment and conditional lending in the 1980s and the rise of activism and concern from member states about overreach, corruption, and waste. Much like the Third Way, in practice this politically conditioned shift would involve an extension of the market agenda, albeit with a kinder face, and become referred to as the post-​Washington Consensus. The endorsement by Bill Clinton of the former investment banker James Wolfensohn for the presidency of the World Bank in 1995, and the later arrival of figures such as Joseph Stiglitz (a key figure within new institutional economics) as the Bank’s chief economist, were important indicators of a burgeoning shake-​up at the world’s largest ‘development organization’ and within neoliberal development policy generally. At its heart, the post–​Washington Consensus—​often driven by liberals in the American sense—​still had a core belief in the sanctity of markets. However, the state was ‘brought back in’ and reanimated (or ‘rolled-​out’, as it were) as a ‘market enabling’ bundle of institutions. This position was significantly underpinned

146   Toby Carroll by then-​ascending theory within new institutional economics that exchanged earlier conceptions of rationality for notions of ‘bounded’ or ‘limited rationality’ and which linked institutions to explanations of ‘market imperfection’, market failure, information asymmetries, and transaction costs. As with Third Way efforts, rather than full privatizations (which during the transition in Central and Eastern Europe and elsewhere led to egregious elite capture and cronyism), PPPs and NPM-​style reforms were promoted. Crucially, this technocratic repurposing of the state and reshaping of its boundaries was also coupled with important efforts to attend to corruption via the promotion of ‘good governance’ (a perennial concern with IFI operations and a key challenge to legitimizing market reforms such as privatization) and political resistance to market reform. These last two issues were to be addressed via a scaled-​up agenda incorporating congenial elements of civil society into participating in market reform—​assisting with reform implementation, transparency, and accountability—​ and encouraging deeper ‘partnerships’ with client countries (dubbed a ‘bottom-​up’ approach in contrast to the ‘top-​down’ approach of earlier structural adjustment). Successive World Development Reports (WDRs), from 1997’s A State in a Changing World on, captured this ‘institution building’ push well. In practice, however, the policies to be implemented using ‘bottom-​up’ and ‘participatory development’ methods had been decided upon long before citizens, civil society, and government were invited to participate in proceedings, with structural adjustment and conditionality continuing on in a more inclusive guise (Carroll 2010). In both the North and South, neoliberalism 2.0 played a key role in establishing the institutional infrastructure of the world market and, in turn, further realizing the interests of transnational capital. By the turn of the millennium, almost three-​ quarters of the world’s countries had open trade policies (in contrast to 22% in 1960) and increasing numbers of countries—​including previously dirigiste developmental states—​had floating or free floating exchange rates. Moreover, indicative of the state’s changing role, between 1998 and 2008, the World Bank documented more than 10,000 privatizations, with many high-​ value transactions located in formerly centrally planned economies (Wacziarg and Welch 2008; World Bank 2015a). Increasingly too, the world’s workers were exposed to more competition than ever before from integrated trade and new supplies of labour from the former Soviet Union and China. More complex and flexible production (‘global value’) chains could form beyond those that accompanied important techno-​logistical developments in the 1960s and 1970s, with the ever-​present threat of capital flight and a lack of investment disciplining domestic political elites and constraining non-​market-​friendly policymaking. The increased diffusion of the ‘soft institutional’ infrastructure of globalization in the form of neoliberal institutions increasingly led to what is often referred to as a ‘race to the bottom’ in the form of countries desperate to attract FDI by accommodating capital. This regularly entailed satisfying the interests of international capital over domestic populations and eviscerating any remaining components of national development agendas.

Neoliberalism, Globalization, and Late Capitalism     147

Neoliberalism 3.0 (mid- 2000s to present): The expansion of finance capital’s hegemony and the deep marketization of development By the mid-​2000s, a considerable amount of the grunt work of neoliberalization and NPM had been accomplished in the Global North, with labour and capital increasingly exposed to world market forces. However, the 2007–​2008 GFC would be infamous both as an example of how the most powerful forms of capital could escape regulation (despite their outsized role, for example, in developing collateralized debt instruments and the extension of loans to those unable to afford them) and in the degree to which losses could be socialized and abated with interventionist policy when systemic threat loomed (using bank bailouts such as the Troubled Asset Relief Program and ‘quantitative easing’ [QE], for example). Crucially, the GFC would see neoliberal austerity applied to vulnerable populations in a manner akin to neoliberalism 1.0, which, like the latter, would attract serious political resistance. In the United States, egregious inequality and outrage at the financial sector and corporate cronyism would underpin Occupy Wall Street and its anti-​neoliberal/​anti-​capitalist/​anti-​inequality demands. In Europe, the so-​called troika (comprising the IMF, the European Commission, and the European Central Bank) would unleash its eerily familiar European Adjustment Programmes (EAPs) upon Eurozone peripheral countries, including Greece, Ireland, Portugal, and Cyprus, which resembled the SAPs of the Washington Consensus (Greer 2014). European austerity and dire economic conditions would also be met with stiff political resistance—​ for example in the form of the Indignados and Podemos in Spain and support for Syriza in Greece (before the accommodation of the terms of an EAP in 2015). Despite impressive resistance to neoliberalism and austerity, however, once the dust of the GFC had settled, what was telling was the degree to which the financial sector got off unscathed and policy suites remained significantly unchanged, reflecting the power of finance capital, Northern states and the embeddedness of neoliberalism. However, it was in terms of development policy—​in a world where a significant majority continue to live in poor countries (King 2018, 449, 452)—​that neoliberalism 3.0’s biggest innovations were apparent. FDI flows to ‘emerging and frontier’ markets had diminished the leverage for conditional policy-​based lending and the ‘institution building’ of the post-​Washington Consensus. However, the ramping up of a new pro–​ private sector push would signal the degree to which development policy was now not just about the interests of capital but, more specifically, the interests of finance—​including the mitigation of its risks. Within this period, for example, the private sector arm of the World Bank, the International Finance Corporation, would significantly increase its portfolio size substantially and play a key role—​along with other regional development banks following its lead—​in recrafting development policy to be, first and foremost, about increasing competitiveness, accommodating FDI and slotting into global value chains (World Bank 2020). These multilateral organizations would also tread an increasingly fine line between the public and private (and attendant conflicts of

148   Toby Carroll interest), advising governments, while lending to and taking equity stakes in the private sector beneficiaries (often involving some of the world’s biggest multinational banks and corporations) of their aforementioned advice. The IFIs would also promote structural reform via new benchmarking programmes, such as the World Bank’s ‘Doing Business’ series, which would rank countries—​signalling relative degrees of risk and cost to capital—​in their provision of an ‘enabling environment’. Complementing this ‘naming and shaming’ approach towards market-​oriented reform, would be interventions inspired by behavioural economics (in important ways an extension of the earlier new institutional economics) that sought to better understand human decision-​making and entrenched patterns of thinking in designing and implementing ‘development policies and interventions that target human choice and action’, as if this was where the mystery of underdevelopment lay (World Bank 2015b, 1). Direct to sector support for ‘access to finance’ institutions would see the penetration of international finance and financial instruments into the Global South like never before. Finally, the financialization of development would involve novel bond issuances and trading schemes—​including to ostensibly assist countries address pandemics and tackle climate change and other extant environmental challenges, bequeathing capital with yet more opportunities to earn returns out of the chaos and uneven development of late capitalism (Gross 2020).

Conclusion The overlapping and intertwined iterations of neoliberalism 1.0–​3.0 have been crucial in establishing a world market (‘globalization’) central to realizing the interests of transnational Northern capital. However, each of neoliberalism’s phases has been accompanied by dramatic and painful crises, highly uneven patterns of development, and myriad other contradictions characteristic of late capitalism. Unsurprisingly, each of these iterations has encountered formidable political resistance, prompting efforts ‘from within’ to re-​legitimize market-​oriented development. For some, the 2016 Brexit vote and the election of Donald Trump signalled a new era in which political figures appealed against ‘technocratic’ and other elites that were central to the promotion of neoliberalism. Moreover, the current trade war between the United States and China has also raised claims of a return to mercantilism and patterns of national capitalist development more broadly. Yet, unwinding global value chains and undoing the market-​interfacing infrastructure of four decades of neoliberalism is no mean feat given the power and interests of transnational Northern capital and the states that support it. Perennial threats of capital flight within a globalized world instil fear in both governments and workers alike. Making matters even more challenging are the splitting of interests between labour in the North and South and the rise of phenomena such as the gig economy and casualization. In the short term, one could easily envisage an even more aggressive combining of Northern protectionism for the powerful with aggressive neoliberalism for the most vulnerable within and without. This said, the well-​documented failures

Neoliberalism, Globalization, and Late Capitalism     149 of neoliberalism over four decades and the vast challenges and crises of late capitalism would suggest that change of a revolutionary nature is required if we are to avoid settling upon accommodating capital, and a further descent into barbarism, as the only ‘rational’ way forward.

Notes 1. See, for example, Dieter Plehwe and Philip Mirowski’s contributions to an important volume on neoliberalism (Mirowski 2009; Plehwe 2009). 2. Ideationally, the early roots of neoliberalism are frequently traced back to several key figures on both sides of the Atlantic, including Ludwig von Mises, Friedrich Hayek, and Milton Friedman, and references are commonly made to the ‘Ordoliberal’ tradition, and the Austrian and Chicago schools of economics. The German Ordoliberal tradition—​ prominent during the interwar period—​emphasized a sort of ‘humanist form of market economics’ grounded in a strong legal and social order, viewing markets not as ‘spontaneously arising’ (an important component of the Austrian school associated with Ludwig von Mises and Hayek) but rather in need of creation and institutionalization by the state. The Chicago School, which ‘endowed the market with vigorously autonomous capacities’ was more avowedly anti-​state and laissez-​faire. All of these positions are crucial kernels for neoliberalism’s ideological emergence, with the MPS and figures such as Hayek playing important roles in binding the traditions (Peck 2010, 17). 3. As Slobodian (2018, 14) notes: ‘In fact, neoliberals were key articulators of what Jan-​Werner Müller calls ‘constrained democracy’. The tension was always between advocating democracy for peaceful change and condemning its capacity to upend order.’ He continues: ‘The need to defend the world economy led some neoliberals to seemingly illiberal bedfellows. The case of Augusto Pinochet’s Chile is notorious; the neoliberal relationship to apartheid in South Africa is less well studied (22).’ 4. Jessop states: ‘The specific content and overall weight of these three desiderata vary, as do the motives of those who promote them. In addition, its overall economic, juridico-​political, and sociocultural significance differs by spatiotemporal context and changes in the balance of forces, and the unfolding of its multiple effects over different periods (Jessop 2012, 1)’. 5. This is not to say that there is no contestation within these states over precise policy forms and their application. However, as is made clear in the next section, there is a clear association between the world’s leading states and the increased promotion of neoliberal policies over time. One only needs to look at the economic policies advocated internationally by the United States or Europe, or the multilateral organizations in which these countries hold significant sway: the World Bank, the IMF, the regional development banks, agencies within the UN system, and the Organization for Economic Co-​operation and Development (see for example Cammack 2017a, 2017b, 2019; Carroll 2010; Jarvis 2017). 6. This draws upon earlier conceptions developed by the author and colleagues. See, for example, Carroll, Gonzalez-​Vicente, and Jarvis (2019). 7. The US Treasury has long been a key defender of the IFIs as crucial elements in defending US interests, and many members of US Treasury have taken up senior positions in the IFIs. One particularly revealing case of Treasury defending the IFIs was evident in its response to the far-​ranging demands of the Report of the International Financial Institution Advisory

150   Toby Carroll Commission (also known as the Meltzer Commission Report): ‘The IFIs are among the most effective and cost-​efficient means available to advance U.S. policy priorities worldwide. Since their inception, they have been central to addressing the major economic and development challenges of our time. They have promoted growth, stability, open markets and democratic institutions, resulting in more exports and jobs in the United States, while advancing our fundamental values throughout the world’ (US Department of the Treasury n.d.).

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152   Toby Carroll Toye, J. 1987. Dilemmas of Development. Oxford: Basil Blackwell Ltd. US Department of the Treasury. n.d.) ‘Response to the Report of the International Financial Institution Advisory Commission’. Washington, DC: US Department of the Treasury. Wacziarg, R., and H. Welch. 2008. ‘Trade Liberalization and Growth: New Evidence’. World Bank Economic Review 22, no. 2: 187–​231. Williamson, J. 1990. ‘What Washington Means by Policy Reform’. In Latin American Adjustment: How Much Has Happened?, edited by J. Williamson, 5–​20. Washington: Institute for International Economics. World Bank. 1990. World Development Report 1990: Poverty. New York: Oxford University Press. World Bank. 2015a. ‘Privatization’. http://​web.worldb​ank.org/​WBS​ITE/​EXTER​NAL/​TOP​ ICS/​EXT​FINA​NCIA​LSEC​TOR/​0,,con​tent​MDK:22936​580~men​uPK:7994​350~pag​ePK:210​ 058~piPK:210​062~theSit​ePK:282​885,00.html. World Bank. 2015b. World Development Report 2015: Mind, Society and Behavior. Washington DC: World Bank. World Bank. 2020. World Development Report 2020—​Trading for Development in the Age of Global Value Chains. Washington, DC: World Bank.

Chapter 9

Imperialism from t h e Eleventh Cent u ry to t h e T w ent y -​F irst C e nt u ry Amiya Kumar Bagchi

Introduction Everybody knows that capitalism is driven by greed, by the lure of profit. But greed in human beings was not born with capitalism. Callicles, in Plato’s Gorgias, (Strauss, 1963) expressed this perfectly when he said that in making decisions, he would consider only his own appetite and nobody else’s(Klosko 1984). A capitalist state is born when a class of persons, driven by the profit-​motive comes to control the state or the state is ruled in the interest of the capitalist class.(Marx 1867). We start from the commune-​based city states of Northern Italy, not only because that is where capitalist states began, with a ruling class which was driven by the need to make as much profit as possible, including via piracy and war, but also because that is where the pattern was set for the behaviour of European nation states from the sixteenth century on. First, colonies became coeval with capitalism, since when a capitalist city or state could subjugate the people of a foreign territory, the latter were deprived of their political rights and often also of civil rights: many of the conquered people became either serfs on their own land or were sold into slavery. Second, wars were frequent and violent, with no quarter given. Pisa fought against Genoa, Genoa fought against Venice, Milan fought against Florence. Third, they fought on the weakened and prostate body of the Byzantine Empire and carved out colonies and extorted extraterritorial privileges from it, just as the Portuguese, followed by the Dutch, the British, the French, the Germans, and the Americans, would extort extraterritorial privileges and carve out colonies in Indonesia (the Mataram Empire) (Boxer, 1973), the Safavid Empire in Persia, the Mughal Empire in India, and the

154   Amiya Kumar Bagchi Qing Empire in China. The Spaniards followed the Portuguese and took over all of the Western Hemisphere, from today’s California and Texas down to Cape Horn. European powers ‘opened up’ Africa and took over all of Africa except Abyssinia, which Mussolini would conquer in 1935. Fourth, in the Crusades launched from Christian Europe against Muslim-​ruled Palestine, which the city states joined, there were genocides on both sides (Hooper 2005; Fotheringham 1910; Lane 1973;McNeill 1974), and that tradition was continued by European settlers, especially in North America and Australia (Bagchi 2005). Fourth, a dependency between manufacturing states and agrarian states with a non-​capitalist social structure developed between the northern city states and southern Italy (Abulafia 1977; Astarita 1992). Fifth, during the period, the Italian city states became the dominant sea power in the Mediterranean, it was their naval prowess that kept land-​based powers at bay. Similarly, it was initially the naval prowess of the Spanish Netherlands that allowed it to defeat the Spaniards at sea, take over most of the Portuguese Empire in Asia, and then take on its enemies on land. Following them, the British also used their naval power to defeat first the Spaniards and then the French in the long second Hundred Years’ War, and emerge as the dominant power in Europe and globally. Piracy remained an accepted means of warfare in the sixteenth and seventeenth centuries, just as it had been in the emergence of Pisa, Genoa, and Venice as ferocious capitalist powers (Lane 1973, 23–​24).The only exception has been the United States, but in its case also, its navy played an important part in defeating the Germans during World War I and its navy and air force played the principal part in destroying the Japanese fleet of the Pacific. Finally, the city states also introduced the system of ‘protection’ against their own potential violence for which they exacted a price. This system was introduced by the Portuguese in the Indian Ocean trade, then the Dutch and the English followed it, first in maritime trade and then carried over to territorial rule, when they offered ‘protection’ to local chieftains, often at the price of a tribute and the cost of stationing an armed force in the chieftain’s territory. From almost the very beginning of their writings on political economy and history Marx and Engels had pinpointed the efflorescence of private property and capitalism in Italy. For example, they wrote: Civil law develops simultaneously with private property out of the disintegration of the natural community. . . . With modern peoples, where the feudal community was disintegrated by industry and trade, there began with the rise of private property and civil law a new phase, which was capable of further development. The very first town which carried on an extensive maritime trade in the Middle Ages, Amalfi, also developed maritime law. As soon as industry and trade developed private property further, first in Italy and later in other countries, the highly developed Roman civil law was immediately adopted again and raised, to authority. (Marx and Engels 1845–​ 1846/​1976,99–​100,see also 382–3)

Later scholars such as FernandBraudel (1984) followed their lead.

Imperialism from Eleventh to Twenty-First Century    155

Phase I The Italian city states began to empower merchants with private property rights over land, houses, equipment, and money as rulers of cities. With the subjugation of propertyless workers as wage labour, they more or less invented capitalist states. With the exception of Venice and, for a time, its rival Genoa, these states remained small in scale. But the Italian states invented practically all the basic institutions of capitalism, and the state played a critical role in that genesis. They invented family-​controlled and joint-​stock banks, the stock exchange, and institutions of public credit. They went on to institutionalize the private appropriation of knowledge and skills and their diffusion by issuing patents of temporary monopoly to inventors and persons who would import specialized skills into a state (Greif, 1994). The basic rationale for the continually warring city states was provided by the Florentine republican Niccolo Machiavelli (Pierpont, 2008) Colonialism of a formal kind began with Genoa and Venice. Genoa, a small, poor fishing village of 4,000 inhabitants, became independent from the Holy Roman Empire beginning around the eleventhcentury. The participation of the Genoese fleet in the Crusades enriched it enormously and allowed it to acquire colonies in the eastern Mediterranean andAnatolia (Greif 1988).One reason why the Italian city states could carve out colonies out of a languishing Byzantine Empire mainly because from 1050ce Norman knights under the leadership of Robert Guiscard, with their advanced technique of warfare began attacking the Byzantine Empire(McNeill 1974; Lane 1974). Soon the Byzantine emperor sought the help of Venice, which was nominally a vassal of the emperor. Venice was followed in rapid succession by Pisa and Genoa. In return for helping the Byzantine emperor, they were granted various trading privileges, privileged access and right of settlement in specified quarters in Constantinople, and even the possession of particular islands in the Aegean and the Mediterranean. But the sailors of the city states would neither give up piracy nor desist from pillaging each other’s quarters in Constantinople. Some of the islands became uninhabited because of frequent piracy. Punishment by the Byzantine emperor gave only temporary relief (Fotheringham 1910). The competition of the Pisans was eliminated when the Genoese burned the Pisan fleet in 1284. Genoa and Venice fought four full-​scale wars, which ended with the defeat of the Genoese fleet in the battle of Chioggia in 1380. As nemesis, the French bombarded the city of Genoa for three days and burned up its fleet in 1684 because Genoa sided with Spain in Franco-​Spanish War and Genoa competed with France in the salt trade. The Venetians had to retreat from the eastern Mediterranean when the Ottomans conquered Constantinople. Venice’s final moment of glory came in 1571, when its fleet joined the Holy League of Catholic Christian states against the Ottomans. It lived on as arepublic until Napoleon conquered it in 1797. The memory of the city states, especially of Venice, lived onin maritime law, statecraft (Venice kept ambassadors in all the courts of Europe, whose secret messages are still a valuable source

156   Amiya Kumar Bagchi of information for contemporary events (Braudel 1984), patents protecting innovations, and the use of economies of scale in ship manufacture in its Arsenal. The history of Italy was also a precursor of the dependence of primary producing countries on manufacturing countries. The Kingdom of the Two Italies became dependent on northern city states for all their manufactures, including textiles (Abulafia 1977): The basic reason was that the feudalism that the Norman conquerors imposed on southern Italy in the late eleventh century constrained capitalist development and inhibited foreign direct investment (FDI) (Astarita 1992; Calabria 2000), just as landlordism in the former colonial countries of Latin America, Africa, and Asia constrained capitalist development and FDI in the nineteenth and twentieth centuries.

Phases II and III Phases II and III had most features of capitalist imperialism in common. England and Spain were sparring with each other for domination of Europe throughout the sixteenth and seventeenth centuries. England was able to defeat the Spaniards on the seas most of the time, capturing Spanish treasure-​laden galleons, burning the port of Seville, and in 1656 capturing Jamaica from Spain—​the island became its most valuable possession in the Caribbean (Long 1774; Sheridan 1965).In 1696 France acquired from Spain a third of the island of Hispaniola, known as St. Domingue,which became the richest sugar-​producing island in the Caribbean. After the French Revolution, it was liberated first under the leadership of Toussaint L’Ouverture in 1791, with the encouragement of revolutionaries, and it was the first country to abolish slavery. Then Napoleon re-​ introduced slavery, and sent an army to defeat the revolutionaries. The army captured Toussaint and took him to France, where he died in captivity. But the insurrection could not be put down, and in 1804 one of Toussaint’s lieutenants declared Haiti’s independence, the first non-​white country to be liberated (James 1962). Transatlantic trade in African slaves and their use in sugar and tobacco plantations played an important role in the primary accumulation of capitalist imperialist states, especially, of Britain, France, the Netherlands, and the United States. According to Eltis (2001), the total number of African slaves shipped across the Atlantic was 11.6 million. Of the total Portugal (which did not become fully capitalist but had pioneered the slave trade) accounted for 5.8 million, Britain for 3.3 million, France for 1.4 million, and the Netherlands for 550,000.Slaveryyielded profits not only to the traders or the owners of slave-​run plantations or mines but also to the metropolitan country in the form of earnings from shipping, ship-​building, insurance, and bank credit (Long 1774). The ideology of chattel slavery derived from the Aristotelian doctrine that there were slaves by nature and from the Roman laws of property under which a slave was the private property of the master just like land and movables. The Christian Empire upheld the Roman doctrine and it became embedded in Christianity. The justification was strengthened in the beginning of the transatlantic slave trade and the genocide in the

Imperialism from Eleventh to Twenty-First Century    157 Americas by claiming that only industrious people deserved to be free and, by definition, primitive peoples were not industrious (Blackburn1997, 34–​41, 264). The seventeenth century is primarily a story of rise and gradual decline of the Netherlands. After winning several navalbattles with Spain, the Spanish Netherlandsdeclared independence in 1580. Spanish managed to win backthe southern part of the Netherlands—​today’s Belgium—​but not the northern, mainly Protestant, Netherlands. The Netherlands then engaged in a prolonged, eighty years’ war with Spain, and became part of the Thirty Years’War, whichbegan in 1648 andwas fought mainly in central Europe but involved all the major powers of western Europe. The war ended with the Treaty of Westphalia, when the independence of the Netherlands was internationallyrecognized. Between 1580 and 1640, the Spanish king was also the king of Portugal. So the Netherlands began a systematic assault on the Portuguese colonies overseas. It managed to carve out a fragment of thenorthern part of the Portuguese colony of Brazil, which became the Dutch colony of Surinam. But its most valuable acquisition was Indonesia. It first took over the spice trade and then became the suzerain of the Indonesian archipelago by usinga combination of treatieswith local chieftains and wars against recalcitrant local rulers. The instrument of its predation was the Dutch East India Company (VOC). Its ruthlessness in dealing with the subject population became legendary. The Company’s servants would burn up a whole island and enslave the whole population if the latter refused to deliverthe spices (because they were the most valuable commodity)at rock-​bottom prices (Van Zanden 1993; Bagchi 1982, ch.4,[2005] 2006, ch.6). In the 1790s, the Netherlands became a colony of the French. When Indonesia was returned to the Dutch after 1815, they introduced the so-​called cultivation system, under which every Javanese village had to set aside a third of its land for sugarcane tobe delivered to the state at fixed prices. Since sugar-​cane was a long-​duration crop, it really meant that a Javanese peasant had to set aside two-​thirds of its land for cane cultivation. But the system yielded rich dividends to the Dutch. Using Angus Maddison’s estimate of colonial Indonesia and Alec Gordon’s estimate of the surplus extracted by the Netherlands from Indonesia, I found that the surplus amounted to more than 100% of Indonesia’s income, and helped finance the industrialization of the Netherlands (Bagchi 2019). ‘The annual surplus extracted from India and Burma by the British state and the European businessmen can be reasonably estimated as having been a minimum of £21.4 million in the 1870s and a maximum of £28.9 million in that decade and risen to a minimum of £52.9 million and a maximum of £65.3 million on the eve of World War I’ (Bagchi[2005] 2006, 241). The accumulated surplus extracted by Britain from India and Burma over 1871–​1916, compounded at 4% comes to minimum of £3,199 million and a maximum of £3,779. Taking the total British foreign investment in 1913–​1914 as £4,000 million, then the India-​Burma surplus came to between roughly 75% and 90% of that surplus. Be it also noted that most of the British foreign investment went to white overseas settlements such as the United States, Canada, and Australasia. Since from the second half the nineteenth century the wages of British workers began to rise because of workers’ struggles and government legislation in all major capitalist countries, while those in colonial

158   Amiya Kumar Bagchi countries stagnated or fell, it led to the creation of a labour aristocracy in advanced capitalist countries and a permanent divide in living conditions of the workers of advanced capitalist countries and developing countries (Cope 2012). Since the growing population in developing countries could not be absorbed either in the agricultural sector or in manufacturing, it also led to the creation of a permanent reserve army of labour which was used strategically by governments of advanced capitalist countries to coerce the domestic workers by opening or closing the valve of immigration. From the late seventeenth century to 1815, Britain was involved in a second Hundred Years’ War with France which ended with Wellington’s victory over Napoleon in the battle of Waterloo. France lost its North American possessions and ceased to challenge Britain in India. Britain became the dominant power in Europe and globally, soon adding the whole of India to its list of colonies, and India became the richest colony any power had ever possessed. (On the agrarian crisis and revolts that led to the fall of the Mughal Empire which the British took over, see Habib 1999; Bayly 1989; Bagchi [2005] 2006, ch.4). With a much smaller population and national income, Britain was able to defeat France because of its naval prowess and because it could tap the wealth of its wealthy men because of a much better public credit system than France (O’Brien 1988). As a device of sketching the patterns of European and US aggression against the Turkic, Arab, and Iranian peoples and usurpation of their resources, we may distinguish several major epochs of such aggression and usurpation. They are the invasion of Egypt by the French navy and army under Napoleon Bonaparte in 1798;the invasion of Algeria by the French in 1830;the signing of the Anglo-​Ottoman treaty of free trade in 1838;the acquisition of effective control of Egypt by the French and the British between the 1870s and 1880s, and afterwards solely by the British;the involvement of the Ottoman government in World War I siding with the Germans and the Austro-​Hungarian Empire;the start of an Arab revolt against the Ottomans, with the encouragement of the British and the French, in 1916;the Balfour Declaration of 1917 promising the creation of a homeland in Palestine for the Jews;the break-​up of the Ottoman Empire as a result of its defeat in World War I;the handing over of the Arab lands east of Suez and in the Levant under a League of Nations Mandate in 1922;the occupation of parts of Iran by the Allied forces during World War II;the start of the Cold War between the US and Soviet camps after World War II;and the more intense involvement and continuous intervention in the affairs of the Arab peoples by the United Statesand Allies from then on (Hourani 1991, 1994), With their help, Israel in 1948, which has served as a military watch-​tower over the Arab peoples ever since, engaged in a ruthless ethnic cleansing of the native Palestinians (Pappé 2007). With post-​war reonstruction in Europe and Japan and the use of American aid and technology, there was aboom –​the so-​called Golden Age of Capitalism –​in the advanced capitalist countries that lasted till about 1971 (Marglin and Schor 1990). Unlimited aggression against the people of the oil-​rich lands not yet under US and European domination, began with the war on terror serving as the war cry after the attack on the World Trade Centre on 11 September 2001 [Lando 2007]). The two Gulf Wars against Iraq and the war against Afghanistan were also meant to secure a regime change in those countries, by using what Klein (2007) called the shock doctrine (see

Imperialism from Eleventh to Twenty-First Century    159 also Steimetz 2005) After 9/​11, the United States declared war on Afghanistan, and with Afghan resistance maintained an army. There and killed at least 22,000 civilians by dropping bombs (Wright 2017; Beaumont 2021). Ultimately, after spending 2 trillion dollars over a twenty-​year ceaseless war (Borger 2021), the United States had to leave Afghanistan in August 2021, suffering an ignominious defeat at the hands of the Taliban, a monster that the United States had created for dragging the Soviet Union in a Vietnam war-​like quagmire.

Phases IV and V In these two phases the officially accepted canon is free trade internally and externally and laissez-​faire, with a minimalist state, saying good-​bye to the interventionist policies characteristic of the behaviour of capitalist states between the sixteenth centuries. Under the free trade polcy pursued by Britain in the 1840s, the great famine of Ireland occurred and the island lost a million of its population (Woodham-​Smith 1962)But paradoxically, it is only the states which defied the official canon preached by British and French political economists such as David Hume, Adam Smith, David Ricardo, and J.-​B. Say that managed to join the rich nations’ club. Alexander Hamilton in his Report on Manufactures (1791) to the US Congress wanted the government to support their fledgling manufactures by giving them subsidies and protection against imports of manufactures(Hamilton 1791). The result was that by the time of the Crystal Palace Exhibition in London, in 1851, the Americans had innovated Whitney’s cotton gin and rifles and revolvers with interchangeable parts and by the end of the century was setting the pace in engineering innovations (Saul 1970). Continental western European countries also defied the official canon. Friedrich List in his National Systems of Political Economy(List [1841] 1909) had pointed out that while England preached free trade to everybody, it had followed state interventionist policies in its ascent to world economic leadership(Britain did not become a free-​trading countries until Prime Minister Sir Robert Peel abolished the Corn Laws in the 1840s). State intervention in England started with King Henry VII giving protection to English woollen textiles against Flemish competition, was followed up with patent laws under Elizabeth I and James I, and ending up with the Navigation Laws from the 1650s. By providing state assistance against imports of manufacture and agriculture—​in Germany’s case—​whereas the GDPs per capita for the United Kingdom, France, and Germany in 1820(in 1990 international US dollars) were 1,756, 1,218, and 1,112, respectively, by 1913, the respective figures were 5,032, 3,452, and 3,833, so that the gap had been considerably narrowed, and by 1973, both France and Germany were richer than the United Kingdom(Maddison 1995, Tables 1B-​1 10(a);Table C(8). But the non-​white colonial countries or the ex-​colonial countries of Latin America. Could not follow the lead of the advanced capitalist countries.Free trade was directly imposed on colonial countries by the rulers and on China by the European powers.

160   Amiya Kumar Bagchi The price of British, ergo, international recognition of the newly independent Latin American states was the acceptance of free trade. In 1750, India accounted for almost a quarter of the manufactures—​products of handicraft industries—​and China for another third of the manufactures—​products of handicraft industries—​of the world.On the basis of Colebrooke (1804) data, I had estimated the per capita gross domestic material product (GDMP) of the per capita GDMP of Bengal and Bihar as Rs. 47.4 in 1794 in 1900 prices; using similar methods I calculated the per capita GDMP of British India as Rs. 33.2, at the same prices. On the basis of the national income and population data of Sivasubramonian (2000), per capita income India comes to R.s 33.7 (Bagchi 2010).So there was an actual decline in India’s per capita income over a century of British rule. The situation of China over the period 1850–​1949(the year of the Communist Revolution) must have been much worse because it witnessed two Opium Wars, the hugely destructive Taiping Revolt, Japanese assault that led to the loss of Formosa, foreign aggression to quell the Boxer rebellion, the period of warring landlords, full-​scale Japanese aggression from 1931, culminating in the civil war from 1945 to 1949. With the Ottoman Empire visibly declining, after the defeat of the Ottomans in the Russo-​Turkish war of 1877–​1878, a Congress of the European Great Powers, including Ottoman Turkey, was convened in Berlin, with Bismarck, the Reich Chancellor, playing host. By the Treaty of Berlin, Romania, Montenegro, and Serbia were created as independent principalities by detaching them from the Ottoman Empire, and the process was started of creating a new nationstate of Bulgaria, taking it out of the Ottoman Empire.This settlement resolvedlittle of which power was to get what share of the global resources, markets, and fields of investment. Most of Asia, including India and China, had already been subjugated, the coastal areas of West, South, and East Africa were already in the possession of one European power or another, and they were now competing for the acquisition of all the interior of Africa. One of the claimants of the huge territory of the Congo was King Leopold II of Belgium, who used Henry Morton Stanley to explore and stake out a claim for the king. In 1884, at the Berlin conference of the major European powers, again hosted by Bismarck, Leopold’s claim was recognized and thewhole of Africa was divided into spheres of control among the European powers. (Leopold had already managed, through his agents, to secure US recognition of his claim; Hochschild 1999, ch.3–​5). ‘The scramble for Africa’ received its official sanction (Arendt, 1951) in the Berlin Congress of 1884.

The Civilizing Ideology of European (and US) Imperialism and Its Real Nature The civilizing mission of the imperialists always had a racist underside: non-​white (and in the Japanese case, non-​Japanese) peoples were by definition uncivilized, and trying

Imperialism from Eleventh to Twenty-First Century    161 to impose civilization on them took forms of torture and genocide. ‘Entire peoples were dehumanized in the name of race, their labour was forcibly extracted, and hundreds of thousands were exterminated or uprooted when they proved obstreperous or when their removal was necessary for allowing the European settlers to grab their land’. As Frantz Fanon emphasized, settler colonialism was based on the naked use of violence as a systemic feature (Fanon[1967] 1961). Césaire’s Discourse on Colonialism ([1965] 1972) argues, ‘a civilization which justifies colonization—​and therefore force—​is already a sick civilization, a civilization which is morally diseased, which irresistibly, progressing from one consequence to another, one denial to another, calls for its Hitler’. The first person, however, to connect European colonialism with genocide and the Holocaust was Arendt (1951). In respect of sheer savagery and cruelty, the so-​called Free State of Congo under the rule of King Leopold of Belgium and management of the American explorer Henry Stanley has few parallels. The native Africans were tortured, starved, jailed, and wantonly killed in order to make them deliver natural rubber to Stanley and his equally brutal managers without any payment (Hochschild 1999, ­chapter 9). From 1884 to 1908, when some of the worst abuses were stopped because of international outcry, it led to the death of 10 million Congolese, the largest genocide in history.This barbarity was matched by German genocide in Southwest Africa (today’s Namibia). German genocide of the Hereros and Namas (under the explicit extermination campaign of General Lothar von Trotha, ultimately 40,000–​70,000 Herero died; only 15,000–​20,000 survived the war and subsequent genocide. By 1908 the German Armyhad killed approximately half of the 12,000 to 15,000 Nama.This genocide provided the template for the Nazi concentration camps, the death camps, the legal system prohibiting miscegenation of the Teutonic races with ‘subhuman’ races, and even the colour of uniforms of Hitler’s Brown Shirts. Moreover, army officer Ritter von Epp and anthropologist Eugen Fischer played major roles both in the Namibian genocide and its justification in Nazi Germany. From 1885 to 1891, Hermann Göring’s father, Heinrich, served as the first Reichskommissar for German South West Africa (Madley, 2017). In the twentieth century, Latin America became a backyard domain ofthe United States. It removed mostly democratically elected rulers who displayed the slightest signs of interfering with private property rights to benefit ordinary people—​such as carrying out land reforms ornationalizing the most profitable mineral companies controlled by the local elite or foreign companies. Guatemala’s President Gutavo Arbenz was removed in a military coup (Cullather 1999).In Chile the United Statesaided and abetted the opponents of Salvador Allende, the socialist candidate, before his election, continued to do so after his election, and supported General Pinochet when he overthrew and murdered Allende in a bloody coup (Office of the Historian, US Government, 2011). The School of the Americas run by the Pentagon for training military cadets of Latin America became effectively a school for the dictators of Latin America who were all responsible for human rights violations, including the notorious ‘disappeared’ in Argentina (Crenzel 2011). From Videla and Galtieri of Argentina to Hugo Banzer of

162   Amiya Kumar Bagchi Bolivia to Melgar of Honduras, the roll call of the graduates of the School look like a roll call of blood-​thirsty graduates of the School (Grimmett and Sullivan c.1999; Lears, 2019; Wikipedia, ‘Leopoldo Galtieri’). With China coming up as the principal challenger of US hegemony, the US government has found ways of removing democratically elected governments to deny China access to critical materials. For example, Evo Morales, president of Bolivia was overthrown because Bolivia was planning to export its large reserves of lithium to China.Lithium is a critical material in the new electro-​chemical technology (Koenig, 2019).

Theories of Imperialism The only theories worth considering are left-​liberal theories of J.A. Hobson, Achille Loria, Leonard Woolf, and Marxist theories of Rudolf Hilferding (1910), Rosa Luxemburg, NicholaiBukharin, and Vladimir Lenin (1916). By the beginning of the twentieth century, several were elaborating theories of imperialism, which they regarded as a new phase of human history. The factors behind interimperialist conflicts and wars included contests over markets, supplies of raw materials, drives to invest the surplus extracted from domestic or foreign operations in profitable channels, the rapidly increasing concentration of economic power in the hands of big corporations with their attendant designs to limit competition as much as possible, and finally the determination of old imperialist powers such as Britain, France, and the Austro-​Hungarian empire to retain their foreign possessions, and new imperialist powers such as tsarist Russia, Germany, and Japan, to get a bigger share of the European dependencies. Hilferding’s contribution was to show that there had come about a marriage of finance and capital, which has become prophetic in the age of financialized capitalism. Luxemburg’s contribution was to show how capitalism destroys ‘natural’, meaning non-​market, economies to create markets and how capitalism promotes military expenditure not only for purposes of conquest or defence of existing possessions but also to fill up the gap left by underconsumption. Lenin’s contribution to show that at the latest (‘highest’ is a mistranslation) the drive was to re-​divide among imperialist powers an already divided world and couple the demand for end of foreign rule with the demand for self-​determination of nations (Bagchi 1983). Patnaik and Patnaik (2016) added two planks to the theory of how capitalist imperialism is sustained. One is the fallacious Ricardian theory of comparative advantage, which was used to justifyforcing the colonial and ex-​colonial countries to specialize in the production of primary products.The other is the way in which the developing countries were forced to generate a surplus by exploitationas colonies and then, after they gained political independence, were manipulated into indebtedness to the advanced capitalist countries or financial organizations controlled by them and forcedto go through a painful process of income deflation to supportthe loan servicing charges.

Imperialism from Eleventh to Twenty-First Century    163

The Latest Stage of Capitalist Imperialism The latest stage of capitalist imperialism is characterized by neoliberalism, financialization, ecological Armageddon, and authoritarianism. The free trade doctrine of David Hume and Adam Smith laid the foundation of the economic ideology of today’s neoliberal imperialism. Josiah Tucker formulated the logic of domination of poorer countries by richer under conditions of free trade.Tucker argued, ‘operose or complicated manufactures are cheapest in richcountries; and raw materials in poor ones. And, therefore, inproportion as any commodity approaches to one, or other ofthese extremes, in that proportion will it be found to be cheaper,or dearer, in a rich or a poor country’(Tucker 1774, 36).It is also a theory of why under free trade conditions, a poorer, laggard country can never catch up with a richer country, unless there is strategic state intervention by the state, as argued by Hamilton (1791) and List([1841] 1909). Tucker also anticipated the argument of Gallagher and Robinson (1953) that by imposing free trade on other countries, the imperialist countries can maintain their dominance.The launching pad of the new, more aggressive form of neoliberalism, regardedany interference of the government in the market as evil per se.It wanted unlimited competition, even if that competition led to monopoly, with many characteristics of feudalism (Bagchi 2014a). When in 1945, Friedrich Hayek was on a lecture tour with his bookRoad to Serfdom, the anti–​New Deal president of the Volker Fund bankrolled him to produce adocument setting out the conditions of effective competition.ThusChicago-​style neoliberalism was born, with Aaron Director, George Stigler, and Milton Friedman (Nik-​Khali and Van Horn 2012). The latter led the mission to demolish the influence of Keynesianism on macroeconomic policy, and soon the neoclassical synthesis produced by Paul Samuelson was replaced by neoliberal economics, whose final avatar was rational choice economics—​dubbed ‘the macroeconomics of Dr. Pangloss’ (Buiter 1980). The neoliberal regime also developed a market for firms (Manne, 1965) and through markets and acquisitions gave birth to corporations of gigantic size. Financialization and the ability of big corporations to use the inefficiency of stock markets to aggrandize has led to further increases in the concentration of economic power (Shleifer 2000) Capital has become increasingly financialized, shifting the focus from productive investment to finance as the driver of accumulation. The heroic entrepreneur, whose genius inspires mass assemblies, yields to the arbitrager and hedge fund managers who stealthily stalk opportunity. The model of agency and social life by which small investments of capacity can be leveraged to substantial and increasingly volatile effects, whether this entails deployments of special forces, infrastructure repair, hedge fund investments, or political action termed terrorist, points to the efficacy of the derivative across seemingly disconnected practical domains. (Martin 2009, 108)

164   Amiya Kumar Bagchi The reign of neoliberalism totally fragmented society and depoliticized ordinary people. The US government then set about to mould the belief systems of the people of the countries to which it had access during the Cold War. One instrument was the Congress for Cultural Freedom, a principal instrument of which was the magazine Encounter.Anti-​communist journalists like Malcolm Muggeridge, philosophers like Isaiah Berlin, writers like Arthur Koestler, and Ignazio Silone, an ex-​fascist writer, embraced the cause enthusiastically (Saunders 1995, 1999). The CIA sponsored similar magazines in India and Latin America (Whitney 2017). The IMF was a major guiding spirit of neoliberalism. For instance,under its influence and the policies pursued by its poster-​boy Domingo Cavallo, Finance Minister of Argentina during the presidency of Carlos Menem, Argentina became a basket case by 2002 (Weisbrot and Baker 2002) Capitalist imperialist countries always preferred to deal with authoritarian countriesrather than democratic ones, because they had a single point of reference, the head of the state, rather than a fractious population. This is why the United Statesimposed military dictatorships on Latin America; this is whyin Indonesia it supported General Suharto, who carried out a genocide of a million Indonesians. Neoliberalism and authoritarianism were made for each other. Successful neoliberalism converts citizens into consumers and destroys a sense of community or collectivity. If in a neoliberal regime, the leader can point to an identifiable enemy such as the immigrants, he/​she can convert a democratic regime into an authoritarian one, as President Andrzej Duda of Poland and President Victor Orban of Hungary have done and as Donald Trump tried to do in the United Statesand Narendra Modi in India. As in any ruling regime, capitalism has also tried to inculcate a belief system supporting its rule through nurture and education and through what Althusser called ‘ideological state apparatuses’, such as religion,family laws, and so on. But capitalism is also a regime of propaganda with the objective of what Herman and Chomsky (2002) called ‘manufacturing consent’. This was blatantly displayed when the United Statesand its NATO allies attacked Iraq in 2003, alleging that it possessed ‘weapons of mass destruction’.Although El Baradei, the director general of the International Atomic Energy Authority sent on a mission of inspection, found no such weapons (UN 2003), all the world media continued proclaim this falsehood. Modern industrial capitalism is built on the unlimited exploitation of fossil fuels, mainly coal and oil. Such use leads to the emission of greenhouse gases and leads to increases in temperature on the earth’s surface, a phenomenon that has been dubbed ‘climate change’ (Nordli-​Mathisen c.2019). This in turn causes rises in ocean temperature and its level;thusthe Arctic becomes navigable, Greenland and Antarctica lose their icebergs, Himalayan and Alpine glaciers melt, many islands in the Pacific are submerged, and more frequent and more destructive floods, hurricanes, and tsunamis occur. But most governments, especially the United States, the biggest generator of greenhouse gases, have refused to take any effective action because capitalists want to exploitall the oceans for oil and other valuable minerals and fract sand tar and peat to produce the most polluting shale oil (Bagchi

Imperialism from Eleventh to Twenty-First Century    165 2014b). Despite pious resolutions about limiting the emission of greenhouse gases and minimizing the damage caused by climate change, it is the pressure of profit-​hungry corporations that has caused inaction on the part of advanced capitalist nations (Bagchi 2014b). Finally, I invoke the seminal figure of Rabindranath Tagore for two reasons. First, to correct the impression that Western capitalism has only exploited the colonial countries giving nothing in return: The wriggling tentacles of a cold-​blooded utilitarianism, with which the West has grasped all the easily yielding succulent portions of the East, are causing pain and indignation throughout the Eastern countries. The West comes to us, not with the imagination and sympathy that create and unite, but with a shock of passion—​passion for power and wealth. This passion is a mere force, which has in it the principle of separation,of conflict. . . . Western humanity has received its mission to be the teacher of the world; that her science, through the mastery of laws of nature, is to liberate human souls from the dark dungeon of matter.’ (Tagore 1922)

The second reason I invoke Tagore is that in many of his major writings—​essays and plays—​Tagore has stressed the need for human beings to live in symbiosis with nature rather than trying all the time to master it (see, for example, Tagore 1931).

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166   Amiya Kumar Bagchi Bayly, C.A. 1989.The Imperial Meridian: The British Empire and the World 1780–​1930.London: Longman. Beaumont, Peter. 2021. US airstrikes killed at least 22,000 civilians since 9/​11, analysis finds, The Guardian 7 September. Blackburn, Robin. 1997. New World Slavery: From the Baroque to the Modern 1492–​ 1800.London: Verso. Borger, Julian. 2021. After 20 years and $2tn spent on Afghanistan, what was it all for? The Guardian, 17August. Boxer, C.R.1973a. The Portuguese Seaborne Empire,1415–​1825. Harmondsworth, Middlesex: Penguin. Boxer, C.R.1973b. The Dutch Seaborne Empire,1600–​ 1800.Harmondsworth, Middlesex: Penguin. Braudel,Fernand. 1984. Civilization and Capitalism, 15th–​18th Century, Volume III: Perspective of the World.Translated from the French by Siân Reynolds. London: Collins. Buiter, Willem H.1980. ‘The Macroeconomics of DR Pangloss: A Critical Survey of the New Classical Macroeconomics’.,The Economic Journal90: 34–​50. Calabria, Antonio.2000. ‘What Happened to Tuscan Capital Investment in Sixteenth-​Century Naples? An Unsolved Problem in the History of Early Capitalism’. Essays in Economic and Business History, 1-​16 Césaire,Aimé. [1955] 1972.Discourse on Colonialism. Translated from the French by Joan Pinkham.New York: Monthly Review Press. Colebrooke, H. T. 1804. Remarks on theHusbandry and Internal Commerce of Bengal. Calcutta. Cope, Z. 2012. Divided World Divided Class: Global Political Economy and the Stratification of Labour under Capitalism. Montreal: Kersplebedeb. Crenzel, Emilio. 2011. ‘Between the Voices of the State and Human Rights Movement: Never Again and the Voices of the Disappeared in Argentina’. Journal of Social History 44, no. 4:1063–​1076. Cullather, N.1999. Secret History: The CIA’s Classified Account of Its Operations in Guatemala, 1952–​1954. Stanford: Stanford University Press. Eltis, David. 2001. The Volume and Structure of the Transatlantic Slave Trade: A Reassessment’. William and Mary Quarterly 58, no. 1: 17–​46. Fanon, Frantz. [1961] 1967.The Wretched of the Earth.Translated from the French by C. Farrington. Harmondsworth:Penguin. Faroqhi, Suraiya, Bruce McGowan, Donald Quataert, and Şevket Pamuk. 1994. An Economic and Social History of the Ottoman Empire, Vol. 2:1600–​ 1914. Cambridge: Cambridge University Press. Gallagher, John and Ronald Robinson. 1953. The imperialism of free trade, The Economic History Review, 6(1) 1-​15 Fotheringham, R.K. 1910. ‘Genoa and the Fourth Crusade’. English Historical Review 25:26–​5 7. Greif, Avner. 1994. ‘On the Political Foundations of the Late Medieval Commercial Revolution: Genoa during the Twelfth and Thirteenth Centuries’. Journal of Economic History 54, no. 2:271–​287. Grimmett, Richard F., and Mark P. Sullivan. c.1999. ‘The United States Army School of the Americas: Background and Congressional Concerns’(brief for the US Congress).

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Imperialism from Eleventh to Twenty-First Century    169 Weisbrot, Mark, and Dean Baker. 2002. ‘When “Good Parents” Go Bad: The IMF in Argentina, a Reply to Nancy Birdsall’s “What Went Wrong in Argentina? Washington D.C.: Center for Economic and Policy Research. Whitney, Joel. 2017. ‘How the CIA Sponsored Indian Magazines that Engaged the Country’s Best Writers’. The Wire, 15 March. Woodham-​Smith, Cecil. 1962.The Great Hunger Ireland 1845–​1849.New York: Harper & Row. Wright,Robin. 2017. ‘Trump Drops Mother of All Bombs on Afghanistan’.New Yorker, 14 April.

Chapter 10

Sl avery, Capi ta l i sm, and Im peria l i sm Sébastien Rioux

Introduction Very simply put, there are two broad scholarly traditions on the relationship between slavery, capitalism, and imperialism. According to the first tradition, there is no logical connection between these terms, a position that is closely associated with three main ideas developed by Adam Smith. Rooted in his critique of mercantile capitalism, Smith’s first axiom relates to the primacy given to home production. Smith’s inward-​looking, productionist stance is clearly exposed in the concluding pages of The Wealth of Nations, where he argues that the British Empire was ‘mere loss instead of profit’. By integrating British manufactures into distant markets, the effect of monopoly on colonial trade ‘has consequently been to turn a part of the capital of Great Britain from an employment in which it would have maintained a greater quantity of manufacturing industry to one in which it maintains a much smaller, and thereby to diminish, instead of increasing, the whole quantity of manufacturing industry maintained in Great Britain.’1 According to Smith, the profits accruing to merchants, planters, slave traders, and all those benefitting from monopoly trade were in fact subsidized by the British government, not only because import duties did not cover the administrative costs, military expenses, and naval charges necessary to the maintenance of the empire, but also because they constituted a drain that redirected vast sums of capital away from productive industries at home and towards the debt-​driven structure of the (sugar) colonies. Far from financing the Industrial Revolution, slavery and the slave trade were misallocation of resources that may in fact have delayed industrialization.2 The second axiom is based on the conceptual separation between capitalism and slavery. For Smith, slavery represented an economically inefficient and backward form of labour organization that was antithetical to a modern capitalist economy characterized by free labour, economic progress, and technological innovations.3 This argument logically implies that slaves, however productive they may have been, did not

172   Sébastien Rioux contribute to the wealth of nations. Ironically, one of the most important streams of neo-​ Smithian scholarship in this regard comes from the Marxist tradition. Having reduced the concept of the mode of production to social relations of production (or forms of surplus extraction), this tradition embraces an impoverished historical geography of capitalism hinging on the presence or absence of free wage-​labour.4 Although she clings to a formal conception that reduces capitalism to the commodification of labour-​power, Rosa Luxemburg’s view that imperialism is essential for the integration of non-​capitalist spaces to secure raw materials, cheap labour, investment opportunities, and new markets for manufactured goods remains one of the most sophisticated in this tradition.5 Implicit in the second axiom is a third one, namely that by virtue of not belonging to capitalism, slavery cannot be abolished by the progressive forces of economic modernity. Indeed, although he hoped that slave-​owners would come to realize that it was in their economic interest to abolish slavery, Smith was rather pessimistic about society’s ability to eradicate slavery, which ‘proceeds from that tyrannic disposition which may almost be said to be natural to mankind’.6 In this regard, contemporary moral and political explanations for the abolition of the slave trade and slave emancipation, within which the moral crusade initiated by British abolitionists tends to figure prominently, perpetuate a long tradition of Eurocentric thought by which agency is almost entirely denied to those who, for almost 400 years, resisted and struggled against their enslavement.7 All in all, the main outcome of these three different ideas is the sanitization of the history of capitalism; the abstraction of violence and the violence of abstraction are here one and the same. A much more radical second tradition is rooted in the works of Karl Marx.8 To be sure, the recognition of the close relationship between slavery, capitalism, and imperialism precedes both Smith and Marx. There was indeed no shortage of capitalist imperialists and pro-​slavery authors such as William Wood and Malachy Postlethwayt who recognized that British economic growth was closely linked to slavery and the slave trade.9 The view that British mercantilism acted as a political hothouse for economic growth and development was quite common at the time. Indeed, the idea that industrial capitalism would not have developed without the vast expansion of wealth and trade stemming from commercial capitalism was still dominant in the nineteenth century. Like Wakefield, Merivale, and Cairnes, Marx recognized this relationship: ‘Today, industrial supremacy brings with it commercial supremacy. In the period of manufacture it is the reverse: commercial supremacy produces industrial predominance. Hence the preponderant role played by the colonial system at that time.’10 Within this tradition, Eric Williams’s Capitalism and Slavery remains, even more than seventy-​five years after its publication, one of the most important contributions to Caribbean and Atlantic history, challenging as it did all three axioms of the Smithian framework.11 First, Williams argued that the capital generated by slavery and the slave trade financed the Industrial Revolution. Second, he rejected the separation between capitalism and slavery for commercial capitalism, while maintaining that it was the greater productive power of industrial capitalism that ultimately destroyed commercial capitalism, monopoly, and slavery. Finally and consequently, Williams explained the destruction of the slave system as

Slavery, Capitalism, and Imperialism     173 being the structural outcome of the development of productive forces. However, like Smith before him, Williams’s overly deterministic explanation failed to substantially recognize the role of slave resistance and agency. Although Williams’s contribution has had a lasting impact on postwar scholarship, there has been a growing body of work productively revisiting many of his insights since the 1990s. Building on this radical tradition and organized around a critique of the three main pillars of the (neo-​)Smithian framework, this chapter: (1) problematizes the close relationship between slavery and capital accumulation;12 (2) highlights the extent to which slavery was an early form of scientific management, thus explaining its compatibility with industrial capitalism;13 and (3) demonstrates that the destruction of the slave system was a deeply political—​rather than purely economic—​process based on the resistance and struggles of slaves.14 In choosing the bloody dialectics of factual history over the analytical security of formal theory, this chapter more largely seeks to recover the extent to which unfree labour is intrinsic to capitalist social relations. I briefly conclude by looking at contemporary forms of slavery, arguing that the ‘new’ imperialism of the 1880s, which consolidated in the postwar era under the imperial hegemony of the United States, has created a global financial, industrial, and political architecture conducive to a vast array of forms of unfree labour.

Slavery and Capital Accumulation Slavery and the slave trade fostered capital accumulation in two important ways. The first one is linked to the colossal profits that they generated, and how these profits were ploughed back into the domestic economy. Capital invested in the colonies yielded higher returns than investments in the home market. For instance, David Richardson calculated an average net profit of 17% during the third quarter of the eighteenth century for the accounts of sixty-​seven ventures in which William Davenport, one of the most important investors in the slave trade from Liverpool, participated.15 As Joseph E. Inikori has shown, the average net profit reached 22.8% for thirty-​three of those ventures when Davenport acted as managing director. Davenport was part of a small management elite whose knowledge of the trade allowed them to dominate slave-​ trading partnerships. Because of the War of American Independence and an extremely dynamic plantation system in Saint-​Domingue, the period of 1779–​1788 was particularly favourable to slave traders. Between 1779 and 1784, average profit per venture for eight of the ventures identified reached up to 51.6%, compared to 14.1% per venture for seventy-​one ventures between 1757 and 1776.16 In fact, slave trade profits during the third quarter of the eighteenth century in Great Britain amounted to about 0.5% of the national income, 8% of total investment, and 39% of commercial and industrial investment, thus showing the enormous contribution of slave trade to the wealth of the nation.17 Likewise, Guillaume Daudin concluded from the study of 238 ventures between

174   Sébastien Rioux 1710 and 1780 that investments in the slave trade in France were more lucrative and preferable than domestic ones, ranging from 15% to 30% on average.18 Plantations were also extremely good investments.19 Arriving in Kingston, Jamaica, in 1759, Nathaniel Phillips bought half a share on the Pleasant Hill plantation, an estate of 985 acres worked by 120 slaves. With credit extended by the London merchant house of Hibbert, Purrier, and Horton, Phillips purchased the Castle Hill plantation in 1777, an estate of 1,314 acres that was renamed Phillipsfield. The overall rate of return on investment for the Pleasant Hill plantation was 14.8% for the period between 1776 and 1784, and 21.6% for the Phillipsfield plantation for the period between 1778 and 1784. Phillips acquired a livestock farm in the early 1780s, which became part of a larger, integrated system dedicated to the productive employment of land, labour, and capital through a careful balancing of the space allocated for cane, pasturage, livestock, forests, and buildings. Returning to England in 1789 with about £20,000 in cash, Phillips acquired a fourth plantation in 1791. Like many absentee planters, he bought his way into the landed gentry through the acquisition of Slebech Hall. His net worth in 1811 was £115,815, excluding Slebech Hall and personal investments in shipping and British government bonds, the latter amounting to £12,508 in 1809. Phillips was undoubtedly an enterprising and ambitious capitalist, and the wealth that he acquired on the back of enslaved Africans was by no means exceptional. While we do not know how exactly his capital influenced the British economy, what is certain is that for more than fifty years his sugar estates generated vast amounts of capital that contributed, directly or not, to the employment of a growing army of merchants, seamen, insurers, shopkeepers, longshoremen, and agents, to name but a few. Phillips is a key example of the growth of what Sheridan has called ‘the wealthy planter oligarchy’, which represented a transition from small-​scale, diversified plantations to large-​scale, capital-​intensive specialized estates.20 The fact that capital generated on the periphery of the capitalist world economy could be productively employed back into the central economies was also visible in nineteenth-​century Cuba. Originally from the Iberian Peninsula, a new generation of elite merchant-​planters that held sugar cane plantations in the island reinvested part of their colossal fortunes in places such as London, Paris, and Barcelona. For instance, Tomás Terry Adán, one of the richest planters in Cuba, had substantial investments in government bonds and railway companies across the United States and Europe. And because Barcelona was the main place of resettlement for returning planters with capital to invest, the economic dynamism of the city as well as the industrialization of Catalonia were in part connected to capitalist slavery in Cuba.21 Similarly, planters in the Danish West Indies also realized handsome profits. Started by the Danish West Indian–​Guinean Company, whose annual profit from investments in plantations oscillated between 10% and 25% in the early eighteenth century, the administration of the Danish colonization in America was taken over by the Danish Crown in 1754. Throughout the second half of the eighteenth century, the islands were lucrative possessions, registering on average 5%–​10% annual profit on capital, while providing consumers with cheaper sugar.22

Slavery, Capitalism, and Imperialism     175 Merchants also benefitted from their involvement in the colonial trade. While using their wealth to lead luxurious lives, these enlightened ‘improvers’ often had impressive financial portfolios, including capital investments in government bonds, manufacturing ventures, mining and maritime undertakings, land improvement schemes, private businesses, company shares, construction and transportation works, textile production, savings banks, and insurance companies.23 For instance, the Hibbert family was at once involved in the slave trade, owned plantations, acted as merchants, and had investments in the manufacturing of cotton in Manchester.24 Similarly, Archibald Smith from the Glasgow merchant house Leitch and Smith used his investments and connections to cotton plantations in Grenada to expand into textile production in 1799, which quickly became one of the great Glasgow linen houses. The firm invested more than £88,000 in the Caribbean between 1800 and 1821, including £25,000 in two plantations in Jamaica. Archibald senior died in 1821 with a colonial fortune valued at over £80,000. Forming J&A Smith and Co. in 1824, his sons invested more than £60,000 in Caribbean cotton plantations between 1829 and 1832, and throughout the 1820s and 1830s they had business investments in land, townhouses, and railways in Scotland. West India merchants from Glasgow who claimed slave compensation were also large-​scale subscribers to railway lines across Scotland, with Archibald junior committing over £567,150.25 However profitable slavery and the slave trade may have been for individuals, it did not compare to their contribution to the expansion of world trade, which benefitted home industries through export-​led growth.26 Richard B. Sheridan estimated the total wealth and income of the West Indies in 1775 at £30 million, with the aggregate wealth of Jamaica alone representing some £18 million. Far from a drain, Sheridan concluded, ‘the West India colonies thus became a vital part of the British economy in the eighteenth century. Indeed, Jamaica was one of several colonial economies based on forced labour and tropical agriculture which yielded an economic surplus which contributed in no small way to the growth of the metropolitan economy.’27 Colonies like Jamaica were huge importers of British iron wares and manufactured goods as well as food staples from mainland America. In turn, their exports of tropical goods such as sugar, rice, tobacco, cotton, and indigo contributed both to the constitution of home and international markets. Together, export-​led growth and imports of raw materials were responsible for the expansion and diversification of home industries, the development of new techniques of production, a more advanced division of labour, and new organizational forms. At the same time, the Navigation Laws, which protected shipping and shipbuilding industries from foreign competition, reinforced the domestic economy by tying employment structures to the expansion of colonial trade more firmly than ever before.28 Already during the second half of the seventeenth century, it was estimated that the plantation colonies alone provided employment to some 200,000 wage-​labourers in England.29 Similarly, the growth of the cotton industry in Normandy, sugar factories in Bordeaux and Marseilles, and, especially after 1730, French shipbuilding and shipping industries were the direct outcome of increased colonial trade. Between two and

176   Sébastien Rioux six million Frenchmen depended on West Indian colonies for their livelihood before the French Revolution.30 Until the end of the seventeenth century, English exports were almost exclusively woollen goods. With the growing importance of the Caribbean and mainland colonies, however, British mercantile policies became an incubator for export-​led growth both through the quantitative expansion of commodity production and qualitative diversification of manufacturing. Between 1699–​1701 and 1772–​1774, the share of total exports to Europe decreased from 58.7% to 31.8%, and increased from 10.3% to 31.1% to Asia, Africa, and America, with America taking the lion’s share. While the value of exported woollen goods to continental Europe slightly decreased from £2.75 million to £2.63 million during this period, it increased from £185,000 to £1.15 million for America and Africa. Perhaps more important was the diversification of manufacturing and the gradual establishment of industrial production after 1700. Excluding woollen goods, the value of manufactures exported to Europe increased from £456,000 to £987,000 during the first three quarters of the eighteenth century, and from £290,000 to £2.53 million to America and Africa during the same period. The Americanization of British overseas trade was central to the process of industrialization, which ‘was to an important extent a response to colonial demands for nails, axes, firearms, buckets, coaches, clocks, saddles, handkerchiefs, buttons, cordage and a thousand other things’.31 The idea that colonial demand played a key role in stimulating the growth of manufacturing activities has been further documented by Inikori. He estimated that the share of the value of British raw materials imports produced by Africans in the Americas amounted to 76.8% in 1784–​1786, 73.3% in 1804–​1806, 62.3% in 1824–​1826, and 58.9% in 1854–​1856. For instance, the value of British raw cotton imports increased from £312,000 in 1770 to £13.2 million in 1831, and 85% to 98% of the total value of cotton imports came from Africa and Americas between 1784 and 1856, thus showing the essential contribution of the slave-​based cotton kingdom of the American South for British cotton textile factories.32 Great Britain’s involvement on the side of the Confederacy during the early years of the American Civil War makes clear where British economic interests lied. Indeed, it is worth recalling that between the American Revolution and the Civil War, ‘slave-​grown cotton was the most valuable export made in America, that the capital stored in slaves exceeded the combined value of all the nation’s railroads and factories, that foreign investment underwrote the expansion of plantation lands in Louisiana and Mississippi, that the highest concentration of steam power in the United States was to be found along the Mississippi rather than on the Merrimack’.33 More generally, Inikori estimated that the share of export commodities produced by Africans in the Americas amounted to about 55% in the sixteenth century, 69% between 1601 and 1670, 81% between 1711 and 1800, and 68.8% in 1848–​1850. Enslaved people were essential to commercial capitalism and the rise of the Atlantic world economy, and played a critical role in providing cheap raw materials for the consolidation and expansion of industrial capitalism.34 Frantz Fanon was on solid ground when he claimed that ‘Europe is literally the creation of the Third World’.35

Slavery, Capitalism, and Imperialism     177

Slavery, Industrial Capitalism, and Scientific Management An understanding of the role of slavery in the rise of the Atlantic system demands an etymological appreciation of the words ‘factor’, ‘factory’, and ‘manufacture’. The word ‘factor’ stems from Latin fac-​, from the verb facere (to do, to make), and the suffix -​tor, a masculine agent noun. In late medieval and modern Europe, a factor was a commercial agent established abroad, a trader buying and selling on behalf of a merchant house. The word ‘factory’ comes from Latin factorium, a combination of factor and the suffix -​ium (offices, groups). Historically, a factory was a trading post, a settlement, or even a district located in a foreign country where factors conducted business. Factories were key nodal points dedicated to the collection, storage, and shipping of goods, thus overseeing the circulation of capital and commodities in space. Finally, the word ‘manufacture’ comes from Latin manu (by hand) and factum, from fac-​(to make) and -​tum (the place of a thing). Quite literally, a manufacture is the place where things are made by hand. Throughout the period of commercial capitalism, factors, factories, and manufactures were closely imbricated into vast networks of trade, which, although dominated by merchants, constituted the productive and commercial structure of an expanding capitalist world economy. It would be my argument, however, that the evolution in the meaning of these words exemplifies the transition from commercial capitalism (factor as an agent of circulation and factory as a trading establishment) to industrial capitalism (factor as an agent of production and factory as a production site). The gradual collapse in the distinct meaning of the words ‘factory’ and ‘manufacture’ captures the shift in the locus of power from circulation to production with the rise of industrial capitalism. This explains why eighteenth-​century trading camps and forts such as Factory Point on the Isles de Los on the Upper Guinea Coast, or Fort James on Bance Island in Sierra Leone, came to be known as ‘slave factories’.36 Generally owned in part or in totality by mercantile companies or merchant houses, these factories facilitated the gathering and preparation of slaves by factors, who oversaw their medical evaluation, purchase, branding, and shipping. In places where no trading outposts existed, merchant houses sometimes used a dedicated ship—​a ‘floating factory’—​to conduct their business.37 Because slave factories traded a special commodity having the ability to produce more wealth than it cost, they acquired from the outset a more modern meaning in that they began ‘the carefully designed mass production of bodies and a deliberate, systemic annihilation of individual identity.’38 The slave-​ship was yet another moment of this trans-​Atlantic process whereby the constitution of a new global division of labour was achieved through the mass circulation of capital and bodies. While the slave trade was financed, insured, and organized by merchant capitalists and manned by propertyless sailors and seamen working for a wage, the slave-​ship continued the process of human commodification. Sailors were in charge of safeguarding the physical integrity and market value of the slaves, while also having the responsibility to discipline, punish,

178   Sébastien Rioux and enact violence on them. This contradictory politics of production included feeding (forcefully during hunger strikes) the slaves, having them exercise (‘dancing’), attending to their needs, and preparing them for the market, notably by removing all signs of mistreatment and ensuring the healing of chafing from shackles.39 British merchants played a particularly important role in transforming ‘the Atlantic slave trade from a set of high-​risk speculative enterprises into a routinized and predictable source of profit.’40 This rationalization of the trade—​exchange bills, insurance schemes, dedicated ships, financing instruments—​was key to the forced transportation of more than 12.5 million persons in the Americas. The transformation of the factory into a site of production is best illustrated in the plantation. Beginning in medieval Mediterranean and spreading to the eastern islands of the Atlantic (Madeira, the Azores, Canaries, Cape Verde, and São Tomé) in the fifteenth and sixteenth centuries, plantations acquired a truly industrial scale in America with the mass production of tropical goods such as sugar, tobacco, coffee, cotton, rice, cacao, ginger, indigo, rum, and molasses.41 Geographically integrated through a complex division of labour, often across many estates, large plantations were manned by hundreds of slaves. The biggest estates had up to 3,000 slaves, which made them some of the largest and managerially most advanced businesses in the world.42 Industrial by design, the plantation regime was ‘a total environment’ amenable to the rational organization of land, labour, and capital. Planters often referred to their estates as well-​ regulated machines and emphasized the need for uniformity in design, precision in operations, and efficiency in management.43 Marx’s description of plantation slavery in the American South as ‘a calculated and calculating system’ captures well R. Keith Aufhauser’s argument that scientific management is rooted in capitalist slavery.44 First, planters actively sought to reduce the plantation to a system, studying labour and managerial requirements in relation to what had to be done and when, devising organizational structures reflecting the geography of their estates, and streamlining management practices to enhance efficiency and coordination. Second, they imposed accountability and obedience at every level of the chain of command through the creation of efficient bureaucratic structures based on clear duties and responsibilities.45 The development of a trans-​Atlantic print culture in the last quarter of the eighteenth century reinforced these principles. There was indeed no shortage of books, manuals, and magazines advising on the proper management of plantations and slaves. Despite their importance, however, the standardization of bookkeeping and accounting practices, visible in the growing array of pre-​printed reports and forms from the 1780s onwards, was perhaps the most important improvement on paper.46 These developments in accounting practices in turn paved the way for two other core principles of scientific management: the separation of ownership and management, and employee surveillance. Already existing in the late seventeenth century, the number of absentee planters increased significantly after 1750. Written for ‘the independent, non-​ resident owners of land, and capitalists, and all who are interested in the welfare of that species of property’, Thomas Roughley’s The Jamaica Planter’s Guide (1823) presented a universal ‘method of plantership’ intended to guard absentee owners from incompetent

Slavery, Capitalism, and Imperialism     179 overseers. Accountability was of prime importance, Roughley argued, and accounts should be duly filled and submitted to the owner to ensure the good management of the plantation. He also recommended owners to hire young and literate men, and to make arrangements with their travelling agents to inspect the estate to make sure that the supplies requested were needed and put to good use.47 In this respect, Roughley was only systematizing what had been known for decades, namely that modern accounting and bookkeeping practices provided absentee planters with the necessary tools to manage their enterprises and supervise the employment of their capital from afar. By imposing specific categories and systems of classification, standardized journals also made it easier to enforce industrial discipline. It was precisely the captive nature of slave labour that allowed planters to experiment with data collection, which in turn gave them the ability to control the efficiency and productivity of all aspects of plantation life. On the one hand, time discipline after the 1820s was increasingly governed by mechanical time associated with the use of watches and clocks, a tendency reinforced by time-​specific forces such as the telegraph, railways, and steamboats. To be sure, time discipline was nothing new for planters acquainted to scientific agriculture, systems thinking, and accounting and bureaucratic standardization. Yet the acceleration of clock-​regulated slave labour, visible through the use of bells and clocks on plantations, gave them the ability to refine further time-​motion studies.48 On the other hand, planters used record-​keeping as a surveillance technique to individually monitor, assess and set the productivity rate for each slave, which were enforced by a class of waged managers. Between 1850 and 1860, the number of overseers in the American South doubled to reach 37,883, at which point they oversaw the work of some 4 million slaves.49 This surveillance apparatus presided over a dramatic increase in productivity rates, the elimination of soldiering, and the lowering of wasted time. This ‘pushing system’ was nothing but a scientifically calibrated instrument of physical and psychological torture to ensure maximum productivity. Between the 1810s and 1850s, the daily amount of cotton picked by enslaved people increased by 400%. From 20 million pounds in the early 1800s, the amount of cotton produced rose to more than 2 billion pounds in 1860, making the American South by far the most important supplier of raw materials to British and American mills.50 This short discussion on plantation slavery as an early form of scientific management provides us with the necessary foundations to understand what the historian Dale Tomich has called the ‘second slavery’—​that is, the geographic and economic expansion of capitalist slavery during the nineteenth century.51 Despite its abolition by the British and American states, the slave trade continued unabated between 1808 and 1860, as ‘more than 2.7 million people were moved by force from Africa to the New World, most of them to Cuba and Brazil. This was more than during any other half century of the Atlantic slave trade, save the 3.4 million toll of the 1750–​1800 period’.52 Prohibited by the Spanish Empire in 1820, the ban on the slave trade to Cuba was enforced only in 1867. During this period, about 500,000 slaves were carried to the island to grow sugar. Likewise, despite legal prohibition of the slave trade in Brazil in 1831, close to 500,000 slaves entered the country, mostly to work on the coffee plantations of the Paraíba Valley

180   Sébastien Rioux in southeastern Brazil.53 In addition, the period witnessed mass internal migration in both Brazil and the United States, as slaves were forcefully redeployed to new commodity frontiers. Following the country’s imperialist expansion after the Louisiana Purchase of 1803 and the Creek Wars of the 1810s, more than one million slaves in the United States were moved into the newly open cotton areas of Mississippi, Louisiana, and East Texas. Beyond the well-​known examples of Brazil, Cuba, and the American South, slavery continued in Puerto Rico and was even reintroduced in the French West Indies in 1802. Cuba’s large-​scale agro-​industrial sugar plantations are indicative of the extent to which slave-​based economies during this period were closely linked to industrial capitalism.54 The Spanish colony emerged as a new sugar frontier following the destruction of Saint-​Domingue in the early 1790s. By 1818, Cuba had broken free from Spanish mercantilism, obtained the right to trade freely with other empires and nation states, gained the ability to import slaves without restriction, and secured the right to absolute private property in land. Less than a decade later, Cuba had overtaken Jamaica to become the largest sugar producer in the world. From 14,500 tons of sugar in 1791, the Cuban sugar industry took off: 55,000 tons in 1820, 160,000 tons in 1840, 295,000 tons in 1850, and 720,000 tons in 1868, at which point it controlled 30% of the world market. Although elite merchant-​planters had long understood (like their counterparts in Dutch Suriname) that technological innovations in sugar processing, chemistry, and machinery were their best weapons against protected European markets, it was only from the 1830s onwards that they initiated a large-​scale transformation of Cuba’s physical landscape.55 While the introduction of steam-​powered grinding mills in the 1830s and 1840s allowed planters to extract more cane juice, the dissemination of sugar processing technologies such as the French Desrone system were responsible for a dramatic increase in the quantity and quality of sugar produced. By the 1850s, the use of centrifuges, vacuum pans, juice pumps, steam engines, cane carriers, hammers, all-​metal grinding mills, and fully mechanized mills were common.56 From the 1840s onwards, Cuban sugar machineries, equipment, and tools were mainly imported from steam-​engineering companies and large machinery makers such as English Fawcett Preston and John Fowler, Scottish Babcock Wilcox and W. & W. McOnie, North American Novelty Iron Works and West Point Foundry, and French Derosne et Cail and Fives-​Lille.57 As sugar production constantly outgrew transportation, storing, and shipping capacities, changes in circulation technologies became necessary. Cuban planters responded by building the first railroad network in Latin America in 1837, which oversaw the expansion of sugar production eastward from Havana into the fertile soils of Matanzas, Coliseo, Colón, Cárdenas, and Sagua la Grande. In turn, the expansion of sugar production and railway system during the 1840s and 1850s displaced the problem at the other end of the railway lines, as the old wharf space proved unable to handle growing sugar flows. Planters’ pressure for large-​scale transformations in Havana harbour led to a ‘warehouse revolution’ through the development of modern wharfs and warehouses in Regla, on the other side of the bay. Businesses such as the Regla Warehouse Company built massive warehouses inspired by the most advanced European ports. Equipped with gas lamps, cranes, internal railways, pane-​ glass

Slavery, Capitalism, and Imperialism     181 skylights, and loading bays for wagons, these modern warehouses were among the biggest cast-​iron structures in the world in the early 1860s and represented the architectural response of a new bourgeois order dedicated to increasing the volume and velocity of sugar in space.58 Throughout the nineteenth century, slave-​based capitalist economies in the Atlantic World thrived through vast and growing networks of capital, trade, and knowledge circulating across empires and nation states. From French sugar masters and American Upper South engineers to New York-​based iron works, Scottish large machinery makers, and London-​based financial networks, the expanding commodity frontiers associated with the second slavery were deeply enmeshed with industrial capital. In Cuba, slaves were used as brakemen, watchmen, and switchmen on the railway system, and they worked alongside Chinese indentured labourers in the new warehouses of the Havana harbour to ship sugar, molasses, and rum to European markets. In Rio de Janeiro, enslaved people worked as longshoremen and in bakeries, sometimes as master bakers. Slave labour was at the core—​rather than at the margins—​of an industrializing capitalist world economy. Enslaved people were key to the booming regional economies of the Atlantic world, and cities such as Rio de Janeiro, Havana, New Orleans, Richmond, and Baltimore were some of the most dynamic urban spaces during the nineteenth century.

The Destruction of the Slave System For about 400 years, European colonial empires in the Americas pursued official policies rooted in the exploitation of enslaved people. Slaves fought every step of the way, constantly reminding their oppressors of the peculiar nature of human commodities: slaves at once embody the source of wealth and the potential for its destruction. Hence the importance of control, domination, repression, and outright violence to suppress insubordination, deter from running away, and prevent rebellions. Slaves were whipped, branded, raped, mutilated (the cutting off of ears, hands, and legs), shot, constrained through leg irons and neck collars, put in solitary confinement, broken on the wheel, hanged, burnt, crucified, asphyxiated, dismembered, quartered, buried in anthills, beheaded, and hunted down and killed by man-​hunting dogs. Political authorities and slave-​owners alike did not hesitate to use these methods of punishment and control as deterrents by turning them into public spectacles to instil fear and obedience. Beyond corporal punishment, masters also disciplined slaves by threatening to sell their partners, children, and loved ones, as evidenced by the grim history of the New Year’s Day in Southern United States. In light of these despicable and ignominious abjections, there is no more Eurocentric analysis than the one situating the beginning of slave emancipation with the growth of European abolitionist movements. As the Guadeloupean historian Oruno D. Lara has argued, ‘the whole history of the slave trade and slavery is a sequence of revolts.’59 That is why the words ‘abolition’ and ‘emancipation’, inherited from the colonial system, are misleading notions. In truth, slaves were the main actors in

182   Sébastien Rioux the destruction of slavery.60 As anticolonialist French priest Guillaume-​Thomas Raynal put in 1770 about slaves’ ongoing resistance: ‘Those lightings announce the thunder.’61 Resistance was at once individual and collective, passive and violent, overt and concealed, spontaneous and organized. Collective solidarity was hardly a given considering that beyond the master’s manipulations and repressive methods for eradicating the desire for freedom, slaves were divided by occupations, languages, gender, origins, and individual motivations and strategies. Unsurprisingly, plantations were the most important source of subversive actions, although urban-​based struggles increased during the nineteenth century. Enslaved people developed a vast repertoire of actions in their fight against barbarism, which took three main forms. The first one is linked to quotidian struggles. More subtle and less visible, day-​to-​day resistance was universally practiced. Recognizing the inherently conflictual nature of the master–​slave relationship, this politics of accommodation actively sought to (re)negotiate the terms of bondage through constant and strategic resistance. Slaves were thus able to win concessions such as the promotion of family, the access to provision grounds (conucos) to grow food and raise animals such as pigs and chickens, as well as other ‘rights’ pertaining to funeral rites and the authorization to go to the market or to earn extra cash for services. At the same time, planters often saw such concessions as a way to prevent rebellions, and many owners, especially in Brazil, sought to pacify the relationship by promising manumission for good service. However, given the extremely harsh living and working conditions, a type of politics of retaliation emerged through different means such as theft, sabotage, feigning stupidity, destruction of goods, committing suicide, abortion and infanticide, malingering, arson, self-​mutilation, slowing down the pace of work, and the beating and killing of masters and overseers.62 The second form of resistance was the constant running away of slaves, despite the very serious consequences. Most slaves escaped individually or in small groups and followed two broad strategies. On the one hand, petit marronage was characterized by slaves’ temporary escape for one or two days, perhaps a week, but never more than a month. Essentially a form of absenteeism, petit marronage was more or less part of the daily fabric of the slave systems in the Americas. During their escape, most slaves stayed in the vicinity, hiding in relatives’ homes, in the woods, swamps, and towns nearby the estate, or in the barracks of slaves from other plantations. Slaves ran away for various reasons, including visiting lovers and family members, finding work in town, participating in festivals and religious ceremonies, drinking in taverns, or simply to feel free. Others practiced petit marronage to find a new master or force their master to get rid of violent overseers or make concessions. On the other hand, and proportionally much less important, grand marronage entailed the intention never to return. Existing in all slave societies, escaped slaves usually lived isolated for a while, before organizing themselves in groups or joining already existing maroon communities. Also known as quilombos or palenques, these independencies generally existed on the margins of the slave systems. Palenques with more than 100 individuals were comparatively few and most were relatively weak and unstable polities. Though brutally repressed, running away was facilitated by cross-​border connections and proximity to islands. Essentially a

Slavery, Capitalism, and Imperialism     183 rural phenomenon, urban grand marronage increased from the early nineteenth century onwards, as cities came to provide opportunities to hide among other slaves and free blacks. In the dynamic cities of New Orleans, Charleston, Richmond, and Baltimore, chronic labour shortages linked to the booming economy of the cotton kingdom provided jobs to fugitives.63 Physical geography mattered immensely in determining available options. Natural barriers such as forests, jungles, swamps, mountains, islands in proximity, and waterways protected fugitives from imperial troops, militias, and slave hunters alike, while providing them with escape routes, food, and other resources. That being said, it was hard to establish independent communities considering the expansion of the plantation system, the subjugation and destruction of indigenous communities, and the growing military capacity of colonial and imperial authorities. On smaller islands where sugar plantations advanced rapidly, such as in British Antigua and Barbados, quilombos were more difficult to establish and maintain. At the same time, proximity could offset the constraints of small, low-​lying islands. For instance, the geographical proximity of the islands of St. Thomas, St. Jan, and St. Croix in the Danish West Indies with Spanish Puerto Rico and Vieques Island provided a natural escape route for enslaved people from the initial colonization of St. Thomas in 1671 up to 1848, when slavery was abolished. In places like Jamaica, St. Vincent, Cuba, Brazil, and Suriname where resilient, well-​organized independencies consolidated strongholds, authorities—​ often after long, costly, and unsuccessful wars—​signed peace agreements. In exchange for freedom and the recognition of land-​rights and self-​government, treaties signed with maroon communities sometimes required them to return captured fugitives or runaway slaves seeking refuge, thus bringing them into the imperial fold.64 In mainland colonies, quilombos existed much more extensively in South and Central America. In North America, palenques were comparatively small, with indigenous territories and St. Augustine in Spanish Florida offering the most important destinations for escaped slaves from the Chesapeake Bay and the rice-​growing areas before the early nineteenth century. In New Orleans, small settlements such as Ville Gaillarde and Chef Menteur were established during the American Revolution, but they remained unstable and weak.65 The third form of slave resistance was rebellion. Largely spontaneous, uprisings were often responses to harsh working conditions. Revolutionary, well-​organized plots aimed at the destruction of the slave system were rare, and insurrections with more than 1,000 rebels comparatively few. Access to weapons was always a problem, and most rebels lacked military skills and knowledge. As a result, insurrections rarely lasted more than few days. Revolts often occurred on Sundays, Christmas, or during the master’s absence, that is, when the ruling class’s distraction was higher and control looser. Since most slaves were controlled by curfews, the prohibition to leave the plantation or restrictions on the use of horses, several of the most important uprisings were led by elite or privileged slaves—​mostly Caribbean-​born skilled workers such as artisans, foremen, headmen, drivers, and domestics—​whose mobility and language skills gave them the ability to communicate and organize more easily. At the same time,

184   Sébastien Rioux masters sought to prevent rebellions by inflicting brutal punishments for disobedience or making concessions, promising rewards and even freedom to slaves betraying plots. For instance, the betrayal of the planned uprising of 1736 in Antigua led to the execution of eighty-​eight slaves, seventy-​seven of whom were slave elite.66 And while rebellions remained a rural phenomenon, the 1822 Vesey plot in Charleston or the 1835 slave insurrections in Salvador, Brazil, were good reminders that the possibility of urban-​ based rebellions should not be dismissed. According to recent estimates, 62.8% of slave-​ ship rebellions occurred on the African coast, 12.8% within the first week of departure, 22.5% during the Middle Passage, and 2% in the Americas before disembarkation.67 This geography of slave-​ ship rebellions demonstrates how these ‘floating factories’ crushed the spirit of revolt. Ships were designed and equipped to prevent takeovers, and successful mutinies such as the capture of the Amistad in 1839 were rare. Yet as impregnable as they were, slave ships nonetheless carried with them the fight for liberty to the Americas. Slave-​based economies were hotbeds of discontent, as shown by important uprisings in Barbados (1816), Berbice (1823), and Jamaica (1831–​1832), the latter involving about 60,000 slaves. Evidence suggests that rebellions became more frequent following the transition to large-​scale, labour-​intensive plantations circa 1750. Indeed, some 5,583,600 individuals were forcefully taken from Africa between 1751 and 1850, representing about 60% of the total slave trade from 1501 to 1867.68 Following the 1763 Peace of Paris, conflicts increased substantially in Dominica, St. Vincent, Tobago, and Grenada, as Britain expanded sugar cultivation and heightened slave imports.69 Similarly, the growing number of slaves disembarking in New Orleans in the wake of the Louisiana Purchase of 1803 was accompanied by a surge in slave insubordination. Taking advantage of competing jurisdictions during the transition of public authority, rebellious activities culminated in the Charles Deslondes slave insurrection of January 1811, which was brutally suppressed.70 Likewise, slave insubordination on the commodity frontiers of Brazil, Cuba, and Puerto Rico increased. Between the 1812 Aponte Conspiracy and the conspiracy of La Escalera of 1843–​1844, work stoppages, plots, and uprisings increased dramatically as hundreds of thousands of African-​born slaves were brought to Cuba to work on sugar plantations.71 While slave resistance was key to what the historian Gerald Horne has called the American Counter-​Revolution of 1776, such resistance became revolutionary during the Haitian Revolution. Following the uprising of the slaves in Saint-​Domingue in 1791, the military help provided to the slaves by neighbouring Spanish forces and the British invasion of the colony in September 1793, France abolished slavery in all its colonies on 4 February, 1794 in order to hamper British appetite for land. Britain responded by invading Martinique in March and Guadeloupe in April. While the former remained occupied until the Treaty of Amiens in 1802, when it was returned to France, Guadeloupe was taken back by France in December 1794 with the help of a black citizen army. In Saint-​Domingue, the leader of the slave rebellion, Toussaint L’Ouverture, allied with France, outmanoeuvred the Spanish Empire, and forced Britain to withdraw in 1798. The restauration of slavery in 1802 by imperial France was followed by a war in 1803,

Slavery, Capitalism, and Imperialism     185 during which the Armée Indigène defeated the French. That same year, Guadeloupe’s former slaves fought to keep their freedom but were defeated and returned to slavery. The fire of colonial independence forged in Haiti soon moved to the Spanish American mainland. During the wars of independence of the 1810s and 1820s, slaves joined patriot armies with the promise of emancipation. In colonies like Peru, slaves from haciendas were forcefully enlisted by royalists, also under the promise of liberty. While the new republics of Chile and Mexico abolished slavery immediately, these promises were broken in countries where slavery was more central to the economy. Indeed, it took decades for states such as Ecuador (1851), Colombia (1852), Argentina (1853), Peru (1854), and Venezuela (1854) to finally outlaw slavery. Slaves also played a central role in the destruction of the American, Cuban and Brazilian slave systems.72 Sudden or sharp decline in living conditions also pushed slaves to rebel. Following crops failure in St. Jan in the Danish West Indies in 1733, slaves overpowered weak colonial authorities and took the island within a day. When Denmark recaptured the island the following year, a majority of slaves chose to commit suicide, using their guns one last time to permanently escape such madness. Real or perceived weakening of colonial authorities in the context of demographic imbalance could also be a trigger. Organized by seven elite slaves, the 1763 revolution in Dutch Berbice witnessed a colony-​wide takeover. Dutch imperial authorities’ counteroffensive led to five months of guerrilla warfare and the capturing of 800 rebels, 53 of whom were tortured, executed, or broken on the wheel at public spectacles.73 News of slave uprisings in the Atlantic world would also be a call to action. Inspired by the 1791 uprising in Saint-​Domingue, slaves from the former French colony of Grenada rebelled in 1795. Leader Julien Fedon rallied free blacks and joined forces with slaves in an attempt at overthrowing British regime for revolutionary France. During the sixteen-​month rebellion, about 7,000 slaves were killed and some 100 estates destroyed, forcing the imperial government to financially rescue the island’s economy.74 Finally, gradual or delayed emancipation was also cause for concerns. Slaves in Martinique did not wait for the decree freeing all slaves to take effect. Starting on 21 May 1848, a series of uprisings forced the governor to proclaim emancipation two days later. Inspired by the events, slaves in the nearby Dutch colony of Sint Eustatius rose and obtained their freedom. Likewise, Brazil’s gradualist approach in the 1880s was characterized by widespread revolts and massive escapes from plantations. By the time slavery was outlawed in 1888, the demise of slavery was largely a fait accompli.75 By then, only one country in the Americas still had legal slavery, the United States, where the Thirteenth Amendment, ratified in 1865, abolished slavery except as a punishment for crime.

Conclusion According to the most recent estimates of the International Labour Organization (ILO), 40.3 million people—​including 24.9 million in forced labour and 15.4 million

186   Sébastien Rioux in forced marriage—​were victims of modern slavery on any given day in 2016. This is substantially more than the 20.9 million victims estimated in 2012. Between 2012 and 2016, the ILO estimated that 89 million people had experienced slavery, ranging from a few days to a few years of servitude. With estimated annual profits from forced labour at US$150.2 billion per year in 2014, modern slavery is big business. Yet according to many specialists, these estimates are at best conservative and do not capture the full extent to which modern slavery is a growing phenomenon fuelled by decades of neoliberal economic policies. Despite historically strong national and international legal frameworks against slavery, the reality is that given the actual (and growing) complexity of the international division of labour, very few multinationals can confidently say that their activities are devoid of slave labour. Domestic work, construction, manufacturing, commercial agriculture, forestry, and fishing as well as accommodation and food service activities are among the leading sectors of modern slavery. In the current context of globalized production, this means that more and more commodities produced under the duress are traded on world markets.76 Economic imperialism remains the linchpin around which slavery proliferates under neoliberal capitalism. Two main factors contribute to the phenomenon. The first one is associated with trade liberalization and the uneven and unequal integration of the countries of the Global South into the international division of labour. Competitive insertion into the world market was given legitimacy through the doctrine of comparative advantage, which was widely adopted in the 1980s and 1990s by the International Monetary Fund (IMF) and the World Bank as a debt management strategy. During this period, dozens of countries underwent structural adjustment policies through various mechanisms such as import liberalization, cuts in government spending, domestic financial liberalization, labour market deregulation, state enterprises privatization, and currency devaluation. According to the IMF and the World Bank, export-​led growth based on natural resources extraction was the best solution for indebted countries to earn foreign exchange. This approach effectively reintroduced a colonial model of dependency by forcing developing countries to specialize in low-​value-​added industries to service global value chains over which they had little to no power. It also presided over increased rates of poverty, unemployment, and informal labour, all of which are strong determinants underpinning people’s vulnerability to unfree labour.77 The second factor is linked to migration and the growing tendency for states to strongly limit the movement of people across borders. Tighter border controls and restrictions on migration over the last decades have exacerbated poverty, social discrimination, and unemployment. While free trade agreements aim to open borders to the movement of capital, goods, and services, they also tend to avoid facilitating labour mobility. In this context, for the vast majority of people in developing countries, irregular migration is often the only option for upward mobility or just survival, leaving them vulnerable and often powerless as they pass through networks of brokers and traffickers who might deceive them during the recruitment stage about the wages they will be paid, their legal status in the country of destination, and the type of work they are expected to provide. In turn, their irregular status might force them further into adverse conditions

Slavery, Capitalism, and Imperialism     187 as a result of accumulated debt, the confiscation of identity papers, the withholding of wages or the threat of denunciation to the authorities. In this chapter I have argued that unfree labour is part and parcel of the historical geography of capitalism. Yet, there is still a strong Smithian tendency—even amongst Marxists—that conceptualizes capitalist development as the ineluctable rise of free labour. Unsurprisingly, proponents of this view tend to emphasize the growth of the standard employment relationship during the postwar period as proof of the historically progressive character of capitalist social relations. As convincing as this explanation might appear at first sight, it nonetheless remains incapable to explain the growth of unfree labour under neoliberal capitalism, except through the introduction of ad hoc explanations based either on moral failure or the lack of proper legal protections. The Smithian approach is unable to explain the rise of slave labour under industrial capitalism during the nineteenth century, nor its contemporary resurgence under neoliberal capitalism. In this respect, we would do well to recognize with Marx and the long critical tradition to which he belongs that unfree labour is intrinsic to capitalist social relations.

Notes 1. A. Smith (1999b, 551, 194). 2. Thomas (1968). 3. A. Smith (1999a, 488–​489; 1999b, 270). 4. Dobb (1947), Genovese (1989), Brenner (1988), Mandle (1972), Fields (1985), Meiksins Wood (2005), Post (2012), Ashworth (2011). 5. Luxemburg (2015). 6. A. Smith (1896, 96). 7. Anstey (1975), Drescher (1977), Eltis (1987). 8. Rioux, LeBaron, and Verovšek (2020). 9. Wood (1722), Postlethwayt (1746). 10. Marx (1990, 918). 11. Williams (1994). 12. Solow (1993), Blackburn (1998, 2013), Solow and Engerman (1987), Brewer (1990); Inikori (2002). 13. Tomich (2004), Rood (2017), Rosenthal (2017), Beckert and Rockman (2016), Johnson (2013). 14. Linebaugh and Rediker (2000), Baptist (2014), Horne (2016). 15. Richardson (1975, 304). 16. Inikori (1981, 774). 17. Solow (1985, 105). 18. Daudin (2011). See also James (1989, 47). 19. Koth and Serieux (2019). 20. Sheridan (1985, 251). 21. Rodrigo y Alharilla (2015, 231). 22. Rönnbäck (2009). 23. Hancock (1997, 259–​260, 280–​285, 301–​306).

188   Sébastien Rioux 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70.

Williams (1994, 71, 88). Mullen (2013). Inikori (1981, 746; 2002). Sheridan (1965, 297, 305, 311). Davis (1962a), Inikori (2002, chap. 6). See also: Brewer (1990); O’Brien (1994). Inikori (2002, 96). James (1989, 7–​50). Davis (1962b, 290, 291–​292). Inikori (2002, 380, 372–​373). Beckert and Rockman (2016, 1-​2). Inikori (2002, 197). Fanon (1968, 102). Inikori (1981, 764), Mouser (1996), Hancock (1997, 1), Banaji (2020, 15). Gill (1961, 91–​97), Inikori (1981, 756). Rediker (2007, 339). Christopher (2006, ­chapter 5). See also Rediker (2010, ch. 2). Beckert and Rockman (2016, 11). Verlinden (1970), Sheridan (1960, 136), Mintz (1986, 46–​47, 55), James (1989, 85–​86). Rosenthal (2017, 14). Blackburn (1998. 260). Marx (1990, 345), Aufhauser (1973, 816). Oakes (1983, 154). Rosenthal (2017). Roughley (1823, vi–​vii, 28–​30). M. Smith (1997). Cooke (2003, 1911). Baptist (2016, 40–​41). Tomich (2004, ­chapter 3; 2018). Baptist (2016, 53). Bergad, Iglesias García, and Barcia (1995); Eltis and Richardson (2010). Fraginals (1976, ch. 4–​5). Tomich (2015, 206–​213). Rood (2017, ch. 2). Pretel and Fernández-​de-​Pinedo (2015). Rood (2017, ch. 3). Lara (1979). Lara (2016, 9–​10). Cited in James (1989, 25). Aptheker (1983), Stampp (1956), Elkin (1987), Paquette (2017), Reis (2017). Debien (1966), Franklin and Schweninger (1999), Müller (2020). Patterson (1970). Florentino and Amantino (2011, 718, 721–​722), Hall (1985), Le Glaunec (2009, 222). Paquette (2017). Eltis and Richardson (2010, 190). Eltis and Richardson (2010, 23). Turner (2011, 686). Le Glaunec (2009).

Slavery, Capitalism, and Imperialism     189 71. 72. 73. 74. 75. 76. 77.

Paquette (1988), Bergad (2017, 124), Ghorbal (2009, 561–​590). Schmidt-​Nowara (2017). Turner (2011, 693). Mullen (2013, 209). Reis (2017, 153). ILO (2014, 2017), Taylor and Rioux (2017, chap. 9). Suwandi (2019).

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Slavery, Capitalism, and Imperialism     191 Inikori, Joseph E. 1981. ‘Market Structure and the Profits of the British African Trade in the Late Eighteenth Century’. Journal of Economic History 41, no. 4: 745–​776. Inikori, Joseph E. 2002. Africans and the Industrial Revolution in England: A Study in International Trade and Economic Development. Cambridge: Cambridge University Press. James, Cyril Lionel Robert. 1989. The Black Jacobins: Toussaint L’Ouverture and the San Domingo Revolution. 2nd ed. New York: Vintage Books. Johnson, Walter. 2013. River of Dark Dreams: Slavery and Empire in the Cotton Kingdom. Cambridge, MA: Belknap Press of Harvard University Press. Jones, Norrece T., Jr. 1990. Born a Child of Freedom and Yet a Slave: Mechanisms of Control and Strategies of Resistance in Antebellum South Carolina. Hanover: University Press of New England. Koth, Karl B., and John E. Serieux. 2019. ‘Sugar, Slavery and Wealth: Jamaica Planter Nathaniel Phillips and the Williams Hypothesis (1761–​1813)’. Capitalism: A Journal of History and Economics 1, no. 1: 59–​91. Lara, Oruno D. 1979. ‘Negro Resistance to Slavery and the Atlantic Slave Trade from Africa to Black America’. In The African Slave Trade from the Fifteenth to the Nineteenth Century, edited by UNESCO, 101–​114. Paris: UNESCO. Lara, Oruno D. 2016. Abolition de l’Esclavage 1848–​1852. Paris: L’Harmattan. Le Glaunec, Jean-​Pierre. 2009. ‘Slave Migrations and Slave Control in New Orleans’. In Empires of the Imagination: Transatlantic Histories of the Louisiana Purchase, edited by Peter J. Kastor and François Weil, 204–​238. Charlottesville: University of Virginia Press. Linebaugh, Peter, and Marcus Rediker. 2000. The Many-​ Headed Hydra: Sailors, Slaves, Commoners, and the Hidden History of the Revolutionary Atlantic. Boston: Beacon Press. Luxemburg, Rosa. 2015. The Accumulation of Capital. Mansfield Centre, CT: Martino. Mandle, Jay R. 1972. ‘The Plantation Economy: An Essay in Definition’. Science and Society 36, no. 1: 49–​62. Marx, Karl. 1990. Capital: A Critique of Political Economy. Vol. 1. Translated by Ben Fowkes. London: Penguin Books. Meiksins Wood, Ellen. 2005. Empire of Capital. London: Verso. Mintz, Sidney W. 1986. Sweetness and Power: The Place of Sugar in Modern History. London: Penguin Books. Mouser, Bruce J. 1996. ‘Iles de Los as Bulking Center in the Slave Trade, 1750–​1800’. Revue française d’histoire d’outre-​mer 83, no. 313: 77–​91. Mullen, Stephen. 2013. ‘A Glasgow-​West India Merchant House and the Imperial Dividend, 1779–​1867’. Journal of Scottish Historical Studies 33, no. 2: 196–​233. Müller, Viola Franziska. 2020. ‘Early Undocumented Workers: Runaway Slaves and African Americans in the Urban South, c. 1830–​1860’. Labor History 61, no. 2: 90–​106. O’Brien, Patrick. 1994. ‘Central government and the economy, 1688-​1815’. In The Economic History of Britain Since 1700, 3 vols, edited by Roderick Floud and Donald McCloskey, Vol. 1, 205-​241. Cambridge: Cambridge University Press Oakes, James. 1983. The Ruling Race: A History of American Slaveholders. New York: Vintage Books. Paquette, Robert L. 1988. Sugar Is Made with Blood: The Conspiracy of La Escalera and the Conflict between Empires over Slavery in Cuba. Middletown, CT: Wesleyan University Press. Paquette, Robert L. 2017. ‘Slave Resistance’. In The Cambridge World History of Slavery, Volume 4: AD 1804—​AD 2016, edited by David Eltis et al., 272–​295. Cambridge: Cambridge University Press.

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Chapter 11

Devel opme nt, Underdevel opme nt, and t h e N orth–​S ou th Di v i de Kunibert Raffer

Contrary to neoclassical descriptions the present North–​South Divide has been created over centuries, first by what Max Weber (1923, 258) called capitalism according to the principle of plundering (Beuteprinzip), and later by colonialism. The resulting deformed global economic structures obstruct development. The orthodox view that development occurs if only ‘internal development blockades’ are abolished, is clearly wrong. History shows the development of underdevelopment (Frank 1966). The South was remodelled to serve Northern advantage. Enormous resources have been transferred to the North by plundering, financing Northern industrialization, while Southern economies have been destroyed and distorted to benefit the North. So far relatively few economies could shake off these distortions, essentially by not applying orthodox economic policies. Analysing the present world economy, this chapter shows how underdevelopment was created, how present structures disadvantage Southern countries (SCs), for example, by unequal exchange or transfer pricing, and how financial markets discriminate against SCs and their inhabitants. It discusses tax evasion depriving SCs of resources needed to finance development. Finally, it analyses the role of international organizations, such as the International Bank for Development and Reconstruction (IBRD), the International Monetary Fund (IMF), the World Trade Organization (WTO), or treaties such as Lomé-​Cotonou in supporting Northern interests, hampering development, and perpetuating the North–​South divide.

196   Kunibert Raffer

Deforming the South to One’s Advantage: A History of Robbery and Overreaching There are two different perceptions on development. Ruling neoclassical economics does not consider historic facts. One cannot but conclude, knowingly so. Neoclassical development economics believes all countries started from the same base of underdevelopment simultaneously, as runners in a 100-​meter race actually do. Then some runners (countries) lag behind because of their own fault, so-​called internal development barriers. Leibenstein (1957, 4; emphasis in original) provides the best illustration for this fundamental failure: The nature of the abstract problem can be outlined in the following terms: (1) We begin with a set of economies (or countries), each ‘enjoying’ an equally low standard of living at the outset. (2) Over a relatively long period of time (say, a century or two) some of these countries increase their output per head considerably whereas others do not. (3) Furthermore . . . the gap in per capita output between the advancing countries and the stagnant ones steadily increases. . . . Now our problem is . . . why some countries should have developed while others remain more or less stagnant, or why some countries remain economically backward while others experience sustained secular advance.

To anyone just able to read or spell ‘history’, this is a clearly wrong statement. Anyone, probably even orthodox economists, knows this not to be true. Anyway, no one has been so inconsiderate lately to formulate with Leibensteinian clarity. Many scientific sources including Adam Smith witness the atrocities and the deformation of ‘newly discovered’ economies that were shaped to benefit Northern profits (for a very brief summary, see Raffer 1987a and literature quoted there; Frank 1966; Rodney 1972). It is historically proved that production structures were destroyed, and present economic structures were created by military power and colonialism. Although some few countries have managed to overcome this colonial heritage—​most notably in Asia—​the concentration on very few exports, usually raw materials, still remains clearly visible, even though exports of cheap manufactures, most notably textiles and apparel, have considerably increased. The colonial prohibition of producing textiles in India may be better known due to Ghandi’s protests. India was not an exception, though. Even an advanced country like Brazil still earns roughly half its export income by exporting primary commodities (WTO 2020). History shows that Northern products were initially difficult to sell. Newly ‘discovered’ territories often refused to buy them or to buy notable quantities. With some exceptions—​including black slave exporters in Africa, where guns and alcohol were accepted as payment—​European goods could hardly be sold. Even slave exporters often

Development, Underdevelopment, and the North–South Divide     197 preferred Indian cotton, which was of much better quality than English products. Logically, India’s textile industry was brutally destroyed by Britain. Militarily incapable of plundering, the Portuguese had to pay for spices with gold or silver. The atrocities committed during the first periods of colonization were therefore not simply regrettable and sad but also a necessary and astutely calculated strategy to reverse otherwise unfavourable terms of trade in favour of Europeans (cf. Raffer 1987a, 137). The Spaniards started looting on setting foot on the new continent. Their transports of looted precious metals over the Atlantic had huge effects on other European economies that engaged in piracy. No lesser economist than Keynes (1965, 156f.) stressed the importance of piracy for British development, considering the booty brought back by the Golden Hind (Drake’s third voyage) as the Fountain and origin of the British foreign investment. Elisabeth [Drake’s main shareholder KR] paid off out of the proceeds the whole of her foreign debt and invested part of the balance (about £42,000) in the Levant company. Largely out of the profits of the Levant Company there was formed the East India Company, the profits of which during the seventeenth and eighteenth centuries were the main foundation of England’s foreign connections; and so on.

To demonstrate the importance of the inflows of ‘Spanish treasure’, as Europeans called gold robbed by Spaniards in America, Keynes presents an illustrative calculation: if half the income of Elisabeth’s share of the booty would have been re-​invested, this would have accumulated ‘by 1930 to approximately the actual aggregate of our present foreign investments’. However, this was not the only influx. Keynes (1965, 151) sees direct and indirect inflows from the Spanish treasure as responsible for the establishment of the Bank of England, a stock exchange list on modern lines, and a boom comparable to the railway boom ‘characterised by a number of water-​works flotations’. The English were not the only ones to engage in this business. Especially French pirates also looted large amounts of gold and silver. St. Malo was a hub of piracy, contributing up to about 10% of French GDP. Beside piracy, slave trade was another main income stream. Williams (1944) argued that profits from the transatlantic slave trade provided one of the main streams (if not the main stream) of accumulation of capital financing the Industrial Revolution. Even if one qualified Williams’s conclusion, slave money certainly contributed enormously to development in the robber states. Challenging Williams, Wirz (1984, 200–​204) nevertheless assumes contributions of 5% to national income and 2% to investments per annum, a figure much more important at that time, when capital per worker was low. He points out that ten out of the biggest fourteen banks in Liverpool were established by merchants connected to the slave trade, or that Watt’s steam engine was financed by slave money. Money, routinely robbed in the periphery, flowed into Europe. This, however, only triggered development in those countries where resources were not squandered on conspicuous consumption, as in Spain, but invested.

198   Kunibert Raffer Unlike orthodoxy, Wallerstein (1974) and the dependency school (cf. Kay 1989; Dos Santos 1970; Frank 1966) based their analysis on these historic facts, on reality, as any science should. Palma (1989, 91) sees dependency’s ‘most important contribution’ in its analysis of peripheral capitalism ‘from the point of view of the interplay between internal and external structures’. The role of domestic ‘elites’ collaborating with the centre to preserve their own material advantages is one important blockage to development. The concept of structural heterogeneity, like the concept of dualism, tackled the problem that most SCs disintegrate into two ‘countries’, the one modern and rich, the other decaying and impoverished. But while dualism would finally be overcome—​as the whole country would eventually become developed after starting from the same starting line—​structural heterogeneity is bound to deepen and stay. Comparing dualism and structural heterogeneity shows how the same phenomenon is analysed by two schools: the main difference is their evaluation of development prospects. Dependentistas put internal development blockages always into their international context, which may justify classifying them as focussing more on external problems. Colonialism destroyed domestic structures, enforcing monocultures for exports and banning industrialization. Briefly, the fact-​based heterodox view considers historical facts, whereas orthodoxy disregards these facts.

Trade and Unequal Exchange Unequal exchange is the cornerstone of the present disadvantaging global economy formed by violence and force. Unlike orthodoxy, which blatantly and wrongly denies any overreaching by trade, these theories explain how trade syphons off resources from SCs nowadays. The first to draw attention to the fact that global markets disadvantage SCs (the periphery, in their wording) were Prebisch (1949) and Singer (1950; to save space cf. Raffer 1991, for further elaboration). Orthodoxy expected that functioning markets would lead to steeply increasing raw material prices, thus increasing terms of trade of SC-​producers. This was logically requested by textbook economics. The Prebisch-​Singer thesis proved that the market did not work. Even at constant terms of trade, the market does not work as textbooks predict. Orthodoxy immediately obfuscated the real issue by being able to deviate the discussion to the purely technical question whether a trend could be proved. While interesting, this is not the point. Whenever even such tricks cannot save orthodoxy, it simply chooses to ‘forget’ unpleasant arguments. Graham (1923) is a case in point. After he had shown that if one dropped the totally unrealistic assumption of constant costs, comparative costs specialization may gravely disadvantage countries specializing according to this theorem, lead to global output losses, and destroy wrongly specialized economies. After attempts to disprove Graham had failed most miserably—​Graham was proved right—​he was simply ‘forgotten’ (cf. Raffer 1994). Students are no longer bothered with Graham’s ‘paradox’

Development, Underdevelopment, and the North–South Divide     199 not to wreck their believe in comparative costs and the beneficial world market. In any science worth this name, this would not be possible. The claim that water freezes at sea level at 50 Centigrade could not be upheld. Orthodox economists could easily do so. It can be shown that Prebisch-​Singer, Graham, and unequal exchange form a nucleus of an alternative theory of international trade (Raffer 1994). One more reason for orthodoxy not to tackle these issues scientifically and fair-​mindedly. It was easy to shrug off the first theories of unequal exchange (Emmanuel 1972 is best known; for a survey of theories, see Brolin 2006; Raffer 1987a) based on Marx’s theory of surplus value and its transformation into prices of production on a global level. Neoclassical economists could simply say that they refuteMarx. Mostly, however, they are were not even bothered with such questions. ‘Critical’ texts were published that only proved that the author had not read or understood the model, as conclusions were ascribed to Emmanuel he had repeatedly refuted (cf., e.g., Samuelson 1976; for a critical assessment of Samuelson’s errors, see Raffer 1987a, 45–​49). To be fair, it must be noted that Samuelson (1976, 97), who thought Emmanuel had used his book to refuting comparative costs, which Emmanuel declared irrefutable within its own assumptions, at least admitted—​unlike all other ‘critics’—​that he had ‘invested some hours’ in ‘studying not the whole book, but only arithmetical tables and syllogisms’ (Samuelson 1976, 97, emphasis in original), without bothering about explanations given in the text. Nevertheless, he has been eagerly quoted as ‘proof ’ against Emmanuel. Economic orthodoxy is Blair’s novel 1984 come to life, probably even outdoing the original. Facing arguments against Marx’s theories, Emmanuel (1972) himself chose to present his model in a different way, as a Sraffarian system of equations. Braun (1977) did so too. Amin’s (1976, 149) definition of unequal exchange as double factoral terms of trade ≠ 1, which forms the base of all theories of Unequal Exchange, is clearly within neoclassical economics. It proves market failure. Nevertheless, orthodoxy once again ignored this apparent problem of international trade. Discussing it would have meant discussing whether the world market is uniquely beneficial, a sacrilege that might well end many a career in economics. Crimethink (© Blair in 1984) must be dealt with appropriately. As one could expect, an Unequal Exchange theory arguing uniquely with neoclassical instruments (Raffer 1987) was also banished. Like all others, this approach uses double factoral terms of trade as the measuring rod. It is very easy to show that real income per unit of productivity deviates very strongly from equality so that—​considering whatever measurement problems—​the world market is not working as textbooks allege rather than believe it does. Raffer’s model rests on different elasticities of demand, putting present trade into the historical perspective of Wallerstein’s world system. After looting capitalism and colonialism had totally deformed peripheral economies to serve the North—​mostly with military power—​and destroyed well-​functioning local economies, some more advanced than the North, dependencies have been created that no longer require military actions. Now trade alone is sufficient, because SCs were made ‘specialize’ in products that can be more easily substituted, or that have a higher elasticity of demand. While SCs export commodities or easily substitutable simple products such as textiles, they depend

200   Kunibert Raffer on importing urgently needed capital goods from the North. Even success in this one sector, textiles, has been blocked by the North over decades. This tilted global market has allowed the North to change terms of trade in its favour.

Finance and Debt Dependence Immediately after 1945 SCs did virtually not borrow in international capital markets. Lending occurred normally via bilateral or multilateral channels, usually dubbed ‘aid’. Contrasting to what one would expect, this wave of public lending created the first debt crisis, covered up by the new Euromarket pouring money into SCs. This early debt problem resulted from official lending (‘aid’) constituting 75% of total sovereign debts in 1968. Prepared on request of the president of the International Bank for Reconstruction and Development (IBRD) the Pearson Report (Pearson et al. 1969, 153–​ 168) already spoke of a structural debt problem and necessary debt reduction. The so-​called Retroactive Terms Adjustment was adopted in 1978 to provide debt relief and improve the net flow of bilateral official aid to low income countries. These debts were mainly caused by official flows, which establishes a clear co-​responsibility of official creditors deciding and monitoring where and how their money is spent. The programme’s long-​ winded, clumsy name documents the creditors’ desire to avoid words such as ‘debt relief ’, not to mention ‘insolvency’. The Pearson Report was published at the very time when this new wave of lending followed. In spite of the Report’s warnings SC-​debts exploded during the 1970s. A Ponzi scheme took off. The Euromarket covered existing problems with new inflows—​ precisely in the way the OECD had warned against. Nevertheless OECD countries favoured this evolution, later wrongly calling it the ‘recycling of petro-​dollars’, while the bulk of Euromarket loans came from other sources. This second wave rested on a nearly universal convergence of interests of borrowers, lenders, and OECD governments. As the debt crisis following unregulated Euromarket borrowing is routinely and uniquely ascribed to OPEC’s price increases, it must be mentioned that the OECD, GATT, and the Bank of England produced data showing this to be alternative reality (cf. Raffer 2010, 11–​12). The dependencia school had warned of debt problems as early as the 1960s (Raffer 2010, 10), seeing it as a most powerful means of controlling countries. But to no avail. Thus, debt dependence became a most important factor in North–​South relations. The record of debt crises shows how sovereign debt can be used as a means to control countries. In addition, step by step, extremely few private credit rating agencies (CRAs) with excellent connections to lenders have been given the power to determine the fate of countries, severely restricting debtor countries’ bargaining power. Thus, debtor countries in the South are controlled both by International Financial Institutions (IFIs) and private CRAs. Considering the substantial costs of controlling colonies, this is

Development, Underdevelopment, and the North–South Divide     201 economically much more efficient. Exploited countries pay their own chains. Why opt for colonialism if this new arrangement is so much better, cheaper, and more profitable? Until the big debt crisis of 1982 bank lending to SCs exploded. Probably aware that they would be protected—​this author makes no connection to payments to political parties, but points out that banks have always been protected by taxpayer money—​ banks apparently charged what they could get and lent as much as they could, sure that taxpayers would bail them out. Very annoyed when Colombia, a prudent borrower, refused to borrow money that it did not need, banks did not grant Colombia new loans any more easily than other Latin American countries after 1982. Once the sovereign debt crisis struck in 1982—​unsurprisingly to anyone who can read—​Northern countries (NCs) and IFIs flocked in to abuse the situation. The Bretton Woods Twins (BWTs) were the main instruments used to develop financial dependence. More privatizations (favouring Northern firms) and more people dying were the result. Recently, Corona showed that neoliberal policies had cut down health budgets so severely that not enough resources to fight the pandemic were available even in the North. No problem really: politicians still have all the health services needed. No problem to Northern governments otherwise so eager to put human rights on top of their ‘priorities’, de facto only when this seems useful arguing against out-​of-​favour governments that occasionally might respect human rights more than those eagerly preaching them. Eventually the so-​called Brady Plan plagiarizing the idea of a Brazilian minister of finance, Bresser Perrera, was presented. The United States has always insisted on protecting copyright as long it has been US ‘copyright’. Bresser is no US-​American. Intellectual theft is thus OK. The present world order is again back to where it once was: robbing and stealing is again ‘legally’ protected and anointed by the WTO, which allows bio-​piracy, stealing knowledge in SCs and patenting it as one’s own in the North to be protected as intellectual ‘property’ against its inventors. In parentheses it might be noted that the WTO itself stole the acronym of the WTO (World Tourism Organization), a clear breach of Article 15 of its own Trade Related Intellectual Property (TRIPS) agreement. Article 15 explicitly protects letters and combinations of letters. Highwaymen and pirates in former times were more honest, plainly calling robbery robbery. Nevertheless, a strong debt burden remained after ‘Brady’ allowing neocolonial strategies again used to the tilt. No creditor government or IFI has ever defended civilized contract law when many SC-​governments had been forced to ‘assume retroactively’ losses of private banks and corporations. One has to emphasize that these were not initially commercial debts voluntarily guaranteed by governments, whose guarantees were eventually triggered, but debts for which there had never been any government guarantee in the first place. The debt problem and its ‘management’, new and stricter forms of conditionality of aid and development finance and changes in the global economic framework increased the dependence of ‘developing countries’ substantially. So much so that one may speak of a de facto re-​colonialization without the often substantial costs of former colonial administrations. The present situation of the South fully corroborates and confirms

202   Kunibert Raffer dependency analysis. But this triumph goes unclaimed. Dependency thinking was vanquished so completely by neoliberalism that orthodoxy could preposterously claim before the crash of 1997 that Asian ‘tigers’ such as South Korea and Taiwan would prove dependency wrong, although these two countries are prime examples corroborating it (cf. Raffer and Singer 2001 138–​158). The present situation lends itself even better to dependency analysis than the world-​system of the 1970s. Naturally the world-​system has changed since then and concrete expressions of dependence with it. Finance and debt have become much more important. Quite logically, the solution offered to any other debtor, also demanded by human rights, must be denied to SCs and their peoples. Insolvency (cf., for the latest presentation of a proposal made in 1986, Raffer 2016) . Honouring the rule of law and human rights obligations would destroy creditor dominance.

Tax Evasion and Transfer Pricing Losses from more or less legal tax dodging are enormous and especially noxious for cash-​strapped SCs. It is, however, a global problem. Nevertheless, cash-​strapped SCs are more severely affected. The North encourages this malpractice. The EU even has tax avoidance (de facto rather dodging) enshrined in their basic organizational structure. Members, such as Luxembourg or Ireland, have based their economies on offering possibilities to reduce taxes to international companies. When the debt crisis broke in Ireland, EU authorities insisted on many policy measures and on harsh austerity for the Irish. But the unduly generous tax treatment of transnational companies that deprives EU-​members of billions of tax-​euros every year remained untouched, even though Ireland needed that money. Thus, there exists the ridiculous situation that member states getting heavy subsidies from other members funded by taxes are allowed (if not encouraged) to reduce that very tax base from which they get their transfers. There is no honest economic or logical explanation for that. When the scandal of Luxembourg’s tax regime could no longer be silenced, the EU appointed Juncker to investigate abuses that had occurred while he had been the responsible minister in Luxembourg. The earnestness of fighting tax dodging cannot be shown more clearly. While some NCs, including the United States (e.g., Delaware or the Channel Islands in Europe) play a leading role in helping companies not to pay taxes, some SCs have also opted for this model. Generally, this is a particularly tempting option for small countries. While paying 1% or less of turnover in taxes amounts to de facto tax-​free status for big transnationals, this is a lot of money for a small country, such as Luxembourg. Most countries, however, suffer from such schemes, both in the North and in the South. For cash-​strapped SCs these income losses are particularly detrimental. Shifting profits around the globe is easy. Simply by overcharging or undercharging exports and imports one can shift profits. Naturally, more complicated strategies exist, but the essence is always as simple as described earlier. Furthermore, licenses or

Development, Underdevelopment, and the North–South Divide     203 payments for patents from one affiliate to the other are also widely used: I pay myself for using my intellectual property (occasionally stolen in SCs). Thus, profits accrue in countries where corporate income taxes are low or non-​existent. Damages done to SCs are enormous: ‘Tax havens collectively cost governments between $500 billion and $600 billion a year in lost corporate tax revenue . . . through legal and not-​so-​legal means. Of that lost revenue, low-​income economies account for some $200 billion—​a larger hit as a percentage of GDP than advanced economies and more than the $150 billion or so they receive each year in foreign development assistance’ (Shaxson 2019, 7). The author adds global individual income tax losses of around $200 billion a year to this corporate total. Shaxson (2019, 8) also points out ‘a dramatic decline in average corporate tax rates, which have decreased by half, from 49 percent in 1985 to 24 percent today’—​aided and abetted by Northern governments, one would have to add, even though that reduces their own tax income. Politicians, though, might have different priorities. Government ‘initiatives’, such as by the OECD (BEPS, the base erosion and profit-​ shifting project), aimed at realigning taxation with economic activities have not led anywhere so far. This does not signal great interest in fighting against tax losses. As Switzerland’s example shows, it would be easy to stop this malpractice. Discovering that Swiss banks had helped US clients evade tax, the Department of Justice exerted pressure on banks in 2008. Soon major concessions on banking secrecy were made for the first time (cf. Shaxson 2019, 9). Strong sanctions against the private enablers, including accountants and lawyers, immediately showed results. There is, however, no interest at all to defend poor countries, nor one’s own tax base in the North. For SCs this is a financial catastrophe. Financially draining SCs seems to be what the North wants to favour their transnationals. This, again, is an external development block reinforcing the tilted global system.

International Organizations at Their Masters’ Service The most important new feature is a new form of neo-​colonial dominance putting SCs under the control of multilateral institutions dominated by the North.

The BWTs Particularly the IMF and the IBRD have managed to exercise strong control over SCs and their policies. The 1982 debt crisis allowed them de facto to administer indebted SCs. The IBRD had always demanded conditionalities, financing its projects. But starting structural adjustment (or non-​project) lending increased its leverage

204   Kunibert Raffer substantially. The IMF, which should have been dissolved after the demise of the Bretton Woods system, was particularly fortunate. It managed to acquire the task of a debt manager, for which it had not been created. After some turf war, the BWTs are now jointly administering SCs. Increasingly the present situation fits Friedrich List’s recommendation of North–​ South relations. Better known for his opposition to the ‘English philosophy’ of free trade as harmful to Germany’s development some 150 years ago, List (1920, 211) advocated joint exploitation of the South as ‘promising much richer and more certain fruits than the mutual enmity of war and trade regulations’. This new form of dominance should thus be called neo-​Listian (Raffer 1987b). The BWTs are an excellent illustration of how the scope of institutions can be perverted. Their founders’ intentions were diametrically different. The BWTs were to take problems of weaker and developing countries properly into account in order to support development, intentions which the BWTs successfully got rid of meanwhile. Loans were increasingly connected to initially un not envisagedforeseen conditionalities, including conditions that had nothing to do with the problem, but only served to control the ‘member’, enforcing conservative and neoliberal policies. Conditionalities were strengthened over time. This is wonderfully illustrated by the IMF’s Compensatory Financing Facility. Initially introduced to compensate export earnings shortfalls beyond the member’s control, ‘conditionality’ was limited to an obligatory statement by the member to co-​operate with the Fund to find, where required, appropriate solutions for its balance of payments difficulties. ... Over the years, however, the Fund has increasingly come to the realization that even though a country’s export shortfall was both ‘temporary’ and largely beyond its control the country might still have balance-​of-​payments difficulties attributable to inappropriate policies and that large amounts of unconditional credit might cause the country to delay adopting needed policy adjustments. (Polak 1991, 9 emphasis added)

Polak’s immensely recommendable publication also advises how a country can be made to ‘present itself as opting for adjustment on its own rather than under pressure from the Fund’ (Polak 1991, 13, emphasis added). His advice is increasingly heeded; debtors have often claimed the ‘advised’ policies to be their own. A leading theoretician of the Fund, the main brain behind the IMF’s policies, Polak clearly described how the IMF makes ‘members’ accept policies the Fund prefers ideologically. The Asian Miracle was only possible because these countries had never come under the IMF’s thumb before the 1997 crisis. The Crisis threatened to change that. Avoiding BWT-​advice the Asian ‘tigers’ developed very successfully until they followed BWT-​advice, liberalizing their economies. The IBRD (1999, 2) acknowledged having known ‘the relevant institutional lessons’ years before. A report by its Operations Evaluation Department on Chile’s structural adjustment loans ‘highlighted the lack of

Development, Underdevelopment, and the North–South Divide     205 prudential supervision of financial institutions in increasing the economy’s vulnerability to the point of collapse’ (2) The ‘key lesson’ that ‘prudential rules and surveillance are necessary safeguards . . . rather than unnecessary restrictions’ (2) did not keep the BWTs from encouraging undue liberalization, the very policies leading to crashes in Chile or Mexico. The unfolding of the Asian Crisis could be watched like a movie whose script is known. Argentina’s crisis 1995 goes unmentioned, although it was of a similar variety. One has to ask why the IBRD did not warn its members, as it should have done, unless this was done to bring Asian tigers finally under control. Just an aside: this report (also printed) could no longer be found at the IBRD’s homepage, but can still be downloaded elsewhere. Rodrik (1996, 17), who pointed out that tigers did demonstrably not follow the Washington Consensus, interprets the Asian debt crisis as an opportunity seized by orthodox economists for a ‘wholesale reform of prevailing policies’, offering the chance ‘to wipe the slate clean and mount a frontal attack on the entire range of policies in use’. Asian tigers had used their now discredited policies to good effect before they started neoliberal globalization. The crash of the globalized credit market provided leverage for further globalization in the South. Meanwhile nearly all tigers have shaken free of BWT-​diktat. Similar to Polak, the IBRD’s Stern (1983, 93) saw structural adjustment lending (SAL) as a ‘unique opportunity to achieve a comprehensive and timely approach to policy reform’ and as the response to a ‘feasible . . . call for increased sacrifices’. IFIs also claim a status at odds with the Rule of Law and their founders’ intentions: they do not have to compensate damages done by them, not even if these were intentionally inflicted. Suffice one example: in its report on Argentina, the IMF’s Independent Evaluation Office (IEO) concluded: ‘The September 2001 augmentation suffered from a number of weaknesses in program design, which were evident at the time. If the debt were indeed unsustainable, as by then well recognized by IMF staff, the program offered no solution to that problem’ (IMF, IEO 2004, 54–​55). Thus, the IMF knowingly aggravated the problem. This is not all. An internal memorandum of 26 July 2001, clarified: ‘staff estimates that a haircut of between 15 and 40 per cent is required, depending on the policy choice’ (IMF, IEO 2004, 90, fn 95). The ‘program was also based on policies that were either known to be counterproductive . . . or that had proved to be ineffective and unsustainable everywhere they had been tried . . [A]‌s expressed by FAD [Fiscal Affairs Department] at the time.’ ‘Nor did the program address the now clear overvaluation of the exchange rate’ (55). The Board supported ‘a program that Directors viewed as deeply flawed’ (50). Economically there is an incentive to do so. If IFIs (intentionally) damage member economies by undue lending or otherwise, this IFI’s income and importance increases, and it can be sure to get everything plus interest back. IFI flops create IFI jobs and income (for more examples see Raffer 2010, 228–​239). The status of preferred creditor is alien to the statutes of all IFIs, but de facto enforced. The impression quite successfully created over decades that multilateral claims are entitled to preferential treatment is absolutely unfounded and against their founders’

206   Kunibert Raffer intentions, which wanted to subordinate BWT-​claims in order to foster development financing and to reassure private flows. Also, there is no hindrance for IFIs to undergo legal procedures, either in courts of law or in arbitration procedures. They can fully participate in any insolvency proceeding (cf. Raffer 2009). With the Highly Indebted Poor Countries Initiative (HIPC) the BWTs already recognized that their debts can be reduced, which had been vigorously denied before. The IMF knows that it enjoys no legal or contractual preferred creditor status, as one can read on its very own homepage (Boughton 2001, 820). Around 1988, when problems with SCs unable to service their debts to the IMF in time could no longer be ignored, preferring the IMF was discussed. Some It was tried to find arguments in favour of preference. But ultimately the fact that the IMF had no legal or contractual status as a preferred creditor could not be denied. Before the Second Amendment, the IMF’s Articles of Agreement ‘contained a provision suggesting that others would have preference on the Fund’ (Martha 1990, 825). The author refers to Schedule B, paragraph 3 on the calculation of monetary reserves on which repurchase obligations were based. Presently the IMF’s statutes no longer contain formulations subordinating the Fund’s claims. But no formulations preferring them exists either. This practice is rooted in pure power relations and the usefulness of the Fund to enforce Northern, neoliberal agenda. No article of the Bank’s or IDA’s statutes can be stretched to justify preference. By contrast, their Articles of Agreement still contain obligations that prove the founders’ intention to subordinate these claims. Apparently, developmental tasks are the reason, quite as public interest in the global economic framework was in the case of the IMF. The statutes of the IBRD, the first institution in the so-​called World Bank Group, not only recognize default as a fact of life. They contain obligations of the IBRD beyond those of a ‘normal’ creditor. Legally speaking, this means subordination. Article IV, Section 4 of the IBRD’s statutes speaks of a ‘relaxation of conditions of payment’ to ‘modify the terms of amortization or extend the life of the loan’. The IBRD’s statutes go even further. At ‘its discretion’ the Bank may accept ‘service payments on the loan in the member’s currency for periods not to exceed three years’. In this case repurchasing of the member’s currency ‘on appropriate terms’ is stipulated. This may be extremely useful if a country has a short-​term scarcity of foreign exchange, and is likely or foreseeably able to pay in foreign currencies later. Art. IV.4.c.i thus provides a valuable way to defuse short-​term (illiquidity) problems that might otherwise trigger default, protracted debt problems, and losses suffered by other creditors. Article IV.4.c confers a right onto members suffering ‘from an acute exchange stringency’ (viz. threatening default) to ask for relief. Pursuant to this Article, the Bank may reduce present values. Article IV.4.c specifically demands taking both the Bank’s and such members’ interests into account. One notices that no conditions are stipulated for such relief, except the member’s urgent need for help. Naturally, no member has ever dared officially ask for it. Similarly, IDA’s Article V.3 demands to take decisions on relief ‘in the light of all relevant circumstances, including the financial and economic situation and prospects of the member concerned’.

Development, Underdevelopment, and the North–South Divide     207 The country has the right to ask for relief. The IBRD may—​but need not—​grant it, but has to take the country’s interest into account. The Bank does not have to grant relief whenever asked. Nevertheless, Art.IV.4.c certainly constitutes a general obligation to grant relief when and where appropriate, an obligation hardly reconcilable with the purported preferred creditor status, and the Bank’s behaviour. Although other creditors, most clearly the private sector, have no such obligation, they have been subordinated to the BWTs. This indicates that the Bank’s founders also wanted to subordinate the IBRD’s claims, maybe formulating so clearly because no sovereign insolvency procedure existed in the 1940s. Evidently, IBRD-​claims are meant to rank behind other claims. Nowadays’ reality is the very opposite. IFIs ‘enjoy’ unconditional preference. The African Development Bank is even a perfect example how initial stipulations helping cash strapped members were removed (Raffer 2009). IFIs were re-​shaped to serve as bailiffs and administrators for the North. Immunizing them from damage compensation was essential. A well-​meant system was totally perverted into a neocolonial instrument of domination.

The WTO The WTO was propagated as a fair and efficient system, protecting the rights of small and Southern countries. The WTO’s legal framework would put an end to bilateral, GATT-​violating measures such as the US Super 301. WTO dispute settlement promised to replace it. Meanwhile, Section 301, though a bilateral measure clearly violating the WTO Treaties, and according to the Dispute Settlement Body (DSB) ‘a prima facie violation’ of WTO obligations, was declared ‘not inconsistent with US obligations under the WTO’ (WTO 2000, 68). The DSB sees it meanwhile as a means to ‘provide an important avenue for the United States to enforce its rights under WTO agreements’ (67). Estimates of incredibly large gains by the Uruguay Round had been presented to lure SCs into signing. Criticizing model assumptions disconnected from reality, Mattoo and Subramanian (2005, 21) concluded soberly: ‘the benefits of the Round were exaggerated and its costs were underplayed’. Lies worked, though, thus proving this strategy efficient. Although dispute settlement repeatedly clearly favoured NCs and big players could freely choose whether to obey arbitral awards (cf. Raffer and Singer 2001, 213–​215; Raffer 2019, 84–​87), the North has paralyzed it. After SCs had signed, it had served its purpose. The case of US cotton subsidies destroying African exporters is one prominent case showing the malfunctioning of dispute settlement. In spite of losing the dispute and the Appellate Body’s finding, the United States has simply ignored the arbitral awards, continuing to subsidize cotton farmers in violation of WTO obligations (Raffer 2019, 87). The promise of compensatory (unconditional) measures to net food importing SCs before they had signed was blocked in spite of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-​Developed and Net

208   Kunibert Raffer Food-​Importing Developing Countries and Article 16 of the Agreement on Agriculture. After ratification SCs were referred to existing BWT-​facilities financing commercial imports instead, which are subject to conditionality. After the promise of additional help had served its purpose, it was broken and turned into another means of control. The WTO is to cooperate closely with the BWTs, reinforcing domination. While the ‘WTO would seem to be the best vehicle for advancing the current interests of the industrial countries’ private sectors’, the WTO process was a ‘victim’ of the ‘success of the World Bank and IMF’ as Mattoo and Subramanian (2005, 20) conclude. During ‘structural adjustment’ SC economies had been so largely liberalized that little remained to be offered by the South. Northern interests had been able to secure their main goals, especially as regards TRIPs, which ‘increased the monopoly power of the patent holder’ (Mattoo and Subramanian 2005, 20) against generic competition. Thus, the Doha Round ‘has always been plagued by a private sector interest deficit’ as they (19) conclude. WTO director-​general Pascal Lamy (2007, emphasis added) described his organization quite honestly at ECOSOC: A number of the current substantive rules of the WTO do perpetuate some bias against developing countries. This is true for example with rules on subsidies in agriculture that allow for trade-​distorting subsidies which tends to favour developed countries. This is also true when we look at the high tariffs that many developed counties apply on imports of agricultural and industrial products, in particular from developing countries. I often say that while the political decolonization took place more than 50 years ago, we have not yet completed economic decolonization.

The recent shift to preferring bilateral investment treaties as well as the destruction of dispute settlement show that despite this unfairness the WTO seems to have served its purpose.

Lomé-​Cotonou Lomé I was a progressive model of contractual partnership, the best a group of SCs had ever been able to achieve. It was very progressive, negotiated at a time when SCs demanded a New International Economic Order. Blocking these demands, the EEC (European Economic Community, now EU) made far-​reaching concessions, granting African, Caribbean, and Pacific (ACP) states an unprecedentedly strong position, including a contractual right to aid, and to compensating market-​caused export shortfalls for some products. Its great innovation was Stabex, the STABilization of EXport revenues (Raffer and Singer 1996, 99–​119), deliberately offered as an alternative to Southern demands for commodity price stabilization. Like an insurance scheme, Stabex conferred contractual rights of compensation for export earnings shortfalls of selected

Development, Underdevelopment, and the North–South Divide     209 commodities. Special regulations for bananas, rum, and most notably sugar were laid down, the so-​called Commodity Protocols. The Sugar Protocol guaranteed a minimum sugar price for stipulated quantities, linked to European prices. Lomé I was the best deal any SC or group of SCs ever got—​a very good reason for Brussels to dismantle it once there was no more reason for anxiety. The European Commission (1996, 9, emphasis added) frankly acknowledged that such generosity resulted from ‘concern to defend . . . economic and geopolitical interests in the age of the Cold War . . . the international situation . . . European anxiety at the first oil crisis, i.e. a fear of raw material shortages and a desire to hold on to valued overseas markets, united with geostrategic interests’. Such anxiety has meanwhile evaporated totally. The Europeans have successfully rolled back any progressive concessions, starting as early as the second treaty, Lomé II. Political and ideological neutrality, an asset during the Cold War, was eliminated. Stabex (under heavy European attack from the very start) and commodity protocols were abolished, conditionality introduced. The initially envisaged agreements with several groups of associated countries, not with one group, were realized. The ACP-​group was split, as the EU had wanted in the 1970s but lacked the courage to enforce it (for a short history, see Raffer and Singer 2001, 99–​120). The system of reverse preferences was re-​established with the help of the WTO-​system, which was also strongly shaped by the EU. WTO compatibility also serves to undo commodity protocols. Replacing fixed financial allocations by a ceiling for payments under Cotonou invites reduced disbursements. Simply by dragging their feet the EU can pay much less than the maximum stipulated, a clear case of moral hazard. Considering the Commissions inefficiency, the substantial backlogs of disbursements as well as the ‘geopolitical’ shift of EU-​interests to neighbouring regions one may expect actual payments to fall well below the ceiling stipulated. This, in turn, would certainly provide a very good argument for reducing resources further.

Conclusion After re-​shaping Southern economies by force to suit Northern profit interests, other, less obvious means of domination could take over, such as unequal exchange, financial dependence, and international organizations and treaties disadvantaging SCs. All these hamper Southern development. Losses in tax income, a global problem, affect SCs more gravely. While few exceptions exist, development remains elusive to most SCs, as intended by the North, enhancing its tools of domination. Logically, sovereign insolvency is strongly opposed, as this would abolish the present power of the North, introducing the Rule of Law, debtor protection, and respect for human rights for people in SCs at last. The North–​South divide is unlikely to be overcome.

210   Kunibert Raffer

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Development, Underdevelopment, and the North–South Divide     211 Polak, Jaques J. 1991. The Changing Nature of Conditionality. Essays in International Finance No. 184. Princeton, NJ: International Finance Section, Department of Economics, Princeton University Press. Prebisch, Raúl. 1949. ‘El desarrollo económico de la América Latina y algunos de sus principales problemas’. El trimestre económico, no. 63: 347–​431. Raffer, Kunibert. 1987a. Unequal Exchange and the Evolution of the World System, Reconsidering the Impact of Trade on North-​ South Relations. London and Basingstoke/​ New York: Macmillan/​St. Martin’s Press. Raffer, Kunibert. 1987b. ‘Tendencies towards a Neo-​Listian World Economy’. Journal für Entwicklungspolitik 3, no. 3: 45–​57. Raffer, Kunibert. 1991. ‘Siphoning Off Resources from the Periphery: The Relevance of Raúl Prebisch’s Thinking for the Eighties’. In Aid and External Financing in the 1990s, edited by H. W. Singer, N. Hatti, and R. Tandon, 583–​606. New World Order Series, Vol. 9. New Delhi: Indus. (Reprint from Development and South–​South Cooperation 2, no. 3 [1986], Special Issue: Homage to Raúl Prebisch: 101–​123.) Raffer, Kunibert. 1994. ‘Disadvantaging Comparative Advantages: The Problem of Decreasing Returns’. In Market Forces and World Development, edited by Renée Prendergast and Frances Stewart, 75–​90. London & Basingstoke/​New York: Macmillan/​St. Martin’s Press. Raffer, Kunibert. 2009. ‘Preferred or Not Preferred: Thoughts on Priority Structures of Creditors’. Paper prepared for the 2nd Meeting of the International Law Association’s Sovereign Insolvency Study Group. Accessed October 31, 2020. https://​homep​age.uni​vie. ac.at/​kunib​ert.raf​f er/​net.html. Raffer, Kunibert. 2010. Debt Management for Development—​Protection of the Poor and the Millennium Development Goals. Cheltenham, UK/​ Northampton, US: Edward Elgar [Paperback 2011]. Raffer, Kunibert. 2016. ‘Debts, Human Rights, and the Rule of Law: Advocating a Fair and Efficient Sovereign Insolvency Model’. In Too Little, Too Late, the Quest to Resolve Sovereign Debt Crises, edited by Martin Guzman, José Antonio Ocampo, and Joseph E. Stiglitz, 253–​ 269. New York: Columbia University Press. Raffer, Kunibert. 2019. ‘Developing Economies and Newly Globalized Trade: New Rules to Fleece the South’. In Globalization and Development—​Economic and Socio-​Cultural Perspectives from Emerging Markets, edited by Nezameddin Faghih, 75–​92. Cham: Springer. Raffer, Kunibert and H.W. Singer. 2001. The Economic North-​South Divide: Six Decades of Unequal Development. Cheltenham (UK)/​ Northampton (US): Elgar [paperback eds: 2002; 2004]. Rodney, Walter. 1972. How Europe Underdeveloped Africa. London/​Dar es Salaam: Bogle L’Ouverture/​Tanzania Publishing House. Rodrik, Dani. 1996. ‘Understanding Policy Reform’. Journal of Economic Literature 34, no. 1: 9–​41. Samuelson, Paul A. 1976. ‘Illogic of the Neo-​Marxian Doctrine of Unequal Exchange’. In Inflation, Trade and Taxes: Essays in Honour of Alice Bourneuf, edited by D. Besley, 96–​107. Columbus: Ohio State University. Shaxson, Nicholas. 2019. ‘Tackling Tax Havens’. Finance and Development 56, no. 3: 7–​10. Singer H. W. 1950. ‘The Distribution of Gains between Investing and Borrowing Countries’. American Economic Review, P&P 40, no. 2 (May): 473–​485.

212   Kunibert Raffer Stern, Ernest. 1983. ‘World Bank Financing and Structural Adjustment’. In IMF Conditionality, edited by John Williamson, 87–​108. Washington DC: Institute of International Finance and MIT Press. Wallerstein, Immanuel. 1974. The Modern World-​System, Capitalist Agriculture and the Origins of the European World Economy in the 16th Century. New York: Academic Press. Weber, Max. 1923. Wirtschaftsgeschichte. Edited by S. Hellman and M. Palyi. Munich and Leipzig: Duncker and Humblot. Williams, Eric. 1944. Capitalism and Slavery. Chapel Hill: University of North Carolina Press. Wirz, Adalbert. 1984. Sklaverei und kapitalistisches Weltsystem. Frankfurt aM: Suhrkamp. WTO. 2000. Annual Report 2000. Geneva: WTO. WTO. 2020. ‘Trade Profiles—​Brazil’. Accessed 31 October 2020. https://​www.wto.org/​engl​ish/​ res_​e/​stati​s_​e/​trade_​prof​i les​_​lis​t_​e.htm.

Chapter 12

Gl obal Valu e C ha i ns a nd Gl obal Valu e T ra nsfe r Susan Newman

Introduction A particular T-​shirt made in Bangladesh was sold in Germany at 4.95 euros. . . . This is how the selling price was broken down in the stages from the cotton raw material to the shirt ending up in a bag at the shop sales desk:

• 0.40 euros: cost of 400g of cotton raw material bought from the US by the factory in Bangladesh; • 1.35 euros: the price H&M paid per T-​shirt to the Bangladeshi company; • 1.41 euros: after adding 0.06 euros per shirt for shipping costs to Hamburg in Germany; • 3.40 euros: after adding some 2.00 euros for transport in Germany, shop rent, sales force, marketing and administration in Germany; • 4.16 euros: after adding 0.60 euros net profit of H&M plus some other items; • 4.95 euros: after adding 19% VAT, paid to the German state. (Norfield 2012) A one-​pound bag of whole bean coffee from Starbucks under the name of Komodo Dragon Blend, a blend of Asia Pacific coffee beans with Papua New Guinea prominently mentioned on the label, costs $12.29. . . . Growers in Maimaful received $0.33 for a pound of their coffee on 8 August. . . . On the same day exporters in Goroka were paid between $1.00 and $1.41 per pound, depending upon the coffee’s certification . . . of the $12.95 paid for a pound of fair-​trade or organic beans, only $1.41 stays in Papua New Guinea. The rest of that price, $11.54, goes somewhere else. (West 2012, 16–​17) In 2006, the 30GB Apple iPod retailed at $299, while the total cost of production, performed entirely overseas, was $144.40, giving a gross profit margin of

214   Susan Newman 52 percent . . . the other $154.60, is divided among Apple, its retailers and distributers, and—​through taxes on sales, profits and wages—​the U.S. government. (Smith 2016, 27)

That the distribution of value-​added/​prices along global value chains (GVCs)1 are heavily biased in favour of multinational corporations who govern and coordinate them is now well documented. Differences remain in the ways in which the distributional phenomenon is interpreted by scholars, policymakers and advocates, and labour activists. For mainstream GVC scholars2, the distribution of value-​added can be measured by new added income measured in price terms. Implicitly, and in accord with neoclassical economics with perfect competition, the distribution of prices along the chain simply correspond to differences in productivity, or embodied expertise, of production processes along the chain and hence, value. Figure 12.1 shows the ‘smile curve’ that depicts the distribution of value-​added along GVCs. Activities along the chain where higher prices and incomes are derived such as design and marketing are territorially focussed within the Global North while low value-​added production is concentrated in the Global South. The mainstream understanding of the distribution of ‘value-​added’ along GVCs presents a potential path for firms operating at low-​value-​added nodes to upgrade to higher value added activities (e.g., The World Bank’s Global Value Chain Development Reports of 2017 and 2019), for critical scholars, the distribution of value-​added facilitates the value capture and appropriation by multinational corporations downstream along these chains in ways that impede or prohibit accumulation to take place at the sites of production. Recent critical analyses of GVCs have deployed Marx’s labour theory of value that allows for the divergence between value creation and price (Lauesen and Cope 2015; Selwyn 2019; Selwyn et al. 2020; Quentin and Campling 2018). This approach recognizes that value is created by labour in production with a corresponding schematic distribution of value along GVCs that is the inverse of the smile curve.3 The difference in the

Value (Marxian)

Value Added/Price (Neoclassical) North (Management; Finance; Design; Research & Development)

South (Production)

North (Marketing; Branding; Advertising; Sales)

Figure 12.1  Wages, value, and price formation along the global production chain. Source: From Lauesen and Cope (2015).

Global Value Chains and Global Value Transfer    215 distributions of value-​added and value imply a systematic transfer of value from the Global South to the Global North that is obscured by the rationale of business economics and conventional accounting justified by neoclassical economic theory. GVCs have been dubbed ‘global poverty chains’ and ‘global inequality chains’ by Selwyn (2019) and Quentin and Campling (2018), respectively, and identified as a key driver for historically high, and worsening, international inequalities in wealth and incomes. The proliferation of GVCs and attendant changes in the international division of labour have characterized capitalist restructuring on a world scale over the past four decades since the late 1970s. UNCTAD’s World Investment Report (2013) estimated that 80% of world trade passed through GVCs. The ILO’s World Employment Social Outlook (2015) estimated that 20% of the global workforce are employed in value chains. The majority of this workforce are located in low-​wage economies in the Global South, as transnational corporations have increased the portion of their workforce employed by corporate subsidiaries alongside the increasing reliance on arm’s-​length subcontracting through original equipment manufacturers who in turn subcontract with lower tier supply chain firms (Cox 2019). The graph in Figure 12.2 shows the ten-​fold expansion in the size of the manufacturing workforce located in the global South between 1950 and 2010. By contrast, the numbers of workers employed in manufacturing in the global North remained at around 200 million workers for the decade between 1975 and 1985. As GVCs took off in the 1990s, the industrial workforce in the global North has been in decline as so-​called mature capitalist economies have undergone a process of deindustrialization. Between the early 1980s and the first decades of the twenty-​first century,

600

500

Millions of Workers

400

Less-Developed Regions

300

200

More-Developed Regions 100

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

Year (5-year interval)

Figure 12.2  Global industrial workforce. Source: From Smith (2016).

216   Susan Newman the number of workers in globalizing (exporting) industries more than quadrupled (Selwyn 2019). In contrast to the allocation of capital on a world scale based upon maximizing its efficiency, and a more refined technical division of labour facilitated by technological progress in ICT and logistics, that would ultimately lead to convergence across the global economy as touted by bourgeoise economists, globalization of the past four decades is more accurately understood as the global restructuring of production that has been central to the neoliberal restructuring of capital in response to downward pressure on the rates of profit in the Global North. Alongside capital account liberalization and trade liberalization that accompanied structural adjustment programmes, the promotion of free trade via the WTO, technological advancements in communications and logistics since the 1980s have facilitated the rapid proliferation of GVCs.4 An international division of labour, and resulting international transfer of value, has been at the core of capitalist development throughout its history. The rise of capitalism depended upon slave and indentured labour in the colonies that provided cheap inputs to manufacturing as well as cheap sources of calories as necessary inputs for the reproduction of low-​paid industrial workers in the Global North (Bekert 2015; Mintz 1986). This allowed the value of labour power in the colonizing countries to exceed the price of labour power while forcing down the value of labour power in colonial subjects via persistent ‘brutal and archaic forms of domination’ (Smith 2016, 250). As capitalism has developed historically, so the international division of labour has ‘evolved into a more complex constellation, whereby capital searches worldwide for the most profitable combinations of relative cost and qualities/​disciplines resulting from the variegated past histories of the different national fragments of the working class (through their impact upon their general conditions of reproduction and condensed in the so-​called “historical component” of the value of labour-​power)’ (Charnock and Starosta 2016, 9). This chapter zooms into the processes of value transfer from Global South to Global North by centring Marx’s labour theory of value as applied to the predominant form of the capital–​labour relation in contemporary capitalism that is expressed in the organization of production in GVCs. To grasp the unity of the essential global contradictory dynamics of accumulation as they are expressed through GVCs, the proliferation, structure, and functioning of GVCs in relation to financialization (the other key component of neoliberal capital restructuring) deserves attention as new avenues of value appropriation and transfer are opened up. The next section of this chapter provides a brief review of unequal exchange theories and examines whether the ‘new international division of labour’, whereby producers in the Global South occupy low value-​added nodes of GVCs, has eschewed in new contemporary forms of unequal exchange and value transfer. The third section turns to financial avenues of appropriation and value transfer from Global South to Global North that have opened-​up in relation to the restructuring of production along GVCs. The fourth section considers the restructuring of GVCs since the global financial crisis of

Global Value Chains and Global Value Transfer    217 2008 and possible opportunities for labour organization across globally fragmented labour. The fifth section concludes.

Unequal Exchange: From Colonialism to Global Value Chains The systematic siphoning of value from the former colonies in the Global South by a capitalist class based in the imperialist centres of the Global North did not cease with decolonization and the end of formal subjugation. Newly independent economies in the post–​World War II era were characterized by capitalist enclaves and extractivist structures. Export-​oriented primary commodity production was the only existing surplus value producing activity and was therefore central to domestic capital accumulation and economic development in postcolonial nations. It was in relation to the prospects for capitalist development that Raul Prebisch and Hans Singer, separately, came to the conclusion that prolonged reliance on commodity exports by newly independent nations would inhibit and ultimately undermine efforts to increase the income and living standards of their populations owing to a long-​ term decline in the terms of trade for primary commodities exports relative to manufactured imports. Prebisch was among the first to characterize the world economy as structured into a core consisting of advanced industrial economies/​colonizing nations and a periphery of former primary commodity producing/​former colonies. Prebisch (1950) and Singer (1950) offered a number of explanations for the long-​run decline in the terms of trade that included: the low price and income elasticities of demand for commodities as compared with manufactures; the technological superiority of industrialized countries; uneven market power between industrial economies (as importers of commodities) and developing economies (as exporters of primary commodities); and the asymmetric impact of labour union power in countries of the core and labour surplus (large reserve army of labour) in periphery countries that would place upward pressure on wages in the former and keep wages down and close to subsistence in the latter (Prebisch 1950; Singer 1950). If economies in the periphery continued to rely on commodity exports, they would need to continuously increase their volume of exports to maintain the same level of manufactured imports, resulting in a long-​run drain of resources from the periphery to the core. In Prebisch and Singer’s hypothesis, ‘unequal exchange’ between core and periphery resulted from differences in their economic structures. Economies where manufacturing was developed were more productive and had greater scope for further productivity gains from technological change and innovation while commodity-​dependent former colonies were in a low productivity trap where economic specialization was in activities with limited scope for productivity increases/​increased value-​addition.

218   Susan Newman Unless peripheral countries modernized by developing a more diversified and complex manufacturing base, the productivity gap and, hence, the terms of trade would worsen. Rich countries would continue to trade less labour for more labour from less productive countries in a way that was especially pronounced under ‘free trade’ (Bainman 2006). While the Prebish-​Singer thesis has been the subject of heavy debate, that there exists a long-​run decline in the terms-​of-​trade for primary commodities has been empirically established (Bleaney and Greenaway (1993); Cashin and McDermott 2002)5 and has served the basis for continued interest and theorizing around the notion of unequal exchange as the basis for a systemic transfer of value from the Global South to the Global North and its relationship to economic imperialism (Smith 2016; Suwandi 2019). The process of ‘unequal exchange’ in trade between the Global South and North, initially revealed by Prebisch and Singer, was further developed by Emmanuel (1972), who coined the term. Emmanuel’s theory of unequal exchange was based on the difference in money wages in the Global North compared with the South that were kept apart by institutional differences such as trade union power rather than simply reflecting differences in productivity. On this basis, Emmanuel formed the view that there existed a ‘labour aristocracy’ in the Global North who were exclusive beneficiary of unequal exchange at the expense of peripheral workers. The diminishing labour share of income in the Global North over the last thirty years, and the concomitant rise in profit share that has accompanied rapid increases of outsourcing via GVCs, suggests labour in the Global North have not been the main beneficiaries of unequal exchange. By contrast, a further source of unequal exchange in the Prebish-​Singer hypothesis was the unequal market power between industrial economies and commodity-​exporting economies that arise out of intersectoral differences in supply structures. Monopolistic competition characterizing industrial production meant higher profit rates compared with competitive primary commodity markets and persistent profit-​rate differentials between the Global South and North. While many former colonized nations in the Global South, particularly in sub-​Saharan Africa, continue to be commodity-​dependent (reliant on a narrow range of commodity exports for foreign exchange income), the development of manufacturing, as indicated by the expansion of the industrial workforce, has occurred in much of the Global South, and in China and India in particular. A more recent downward trend in the terms-​of-​trade of manufacture exports from the Global South relative to their Global North counterparts, coinciding with the proliferation of GVCs, has been observed (Maizels 2000; Kaplinsky 2006), suggesting that ongoing processes of unequal exchange are not limited to intersectoral differences—​differences in the supply structures of primary commodities or manufacturing. Amin (1976) took the idea that unequal exchange arose from difference in profit rates between the core and periphery further in his theory of unequal exchange by building on Baran and Sweezy’s (1966) theory of ‘monopoly capitalism’. Rather than simply attributable to intersectoral differences in market structures, the highly uneven distribution of economic power in the world economy comes from a process of concentration and centralization of capital that emerges as inherent contradictions of capitalism are played out historically. Given the longer duration of capitalist development in the nation states of

Global Value Chains and Global Value Transfer    219 the Global North, and its concomitant crises and capitalist restructuring, value-​transfer via unequal exchange, according to the thesis of monopoly capitalism, is predominantly international via a transfer of absolute rent from the Global South to Global North. In a recent illuminating study, Ricci (2019) deployed Marx’s labour theory of value to distinguish different forms of unequal exchange and value transfer that take place in relation to contemporary spatial patterns of production, namely the globalization of production via GVCs. He distinguishes forms of unequal exchange, that follow from the previous cursory discussion, outlined in Table 12.1. Using data from the World Input-​ Output Database, Ricci estimated that the global amount of value transfers in 1995, 2000, and 2007, as a percentage of global value-​added was 1.8, 1.9, and 1.9, respectively. The composition of value transfers in terms of constituent forms of unequal exchange, by contrast, have shifted dramatically. Ricci estimated that in 1995, 55.2% of global transfer resulted from differences in industrial specialization between countries (as suggested by Prebish-​Singer) while 44.8% took the form of absolute rent that stems from the ability of monopolistic firms to determine market prices higher than the market price of production and results in transfers from competitive to monopolistic firms within the same sector such as from subsidiaries, outsourced OEMs and their suppliers located in the Global South, to transnational corporations (TNCs) in the Global North. By 2007, the quantitative significance of the two sources of value transfer flipped with 64.2% from absolute rent and 35.8% from differences in industrial specialization, with the biggest change between 2000 and 2007. These findings corroborate the thesis of a new international division of labour (NIDL) that is different from the traditional division between the core industrialized economies and the peripheral primary commodity exporting economies. The NIDL is premised upon industrial convergence between the Global North and South with the restructuring of global production into GVCs, combined with the further entrenchment of monopolistic conditions, that originates new forms of dependency and value transfer. Table 12.1 Forms of Unequal Exchange Causes

Types

Differences

Value Form

Industrial specialization

Differential rent

Intersectoral wages (Lewis) Intersectoral profit rates (Prebisch-​Singer)

Market price of production –​price of production

Profit-​rate equalization

Capital composition (Classical Marxism)

Price of production –​value

Absolute rent

International wages (Emmanuel) International profit rates (Monopoly capitalism)

Market price –​market price of production

Labour and capital incomes

Source: From Ricci (2019).

220   Susan Newman Smith (2016) equates this productive restructuring on a global scale with the ushering in of ‘super-​exploitation’—​the forcing down of the value of labour-​power—​as the predominant form of capital–​labour relation.6 Super-​exploitation refers to the reducing of wages below the value of labour-​power to increase the rate of surplus-​value. GVCs provide the architecture for increasing rates of exploitation in the Global South. The monopolistic power of lead firms has allowed them to secure cheap production via supplier networks without having to invest in productive capacity. Price competition between supplier firms have taken the form of cost-​cutting by increasing the rate of exploitation through various and complex systems of oppression. In her comprehensive analysis of work in garment production as part of GVCs in India, Mezzadri (2017) reveals a complex system of subjugation and social oppression. Super-​exploitation occurs through ‘processes of informalization, proletarianization and dispossession’ that often ‘tie and control the labour force across realms of production and reproduction’ and invariably affects the ability of individual workers to reproduce their labour-​power as the intensity of work and impoverishment take their inevitable toll on labouring bodies (Mezzadri 2017, 41). The systemic impoverishment of workers engaged in low-​cost production along GVCs has been termed ‘global poverty chains’ by Selwyn (2019) and Selwyn et. al. (2020), who also shine a light on the gendered nature of increasing rates of exploitation in GVCs.

Financial avenues of appropriation Under Imperialism—​by which I mean the present stage of capitalist development, where a few major corporations from a small number of countries dominate the world market—​access to finance both reflects economic power and is a means of retaining that power. (Norfield 2016)

Financialization has been a key feature of the neoliberal restructuring of capital that was initiated in the late 1970s (Fine 2013). It has been variously understood in the literature (Van der Zwan 2014). As a theory, its analytical purchase has been heavily debated (Christophers 2015; Christophers and Fine 2020). Empirically, few would deny that economic decisions made by owners of capital have increasingly been in the interest of expanding finance capital. But rather than divorced from the so-​called real economy—​ the realm in which surplus value is produced—​finance and the sphere of circulation cannot be separated out from the integrated circuit of industrial capital (Newman 2021). The global restructuring of production and the changing social relations of production within globalized and networked production needs, therefore, to be analysed in relation to the restructuring of finance and processes of financialization, and vice versa. In this way, analyses have illuminated new avenues of appropriation along GVCs. In their book Outsourcing Economics, Milberg and Winkler (2013) show the empirical connections between financialization of the US economy with outsourcing by US firms

Global Value Chains and Global Value Transfer    221 that began with corporate restructuring in the interest of maximizing shareholder value (Lazonick and O’Sullivan 2000). TNC concentration increased in the wave of mergers and acquisitions of the 1980s motivated by the need to counter the falling rate of profit that marked the end of the postwar boom. Mergers and acquisitions were accompanied by corporate restructuring in the form of downsize and distribute, as TNCs focussed on ‘core competencies’ while outsourcing and off-​shoring ancillary activities and ‘low value-​added’ production while retaining ‘high value-​add’ activities such as design, research, and development, branding, marketing, and advertising. That GVC activities located in the Global North are high value-​added bears little relation to productivity. According to Bainman (2014), value-​added in the Global North can be viewed as a form of rent that is rationalized through accounting conventions. Bainman (2014) refers to the income flows into US. TNCs due to high mark-​ups on low-​ cost outsourcing as ‘fictitious value-​added’ in their contribution to the measurement of GDP.7 When compiling national accounts, the US Bureau of Economic Analysis (BEA) need to equate income to value-​added output. When there is not output from fictitious services and manufacturing to match the income, value-​added needs to be ‘imputed’ to get the accounts to match8 (Bainman 2014, 542). In this way, the global distribution of value-​added traces a smiley rather than a sour-​smile that more accurately describes the distribution of value creation along GVCs. The financialization of TNCs has affected the restructuring of production along GVCs and opened up new financial avenues for the appropriation of value created in the Global South that include, but not limited to, the ways in which the structure and function of GVCs have enabled unequal exchange characterised by absolute rent and originating in super-​exploitation. In their study of trans-​Pacific supply chains of US corporations for handheld devices, Froud et al. (2014) argue that US financial power drives and benefits from low labour costs in China in ways that preclude the types of growth in productive power in Asia that was seen in the 1970s and 1980s. Through their exercise of corporate power, firms such as Apple are able to secure large margins to satisfy the demand of shareholders. Any gains from productivity growth by supplier firms through innovation are siphoned downstream along the GVC, preventing them from being reinvested into development and expansion of the productivity base in supplier firms and places ever greater pressures on supplier firms to reduce wages. On the other side, profit growth for TNCs has not seen reinvestment in the expansion of the domestic capital base in the United States. It has been distributed to shareholders, invested in financial assets (including in share buybacks) and hoarded as cash (Froud. et al. 2014; Ivanova 2013). Corporate financialization thus refers to balance sheets that reflect the substitution of financial investments for ‘real’ investment (Krippner 2011). Baud and Durand (2012) examined the accounts of the ten main global retailers to analyse the relationship between corporate financialization and supply chain practices. Despite a downturn in sales growth on domestic markets, retailers increased their return on equity (ROE) due to increased financial investment and command over GVCs. In addition to the intensification of work and a deterioration in working conditions,

222   Susan Newman Baud and Durand uncovered a new mechanism for downstream value transfer. They found that, uniquely in the retail sector, firms operate at the interface between businesses and final customers and can therefore benefit from differences in the terms of payments traditionally existing between these two kinds of economic activities. While customers typically pay at the point of purchase, business payments can take months, generating current liabilities for retailers. Such liabilities have been an important source of funding in the industry, but leading retailers have been able to take greater advantage of their suppliers in the age of GVCs by delaying payments. Baud and Durand (2012) found that the average payment period. ‘Thus, in 2007, the trade partners’ “net” account of retailers represented 43 days of sales, compared with about 30 days in the early 1990s, generating an increasing gap between the accounts receivable and the liabilities due to trade partner’ (Baud and Durand 2012, 257). Retailers have been able to use stakeholder liabilities, essentially as free credit, to fund their desired cash-​holdings, short-​term investments, and increasingly since 1998, the acquisition of financial assets. International trading companies are key monopolistic players in GVCs for agri-​ commodities. Increasing concentration has been a sine qua non for increased command and control of GVCs. For example, the four largest agricultural commodity traders—​ Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus—​control between 75% and 90% of the international grain trade (Baines and Hager 2021); at the international trader level, the top five companies account for a market share of over 55% in coffee (Bargawi and Newman 2017). These firms, many of them privately owned, had been increasingly diversifying their activities into derivatives trading on international commodity exchanges alongside hedge-​funds and institutional investors, with the now well-​documented impact of commodity price movements including heightened volatility (Staritz et al. 2018; Ederer et al. 2016; Clapp 2014; Van Huellen 2020). Commodity traders operate at the interstices of physical and financial markets and have been able to profit from price volatility through ‘speculative’ hedging strategies. Price volatility and attendant price and income risks are transmitted upstream towards local commodity exporters, middle-​men and primary producers via a shift to price-​ to-​be-​fixed contracting. Newman (2009), Bargarwi and Newman (2017), and Staritz et al. (2018) found that the transmission of price volatility from international commodity exchanges to producers has been experienced by the latter as downward pressure on farm-​gate prices, with no related increase when international prices rise. These studies found that the impact on producer prices depended upon domestic marketing structures, cooperative marketing, and the role of the State in mitigating some of the effects of the highly uneven power relationships between buyers and suppliers of primary commodities. A further important dimension of finance and the appropriation and transfer of value in GVCs is the emergence of global wealth chains (Seabrooke and Wigan 2014). Global wealth chains are routes through which owners of capital, such as multinational corporations, channel value created in order to avoid fiscal claims, legal obligations, or regulatory oversight; they therefore tend to exist in offshore jurisdictions and tax havens

Global Value Chains and Global Value Transfer    223 (Seabrooke and Wigan, 2014). Recent estimates of tax haven wealth put it at about 10% of global GDP is held offshore (Alstadsæter et al. 2017).

Global Value Chains and the Ongoing Crisis of Capitalism Several concrete examples in which the relationship between financialization and the structuring of GVCs as they drive the unequal distribution of income and value-​transfer from the Global South to Global North have been outlined in the previous discussion. It is clear from these examples that financialization and GVCs are combined cumulative processes that systematically benefit TNCs of the Global North. The neoliberal restructuring of capital on a global scale over the four decades since the 1970s can be described as the combined process of GVC proliferation and financialization. Internationalization and financialization provides a temporary substitute for domestic growth as a response on the part of large-​scale capitalist firms, in the Global North, to a steady decline in the rate of profit from 1965 to 1982 (Cox 2019). But the overall tendency of this has been a decline in productive or ‘real’ investment in both the Global North and the Global South. For Bainman (2013, 543), ‘[R]‌entier economics [is] worse than global inequality from traditional ‘unequal exchange’. Like capitalists who make no real investments, rentier economies do not advance world productive capacity’. The global financial crisis of 2008 laid bare the contradictions and limits to the strategy of capital accumulation by corporations in the Global North. The response by TNCs has been an intensification in the global concentration of corporate power, acceleration in the trend of investment towards information technology, and a rationalization and shortening of GVCs. The intractable nature of GVCs with extended supplier networks have become apparent with supply chain interruptions caused by the global financial crisis, natural disasters such as the tsunami in Japan in 2011, and most recently with the Global COVID-​19 pandemic. In response, TNCs have placed supply chain logistics, particularly in relation to digitization and data management, at the centre of their operations. There has been a logistical shift of production towards a more concentrated supplier network. Moreover, competition between the United States and China over the extraction of surplus value from the China market, that intensified with the imposition of tariffs on Chinese imports by the Trump administration and China’s restrictions on inward investment; disruptions to supply chains resulting from Brexit; and the impact of the protracted COVID-​19 pandemic, all direct GVC restructuring towards shorter, more localized supply chains so as to maximize operational resilience from the perspective of supply chain logistics. The rationalization and consolidation of supply chains has also occurred in relation to the reorientation of TNCs’ accumulation strategies away from the extension of GVCs

224   Susan Newman to reduce supplier costs towards gaining monopoly power from ownership and control over digitized information and creation of intangible assets. The resulting asymmetry of market structure with intangibles has acted to deepen the smile curve as intellectual monopolies command ever higher intellectual rents (Durand and Milberg 2020). Investment in the IT sector climbed to new heights after 2008, ‘surpassing’, fuelled by the reorientation of TNCs seeking to expand their market access and market share by increasing their investments in data processing, and exacerbated by institutional investors looking towards the most profitable activities. ‘By 2017, of the six transnational corporations with the highest market capitalization, five are high-​tech firms (Apple, Google, Microsoft, Amazon and Facebook) and the sixth is a financial investment firm (Berkshire Hathaway) which has considerable investments in high-​tech companies’ (Cox 2019, 5). This latest phase of global capital restructuring in the context of national economies ravaged by the impact of COVID-​19 will continue to widen the wealth gap and intensify the concentration of wealth at the top. Amazon’s profits have soared amid economic stagnation, worsening unemployment, and destitution of many people in the Global North and South. GVCs and the segmentation of production across countries allowed TNCs and their first-​tier suppliers to force competition among low-​tier businesses within the supply network in a way that promotes poor and worsening working conditions. The 2013 Rana Plaza disaster in which eighty-​seven factory workers were killed, and the spate of suicides by Foxconn workers in 2020 are two well-​publicized and particularly gruesome examples of the extent of the degradation of working conditions. While the fragmentation of workers in GVCs has played a role in limiting the convergence of struggles at the point of production, pockets of resistance and labour unrest have been growing. In China, wildcat strikes and protest numbers grew significantly after the Foxconn suicides. China Labour Bulletin recorded 1,171 workers protests across China between June 2011 and December 2013, 470 of these were by factory workers (China Labour Bulletin 2014) In the period January 2015–​December 2017, 6,694 cases of worker collective action was recorded on the China Labour Bulletin (2018). In an effort to further concentrate ownership of high value-​added activities—​particularly in information technology—​in the wake of the 2008 crisis, there has been an acceleration in the consolidation of ownership through mergers and acquisitions. Such consolidation has occurred not only at the level of TNCs but also in intermediate parts of the supply chain as TNCs sort to rationalize and consolidate suppliers. As Gereffi has noted, ‘the question increasingly posed by the transnational lead firms of GVCs is ‘how can we rationalize our supply chains from 350–​500 suppliers to 25–​50 suppliers’ (Gereffi 2014, 15). This process has led to greater spatial concentrations of the workforce in GVCs and opened up key logistical ‘choke points’. TNCs and their supply networks are more tightly interconnected than ever before, and, as Cox (2019) observed, ‘[t]‌his provides opportunities for developing worker strategies targeted at disrupting the most valuable distribution points within the value chain process’ (20). Cox (2019) also noted

Global Value Chains and Global Value Transfer    225 that, in order to shift the balance of power from capitalists to workers, a reinforcement, deepening, and intensification of worker cross-​border mobilizations is necessary. This would require, in the first instance, a recognition by workers in the Global North and South of the interdependent nature of their struggles. As TNCs outsourced and offshored production, the gap between the profits of TNCs and the wages of the global workforce has grown wider. In the core capitalist countries, real wages have stagnated as the wage share of income declines. A rising profit share has resulted in a greater concentration of wealth at the top and a further ‘hollowing out’ of the industrial workforce in the core capitalist states, often expressed as a shrinking ‘middle class,’ alongside the increased exploitation of the global working class (Milanovic 2016; Cox 2019). As observed by Silver (2003), capitalism is beset by the contradiction between the search for profit—​based upon the intensification of exploitation—​and the need for legitimacy. Contemporary forms of class tensions and global patterns of labour unrest are tied inextricably to capitalist restructuring on a global scale and connected through GVCs. In the West, class tensions have resulted in the loss of legitimacy of capitalist governments, anti-​establishment rhetoric, and the rise of right-​wing populism that contributed to the rise of Trump in the United States, Brexit and nationalism in the United Kingdom, and the rise of far-​right, quasi-​fascist political figures and parties in western Europe.

Conclusion This chapter has discussed continuity and change in the forms of South–​North value transfer as global production has restructured based on a new international division of labour. Traditional forms of unequal exchange that arose from differences in productive structures in the Global North and South in the early postcolonial period in the forms of relative rent continue to play a role in global value transfers. Neoliberal restructuring of capital in response to falling profit rates in the United States from the 1970s has seen an increase in the role of monopoly power in the appropriation of value from the Global South along GVCs, increasingly in the form of absolute rent. The rentier economics that defines capitalist accumulation in the United States has been premised upon the outsourcing and offshoring of production to low-​wage economies, as well as the subjugation and squeezing of the workforce in the United States. The wage share of income in the United States and other financialized economies in the Global North, has been declining since the 1980s, as real-​wage growth stagnated. For several decades, access to credit and the availability of low-​cost manufacturing products produced in GVCs, has allowed corporations to freeze real wages in the Global North while squeezing wages in the Global South. These processes have driven wealth inequalities between nations and classes to historical levels and further entrenched unevenness in the world economy.

226   Susan Newman Workers in the Global North and South have suffered negative impacts from the globalization of production. Their subjugation and oppressions are linked by GVCs, which means that reflexive protectionism on the part of leading economies are unlikely to be of benefit to workers in the Global North. The most recent phase of capitalist restructuring characterized by the rationalization and consolidation of GVCs, the further concentration of capital via the concentration and consolidation of ownership and control over information technology that both intensifies the power of capital over labour and presents new opportunities for workers’ organization in opposition to capitalist exploitation. In order to shift the balance of power from capitalists to workers, a reinforcement, deepening, and intensification of worker cross-​border mobilizations is necessary. This would require, in the first instance, a recognition by workers in the Global North and South of the interdependent nature of their struggles.

Notes 1. In this chapter, GVCs are understood as the organization of production along supply chains that involve arms-​length contracting of suppliers and cross multiple national boundaries. GVCs can resemble linear chains but, more often than not, they encompass more or less complex networks. GVCs often resemble more spider-​like configurations where multiple components via separate suppliers come together for assembly into a final product. 2. See Bair (2005) for a discussion of differences in GVC approaches. 3. Lauesen and Cope (2015) evocatively termed the distribution of value along GVCs as a ‘sour-​smile’. 4. Mainstream economists see technology as the main drivers behind GVCs (Baldwin 2012). 5. Between 2002 and 2008, and again from 2008 to 2012, commodity prices rose rapidly, with some commentators questioning whether this meant an end to a decline in the terms of trade. The commodity boom had been driven by rising demand for raw materials by corporations in China and bolstered by investor interest in commodities in the wake of the global financial crisis. Commodity prices since 2012 have been falling and appear to have returned to long-​term trends prior to the upswing associated with the so-​called commodity super-​cycle. 6. During the immature phase of capitalism, the predominant capital-​labour relation was in the form of absolute surplus-​value. This was replaced by relative surplus-​value as capital took control of the production process. 7. This form of capital accumulation in the United States and other financialized economies has also been described as ‘Profiting without production’. Lapavitsas (2013) related to the ‘changes in the sources and profits’ by financialized TNCs (Milberg 2008) 8. ‘Shaikh showed that the decomposition above can be derived from a basic accounting identity that reflects the necessary distribution of output growth to labor and capital income. Since the identity can be derived without making any assumptions regarding the relative contribution of labour and capital to total productivity growth, the decomposition using real wage and profit growth is meaningless with regard to measuring the relative contributions and proper shares of labor and capital to productivity growth’ (Bainman 2014, 539).

Global Value Chains and Global Value Transfer    227

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Global Value Chains and Global Value Transfer    229 Seabrooke, L., & D. Wigan. (2014). Global wealth chains in the international political economy. Review of International Political Economy, 21(1), 257-​263. Selwyn, B. 2019. ‘Poverty Chains and Global Capitalism’. Competition and Change 23, no. 1: 71–​97. Selwyn, B., B. Musiolek, and A. Ijarja. 2020. ‘Making a Global Poverty Chain: Export Footwear Production and Gendered Labor Exploitation in Eastern and Central Europe’. Review of International Political Economy 27, no. 2: 377–​403. Singer, H. W. 1950. ‘Gains and Losses from Trade and Investment in Under-​Developed Countries’. American Economic Review, 40, no. 2: 473-​485 Smith, J. 2016. Imperialism in the Twenty-​First Century: Globalisation, Super-​Exploitation, and Capitalism’s Final Crisis. New York: Monthly Review Press. Staritz, C., S. Newman, B., Tröster, and L. Plank. 2018. ‘Financialization and Global Commodity Chains: Distributional Implications for Cotton in Sub‐Saharan Africa’. Development and Change 49, no. 3: 815–​842. Suwandi, I. (2019). Value chains: the new economic imperialism. New York: Monthly Review Press. UNCTAD. 2013. ‘Global Value Chains: Investment and Trade for Development’. World Investment Report. Van der Zwan, N. 2014. ‘Making Sense of Financialization’. Socio-​Economic Review 121: 99–​129. Van Huellen, S. 2020. ‘Too Much of a Good Thing? Speculative Effects on Commodity Futures Curves’. Journal of Financial Markets 47:100480. West, P. 2012. From Modern Production to Imagined Primitive: The Social World of Coffee from Papua New Guinea. Durham, NC: Duke University Press. World Bank. 2017. ‘Measuring and Analyzing the Impact of GVCs on Economic Development’. Global Value Chain Development Report. World Bank. 2019. ‘Technical Innovation, Supply Chain Trade and Workers in a Globalized World. Global Value Chain Development Report.

Chapter 13

Internat i ona l Ex pl oitation , C a pi ta l E x p ort, and U ne qua l Exchang e Jonathan F. Cogliano, Soh Kaneko, Roberto Veneziani, and Naoki Yoshihara

Introduction It is difficult to overlook the large inequalities across countries in income per capita and in output per worker that characterize the global economy. Indeed, empirical studies of long-​run historical data show that inequality in per capita income between countries has been expanding since 1820 (see Maddison 2001). It should therefore come as no surprise that a central topic in economics has been the study of the mechanisms generating such persistent, if not widening, disparity between rich and poor countries. According to the ‘convergence theory’ (or ‘catch-​up theory’) in standard macroeconomics, if all countries have access to the same production techniques and are able to trade freely, then per capita incomes in poorer countries will catch up with richer countries. For, given that technology is characterized by diminishing returns, countries with low capital per capita can grow faster. As a result, in the long run all countries converge to the same level of per capita income (more precisely, income per hours worked). Similarly, the neoclassical Heckscher-​Ohlin-​Samuelson (HOS) theory of international trade emphasizes that both rich and poor countries enjoy mutual gains from trade due to the principle of comparative advantage. In other words, in the mainstream approach to international economics, trade can only be mutually beneficial and growth inducing, and unfettered competition has a built-​in equalizing effect. From this perspective, inequalities between countries, uneven

232    Cogliano, Kaneko, Veneziani, and Yoshihara development, and the emergence of a hierarchy in the world economy can only be explained by some forms of market failure, such as the presence of externalities and/​ or market imperfections—​arising, for example, from increasing returns to scale, as in Krugman (1981), or borrowing constraints in international financial markets, as in Matsuyama (2004). This view stands in stark contrast to the radical and Marxian analysis of the global economy. In c­ hapter 22 of Capital I, Marx (1954) argues that international labour productivity differentials imply that the domestic labour values of commodities in rich countries are lower than those in poor ones. In this context, the free trade of commodities across borders yields an unequal exchange of labour (UE, hereafter): Rich countries sell commodities embodying less labour in exchange for commodities with higher labour content, and vice versa for poor countries. This is a corollary of the Ricardian theory of international trade (Ricardo 1951), where free trade is governed by the principle of comparative advantage. Given that countries have access to different technologies, domestic commodity prices that are determined by labour-​value pricing will differ in autarkic conditions. However, they will converge to an international (equilibrium) price system once commodities are freely traded on global markets. Thus, in the Ricardian case, inequalities emerge from competitive behaviour and free trade. Unlike in the Ricardian setting, Arghiri Emmanuel (1972) supposes that all countries have access to the same technology, but, due to significant barriers to migration and differences in labour market institutions, wage differentials persist across borders. He then shows that assuming free trade in international goods markets and perfect capital mobility, profit rates equalize across countries, and this causes transfers of surplus labour from poor countries with lower capital–​labour ratios to rich countries with higher capital–​labour ratios, and thereby widens the wealth gap. This is the celebrated theory of unequal exchange, one of the most influential elaborations of Marx’s theory in ­chapter 22 of Capital I. In the world-​systems perspective adopted by Emmanuel, the capitalist world economic system is characterized by a core–​periphery structure in which the periphery is economically subordinate to the core. Peripheral countries, which historically comprised underdeveloped countries and former colonies, play a complementary role which fosters capital accumulation in the core by providing raw materials and low-​cost crops. The plantation economy accompanied with the premodern slavery is a typical historical example of the periphery economy, whose economic development was dependent on the capital accumulation in the core, and in which wage disparity between the core and the periphery was institutionalized.1 Emmanuel’s analysis accurately captures important aspects of the historical reality of North–​South economic relations after World War II. Given the institutionalized wage disparity and profit rate equalization via capital mobility across borders, the international free trade of commodities is characterized by complete specialization in equilibrium: capital-​rich core countries specialize in the production of goods which use a more capital-​intensive technology, while the capital-​poor

International exploitation   233 peripheral countries specialize in more labour-​intensive sectors. In this equilibrium, core countries earn more per capita national income than those in the periphery, which implies the emergence of international UE, with the core exploiting the periphery. Moreover, countries in the periphery are actually worse off in the free trade equilibrium than in autarkic conditions. Paul Samuelson (1976) famously criticized Emmanuel’s theory, asserting that countries in the periphery would have no incentives to participate in international trade if their welfare actually declined. To the contrary, all countries would necessarily enjoy mutual gains from trade, due to the principle of comparative advantage. This argument is based on the standard HOS theory by assuming that each country in the periphery has a modern domestic labour market and can freely decide whether or not to participate in trade with core countries. As this assumption is arguably historically inaccurate, his criticism is wide of the mark. Nonetheless, while Emmanuel’s assumptions captured important aspects of the global economy in the first three decades after World War II, they seem less pertinent today, as shown, for example, by the so-​called East Asian miracle since the 1970s. The current world economy is still characterized by major wealth inequalities between the Global North and the Global South, but nowadays countries in the periphery are not necessarily specialized in a monoculture such as coffee or tobacco.2 Similarly, although international labour markets remain segmented and institutional differences across countries persist, wage differentials, at least in some areas of the world have been reduced. However, if this description is accurate, it would seem that Emmanuel’s theory is no longer relevant to understand the global economy. In this chapter, we provide an appraisal of UE theory in the light of recent contributions asking in particular whether it provides a useful theoretical framework to understand inequalities in a global, competitive economy. As we have just argued, this appraisal is relevant in the light of the recent trends in the world economy. But it is also theoretically important: does the validity of the theory of unequal exchange hinge, crucially, on market imperfections (just like, somewhat paradoxically, neoclassical explanations of inequalities do)? Or can we provide an explanation of UE, and international disparities, that is consistent with the existence of mutual gains from trade between the North and the South countries? This is a key question since, in a Marxian approach, “a richer country exploits a poorer one, even when the latter benefits from the exchange” (Marx 1968, ch. 20). The broader question of the validity, and relevance, of UE theory in the present world can be split into two parts. One concerns the appropriate concept of UE. It is now almost a commonplace, even outside of the mainstream, to consider UE theory logically flawed and essentially metaphysical, largely due to its reliance on the labour theory of value. Even when UE theory is not discarded out of hand due to its alleged conceptual problems, its normative relevance is often questioned. Emmanuel’s notion of UE, for example, focuses on the differences between the international prices and (domestic) labour values of commodities, but the normative relevance of this definition is not immediately obvious. Why should such discrepancies be a major concern for socialists? And if such discrepancies obtain only under the restrictive assumptions underlying

234    Cogliano, Kaneko, Veneziani, and Yoshihara Emmanuel’s approach, shall we conclude that the current global economy—​where such assumptions seem much less accurate—​is free of UE and exploitation? The other part concerns the determinants of UE: What are the factors that lead to the emergence, and persistence, of unequal exchange, exploitation, and a hierarchical structure in international relations? Do these phenomena arise from market imperfections, such as imperfect competition, or trade barriers (and would therefore be eliminated by promoting free trade)? Or can they arise in competitive markets, as the product of capitalist relations of production? In this chapter, we review some recent contributions that address the issues of the appropriate definition of UE, its normative relevance, and the determinants of UE exploitation and class.

The Economic Environment Consider a simple international economy with a set  =​{1, . . . N} of countries. A country is generically denoted by ν. For simplicity, we assume that only two goods are produced and traded in internationally competitive markets. They are produced by means of themselves and of one primary factor, namely human labour, which is assumed to be homogeneous.3 Citizens in each country plan their economic activities over a time horizon consisting of t =​1, 2, . . . ,T periods. In each period t,4 we denote by pt = (​ p1,t , p2,t ) the (row vector of) commodity prices. Because the international goods market is competitive the law of one price holds. We assume that countries can borrow and lend on a perfectly competitive international credit market and the equilibrium interest rate in period t is denoted by rt.5 In order to abstract from market imperfections and normatively irrelevant sources of heterogeneity, and to investigate the fundamental determinants of UE, we assume conditions of production (available technology) and consumption (evaluation of national welfare) are common to all countries.

Production The production of each good requires as inputs both commodities and labour. All countries can access the same production technology defined as aij > 0 and Lj > 0 for i, j =​1, 2, where aij is the amount of commodity i =​1, 2 necessary as a material input to produce one unit of commodity j =​1, 2 and Lj represents the amount of labour time necessary to produce one unit of commodity j =​1, 2. The structure of material inputs necessary for production is denoted by a Leontief matrix of input coefficients,6

a11 A= a21

a12  , a22 

International exploitation   235 and the symbol Aj denotes the j-​th column of A, namely the structure of inputs in sector j. The structure of direct labour inputs is captured by the vector of labour coefficients L = ​(L1 , L2 ) . This implies that in order to produce an amount xj of good j one needs Ajxj units of the two goods and Ljxj units of labour as inputs. Given the Leontief production technique  ( A, L) , the labour values of all commodities are given by v ≡ L(I–​A)–​1 > 0. Production takes one time period. The amount of output that can be produced in a given period depends on the endowments of the two goods, and labour, available in the economy at the beginning of the period. Available endowments are determined by past decisions to save and accumulate. Formally, at the beginning of period t, each country is endowed with a nonnegative commodity bundle ω ​ νt −1 = (ω1ν, t −1 , ω 2ν, t −1 ) , which is carried over from the previous period t − 1, and with one unit of (homogeneous) labour.

Behaviour In order to focus on international trade, we abstract from heterogeneity within countries and assume that all fellow citizens are alike. Therefore the index ν denotes both a country and what we may consider to be its representative agent. Citizens care about consumption of goods and leisure, and their welfare in a given period is captured by a function that measures the welfare of the representative agent. As already noted, we do not believe that international inequalities are due to differences in preferences that citizens of different countries have concerning consumption and leisure: a higher level of (per capita) income is not due to the natural inclinations and ethics of certain peoples, and conversely poverty does not stem from the laziness or lack of imagination of the others. Therefore we assume that the one-​period welfare function is common to all countries and is given as follows: for every consumption level of commodities c = (​ c1 , c2 ) and the leisure hours 1 − l (total disposable time which is normalized to one unit, say one day, minus labour hours),

u(c, l ) = h(c ) + φ(1 − l ),

where h and ϕ are increasing in c and 1 − l, respectively. In other words, welfare increases as national income grows and citizens are free from toil.7 The welfare of the citizens of a country over their whole life can then be expressed as the sum of the welfare levels attained in every period:

T

∑ ρ u (c t =1

t −1

ν t

)

, ltν , (1)

where 0 < ρ ≦ 1 is the discount factor, which is common to all countries. If ρ < 1 then countries have a presentist bias: they prefer to obtain welfare earlier rather than later.

236    Cogliano, Kaneko, Veneziani, and Yoshihara If, instead, ρ =​1 then countries are indifferent between obtaining one unit of welfare today, or in some future period. We take the simplest possible approach by assuming that the behaviour of a country can be formulated as an optimization problem where countries choose a set of actions, among those available to them, that maximize their lifetime welfare.8 The actions countries undertake include production, lending/​borrowing, trading inputs and final goods, work, consumption, and saving. In our model, at the end of every t, countries decide how much of each good to consume, and how much to invest on capital assets. At the beginning of t they make their production and lending decisions. First, they decide how much of their wealth to lend on the credit market, which we denote by ztν. Then, they determine their production activities, deciding to produce using their own capital or by borrowing capital abroad. ​xtν = ( x1νt , x2νt ) denotes the outputs produced through the former method, and ​ytν = ( y1νt , y2νt ) the latter. Countries can also decide to use their wealth at the beginning of t to purchase goods to be sold at the end of t, which we denote by δ​ tν = (δ1νt , δ 2νt ) . The actions available to countries are constrained by the external economic environment, their own endowments, and past decisions. In the competitive setting countries take the international prices of commodities and the world interest rate as given.9 Formally, let the sequence of commodity prices and the international interest rate be denoted by (p, r ), which consists of prices at the initial period p0 and the full path of T prices and interest rates in all subsequent periods {( pt , rt )}t =1.10 Given the price vector, countries face a number of constraints that define the boundaries of their feasible choices. (i) At the beginning of period t, country ν owns an amount of wealth (the value of its capital endowments), pt−1ωνt−1, which is the result of past decisions. This wealth constitutes the budget that can be lent abroad (ztν), or used either to obtain material inputs to produce outputs (pt−1Axtν), or for the speculative purchase of goods to be sold at the end of the period (pt−1δtν); (ii) At the end of period t, each country obtains income by selling its output (pt(xtν+​ytν)) and any goods purchased at the beginning of t for speculative purposes (ptδtν). In addition, income is obtained when credit contracts are closed and capital and interest are paid back ((1+​rt)ztν). This income can be used to finance consumption expenditure ptctν, savings ptωtν, and the repayment of debt ( (1 + rt ) pt−1Aytν); and (iii) Total labour spent in productive activities (L(xtν+​yνt )) cannot exceed the endowment.

Formally, in any t, given a price system ( pt −1 , pt , rt ) , each ν faces the following constraints:

(

)

pt −1 Axtν + δ tν + ztν = pt −1ωtν−1 ; (2)

International exploitation   237

(

)

(

)



pt xtν + δ tν +  pt ytν − (1 + rt ) pt −1 Aytν  + (1 + rt ) ztν = pt ctν + ωtν ; (3)



L xtν + ytν = ltν 1. (4)

(

)

Finally, in order to fully determine the choices of each country we need to specify a terminal condition constraining choices at the end of the relevant time horizon: (iv) In the final period T, each country ν leaves an amount of wealth (pT ωTν) that is at least as large as the amount it inherited, re-​evaluated at current prices (pT ων0). Condition (iv) can be interpreted as a statement capturing the bequest motive that characterizes most agents, and every nation. But it can also be considered as a normative condition imposing a sustainability constraint: no country is allowed to deplete the capital stock. Formally:

pT ωTν  pT ω 0ν . (5)

In summary, for a given path of the price vector { pt }Tt=​0 and {rt } Tt=​1, each country ν chooses a complete plan ( xtv , ytv , ztv , δ tv , ωtv ), in order to maximize (1) subject to constraints (2)–​(5) and given inherited capital stocks ων0. We denote country ν’s optimization problem as MPν and the maximum lifetime (discounted) welfare that country ν can obtain if it is endowed with ων0 as V (p0ων0).

Reproducible Solutions In reality the decisions undertaken at the country level are shaped, in part, by international institutions, bilateral and multilateral agreements, international law, and customary norms—​as well as, at times, coercive means employed by powerful countries. However, abstracting from these myriad geopolitical factors and focusing on purely economic transactions, imperial or subtle neocolonial relations still characterize the extraction of natural resources, production and exchange of goods, and global credit and financial markets. Of course, if income and welfare inequalities, exploitation, and unequal exchange emerge from the use of brute force, which allows powerful countries to steal from weaker ones; or to compel them to sell at unfairly low prices, then international relations are obviously marred by major injustices. But suppose that agents in international goods and credit markets were subject only to ‘the dull compulsion of economic relations’ with competitive forces fully at play without any outside interference, while preserving capitalist relations of production. Would the global economy become automatically fair? Or, to put it in a slightly different way, does our indictment of capitalism, and its global reach, depend fundamentally on the presence of force and coercion?

238    Cogliano, Kaneko, Veneziani, and Yoshihara This is not an idle question. If the main injustice of capitalism—​and, in the international context, of neocolonial relations—​was the use of force, or threat thereof, then one may argue that the key political objective is to even the playing ground, and make sure that no country can, say, invade another. But to enforce peaceful relations is not necessarily to promote a fundamental change in production relations. These are conceptually different objectives and should be analysed separately. Hence, in our abstract thought experiment, we shall consider allocations where countries are only subject to the ‘dull compulsion of economic relations’ and, as a first step in the analysis, we shall focus on competitive allocations. Can UE emerge even in a setting characterized by economic interactions that are only mediated by competitive markets? What are the factors driving exploitative relations in such an abstract setting? To be specific, we adopt a concept of Marxian equilibrium first proposed by Roemer (1981, 1982), namely the notion of a reproducible solution (RS). At any period t, let ct denote the aggregate consumption of all countries, and let a similar notation hold for all other aggregate variables xt, yt, zt, δt, ωt.11 The concept of market equilibrium, RS, relevant for the international economy is defined by the following five conditions. The first condition concerns the choices of the citizens of each country in isolation, and consistent with our analysis in the section ‘Behaviour’, it stipulates that each country ν chooses its consumption, saving, and production plans to maximize national welfare—​namely, it solves the optimization program MPν. The following three conditions, instead, stipulate that the actions chosen by the citizens of different countries are compatible in the aggregate. At the beginning of each period, the aggregate demand of capital goods by all countries, either for productive purposes, or for speculative aims, must not exceed the total supply of capital stocks available globally:

A ( x t + y t ) + δ t  ω t −1 .

(6)

At the end of each period, the aggregate demand of goods for consumption or investment purposes should not exceed aggregate global supply:

x t + y t + δ t  ct + ω t .



(7)

The international credit market should also clear in every period:

pt −1 Ayt = zt

(8)

Finally, at the end of the planning horizon each country must leave at least as much of its total capital stocks as it inherited:

ωT  ω 0 . (9)

International exploitation   239 This notion of equilibrium is rather different from the standard neoclassical concepts because the emphasis is on the reproducibility of social and economic relations over time, as captured especially by conditions (7) and (9). In summary, a RS comprises a price vector (p, r ) specifying commodity prices and the interest rate over the entire horizon and an associated set of actions for all countries that solve the countries’ maximization programme MPν and satisfy conditions (6)–​(9). One important feature of equilibrium prices should be pointed out at the outset. As we have noted, competitive forces lead to the law of one price to hold in the credit market, and a unique interest rate prevails in the global economy. However, in a perfectly competitive market, competitive pressures will also lead to the erosion of extra-​profits from productive activities, namely profits above and beyond the return on capital lent on the credit market, and all sectors in all countries will earn the same revenue (net of the cost of capital inputs) per unit of labour employed. This leads to a well-​known result in international economics, namely the equalization of the prices of factors of production even if they are not mobile across borders. Therefore, letting wt denote the wage rate at t,12 at a RS

pt = (1 + rt ) pt −1 A + wt L .

(10)

General Definition of Exploitation At the most general level, according to UE theory, exploitative relations are characterized by systematic differences between the amount of labour ‘contributed’ to the economy, in some relevant sense, and the amount of labour ‘received’, in some relevant sense. Yet, there are many conceivable ways of defining the labour given and received by agents. In his seminal book on exploitation theory alone, John Roemer examines no fewer than six distinct UE definitions (see Roemer 1982, Part I and pp. 121, 132–133, 168), and many other approaches have been proposed in the literature, in addition to those briefly sketched in the Introduction.13 Alternative UE definitions may seem to differ for relatively minor, and merely technical details. At a closer look, however, some deep theoretical cleavages emerge and different UE approaches incorporate such distinct normative and positive intuitions that it is legitimate to wonder whether they actually bear any family resemblance. In some approaches, exploitation is defined as a property of economic actors: it measures the status of an actor in the network of labour flows—​how much labour the actor contributes to the rest of society and how much labour the actor receives back. In others, exploitation is primarily a relation between economic actors (e.g., Holmstrom 1977; Fleurbaey 2014 ). The normative content of the notion of UE exploitation is also contested. According to Elster (1985, 167), ‘Being exploited means, fundamentally, working more hours than are

240    Cogliano, Kaneko, Veneziani, and Yoshihara needed to produce the goods one consumes’, and thus exploitative relations are affected by saving/​investment decisions. Other authors, instead, emphasize purchasing power and the idea that ‘workers give more labor to their employers than they receive through the goods their wages can afford’ (Fleurbaey, 2014, 653), and consumption decisions are irrelevant to define exploitation status. And so on. In other words, there is no shortage of definitions of UE theory: many different definitions can be, and have in fact been, proposed, which incorporate different positive and normative intuitions. Nor is there any shortage of heated debates over which definition is more rigorous, or better incorporates Marxian intuitions, or returns intuitive verdicts in certain cases. Instead of proposing another definition, and defend it on exegetical or empirical grounds, in a series of contributions we have adopted a novel axiomatic approach to exploitation theory.14 The fundamental advantage of an axiomatic framework is that it allows one to start from first principles in order to analyse what exploitation is, and how it should be measured. The axiomatic method can thus be used to rigorously and explicitly state the normative and positive foundations of the notion of exploitation, and to precisely identify differences and similarities between alternative approaches. Veneziani and Yoshihara (2018) have identified the core of UE theory that is shared by all of the main approaches in the literature. They have first formalized the (often implicit) intuitions incorporated in the various definitions as separate axioms. Then, they have formulated a single domain condition which summarizes the foundations of UE exploitation theory. The domain axiom, called Labour Exploitation, expresses the following idea: at any allocation, given any definition of exploitation, the exploitation status of every actor is unambiguously determined by comparing the labour contributed to the economy, and the labour received. The former quantity is just a number which captures the amount of labour spent in productive activities. The labour received is a (possibly degenerate) interval and it is determined by identifying two (possibly equal) commodity bundles, which should be affordable and technically feasible, and the labour associated with, or contained in them, which is (a linear transformation of) the labour necessary to produce them as net output. If the labour contributed is more (resp., less) than the maximum (resp., minimum) amount of labour received, then the agent is regarded as exploited (resp., an exploiter). Labour Exploitation sets weak restrictions on the way in which the set of exploiters and the set of exploited agents are identified and it can be shown that all of the main approaches satisfy it. We can apply this axiom to the international context and derive a general approach to defining UE exploitation. Consider an RS with equilibrium prices (p, r ) and the associated actions. In order to define the amount of labour received by a country ν we shall focus on a normatively relevant set of commodity bundles at period t, denoted as Bt, which represents the set of available consumption bundles if country ν withholds capital stocks pt−1ωνt−1 at the beginning of period t for next period’s production.15 Then, following Veneziani and Yoshihara (2017a, 2017b, 2018), we can state that any UE theory

International exploitation   241 formulates the notion of exploitative relations as follows: in equilibrium, in every period t, the mutually disjoint subsets of exploiting and exploited countries are identified by specifying, for each country ν at most two reference bundles ctν, ctν ∈ Bt such that λctν ≧λc−tν and

ν is a UE exploiter ⇔ ltν < λct ν ; ν is UE exploited ⇔ ltν > λ c νt .

In order to interpret the previous definition, recall that the exploitation status of country ν is determined by the difference between the amount of labour ‘contributed’ and ‘received’ by ν. The former quantity is given simply by the amount of labour performed by ν in productive activities, lν. But there are many possible views concerning the latter quantity. As a domain condition, the previous definition provides some minimal, key restrictions on the definition of the amount of labour that agents receive. To be specific, it requires that the exploitation status of each country be determined by identifying two nonnegative vectors ctν,ctν—​call them the exploitation reference bundles (ERBs)—​whose labour content, the amount of labour that ν receives, is the value of the labour necessary to produce the ERB as net output, λctν and λctν. If ν supplies lν, and lν is more than λc tν, then ν is regarded as contributing more labour than ν receives, and is thereby exploited; and similarly for exploiters. The ERBs must have two properties. First, they must be in principle affordable, at the ruling international prices given the country’s decisions and endowments. This embodies the idea that the amount of labour that a country receives depends on national income. In standard approaches, the ERBs coincide and they are equal to the bundle actually chosen by the agent. Our approach here is less demanding in that it only requires that the ERBs be potentially chosen. Second, the ERBs must be technically feasible. This embodies the intuition that the amount of labour received by an agent is related to production conditions. More precisely, the ERBs should be technologically feasible as net output, and their labour content is the amount of labour socially necessary to produce them. These properties, which can be shown formally to be shared by all of the main approaches, may seem rather weak and undemanding. Yet, perhaps surprisingly, they outline very clear boundaries for the set of admissible definitions of exploitation in the global economy, and provide the conceptual framework to analyse the emergence of exploitative relations in the international context. In a series of seminal contributions, John Roemer (1982, 1983) has adopted the UE perspective to analyse UE exploitation in the global context and the hierarchical structure of the international economy. First, Roemer (1982, ch. 1) analyses unequal exchange in a precapitalist economy in order to identify the sufficient conditions for the emergence of UE exploitation in the global economy. By means of a numerical example, he shows that, given international inequalities in the ownership of productive assets and a perfectly competitive world market for commodities, international relations are characterized by

242    Cogliano, Kaneko, Veneziani, and Yoshihara UE exploitation. Neither international credit markets nor labour flows across borders are necessary. Roemer (1983) then shows that if a global credit market is also present, in the presence of asset inequalities across borders, international relations are characterized both by UE exploitative relations and by a hierarchical structure depending on the position of countries in the credit market. A country’s position in the credit market is also correlated to its UE exploitation status. In terms of the debates sketched in the Introduction, Roemer’s (1982, 1983) results provide some fundamental insights. First, mutual gains from free trade and UE exploitation are not mutually inconsistent. Even without market imperfections and coercion the economic development of less developed countries is crucially dependent on capital exports from developed countries, and surplus is transferred from the former to the latter via international credit markets. Second, the fundamental source of UE exploitation (and classes) is the inequality in the holdings of productive assets. We analyse the recent literature that reconsiders Roemer (1982, ch. 1; and 1983) in the next two sections.

The Emergence of International UE In this section, we discuss the emergence of UE in international economies without capital mobility across borders focusing on Kaneko and Yoshihara (2016) and Yoshihara and Kaneko (2019). The starting point of their analysis is that Roemer’s (1982) numerical example, while insightful, is not a general proof. Kaneko and Yoshihara therefore extend Roemer’s work to characterize the necessary and sufficient conditions for the emergence of UE in the pre-​industrial world economy. We consider a special case of the model outline in the section “The economic environment” by focussing only on two countries,   = ​{Nh, Sh} , which can be thought of as the Global North and the Global South. We assume that once countries attain a common minimum consumption standard, which can be thought of as a common subsistence consumption bundle b > 0, they are interested simply in minimizing toil. As a result, a country’s welfare at t can be expressed as u (c , l ) =​1 − l for any c ≧ b. We shall also abstract from time preference and assume ρ =​1. Given these simplifying assumptions, the model can be interpreted as portraying a pre-​industrial world economy, as international financial networks are absent and countries’ welfare functions are characterized by a preference for leisure, once a minimum subsistence level is reached. The latter assumption captures some ubiquitous properties of pre-​industrial societies before the new time discipline was imposed by the introduction of capitalist relations of production at the end of the eighteenth century (see Thompson 1967; Cunningham 1980, 2014). In a precapitalist context, economic activity

International exploitation   243 is not driven by capital accumulation, and so no feature of industrial capitalism is observed in equilibrium.

Incompletely Specialized Equilibria in Pre-​Industrial World Economies In the pre-​industrial world economy, consumption in each country is equal to b and the speculative motive is absent (δt =​ 0) in equilibrium. Further, there is no international credit market and therefore no lending or borrowing (yt =​ 0 and zt =​0); and labour is immobile. However, labour and capital are traded within each country ν, and their respective prices are the wage rate wtν and the interest rate rtν.16 In order to examine the emergence of UE in a situation similar to the standard HOS trade model, Kaneko and Yoshihara (2016) and Yoshihara and Kaneko (2019) focus on RSs with imperfect specialization, in which each country may specialize in the production of one good, but does not produce only that good (xtν > 0). Under these assumptions, competition on international commodities markets leads to factor price equalization: the wage rates and interest rates in all countries are equal (wtNh =​ wtSh =​ wt and rtNh =​ rtSh =​ rt, all t) if, at t =​0, the organic composition of capital is different in the two sectors.17 Therefore under these conditions, and assuming initial prices to be strictly positive, the equilibrium price vector will be given by equation (10). Moreover, it can be shown that in every period t, wt = (​1 + rt ) wt−1 and the real interest rate (that is, the nominal interest rate minus the inflation rate) is always positive: Πt ≡ (1 + rt ) pt−1 − pt ≥ 0 at every t, provided initial prices p0 are not proportional to labour values. Finally, an RS in this economy exists only if the initial aggregate capital stocks ω0 are sufficient to ensure that all countries reach subsistence. Let ω be the vector identifying the minimum level of capital in both sectors that allows both countries to reach subsistence. We shall assume that ω0 =​ ω.18

Characterization for the Emergence of UE In the pre-​industrial world economy, the general approach described in the section ‘General Definition of Exploitation’ reduces to the standard definition: country ν is an exploiter (exploited) at period t if and only if it works less (more) than the socially necessary labour time of the bundle b: Lxtν < λb (Lxtν > λb).19 Assume that the North is richer than the South in the initial period: ω0Nh ≥ ω0Sh, where Nh ω0 +​ ω0Sh =​ ω0 =​ ω. Kaneko and Yoshihara (2016) and Yoshihara and Kaneko (2019) show that in equilibrium the North exploits the South at period t if and only if

244    Cogliano, Kaneko, Veneziani, and Yoshihara

(1 + r ) p t

t −1

ωtNh−1 − pt ωtNh > Πt (ω / 2) > (1 + rt ) pt −1ωtSh−1 − pt ωtSh . (11)

In order to interpret the latter expression, recall that Πt can be interpreted as the real interest rate on assets. Therefore the second term represents the real interest revenue at period t corresponding to an egalitarian distribution of assets. Thus, a country ν is an exploiter (exploited) at t if and only if ν’s real interest revenue is higher (lower) than the egalitarian benchmark at t. This confirms and extends Roemer’s result: exploitative relations arise from asset inequalities if countries trade in perfectly competitive goods markets. The adoption of a dynamic perspective, however, allows Kaneko and Yoshihara (2019) to address an equally important issue that was obscured in Roemer’s (1981, 1982) static, one-​period models: are asset inequalities and competitive goods markets sufficient for exploitative relations to persist? This question was already answered in the negative by Veneziani (2007, 2013) in the analysis of rather different models of national economies: asset inequalities and competitive markets (including a competitive labour market) are not sufficient for exploitation to persist if agents do not discount the future.20 Kaneko and Yoshihara (2019) confirm and extend this insight. Given ρ =​1, exploitation decreases over time and disappears as t goes to infinity, with both countries working the same amount of time (λb) in the limit. This happens either because commodity prices converge to labour value pricing, or because each country’s capital stocks converge to the world average. This result raises some doubts on the key conclusions of Roemer’s theory and raises the issue of the determinants of exploitative relations in the international economy. We return to it in the concluding section.

Class and Exploitation with Free Capital Mobility Roemer’s (1983) conclusions depend on a specific definition of UE-​exploitation and are derived in the context of a static, one-​period economy with rather specific assumptions on technology and preferences. Veneziani and Yoshihara (2017b) set up a dynamic model of a global economy that significantly generalizes Roemer (1983) in terms of the assumptions on preferences and technology, and of the set of equilibria considered, and consider a whole class of definitions of UE-​exploitation consistent with the approach laid out in the section ‘General Definition of Exploitation’. Their basic insights can be illustrated in the simpler context laid out in the section ‘The Economic Environment’.

International exploitation   245

The Emergence of Class Division Consider the general model outlined in ‘The Economic Environment’. Can a hierarchical structure emerge, in equilibrium, in the global economy with a competitive credit market? Will a core–​periphery dynamic emerge endogenously from financial interactions only? Following Roemer (1983), we define four categories that identify a country’s position in the global economy based on their optimal actions in the credit market. In each period t, a country is a capital exporter if it can optimize without relying on foreign borrowing, while lending to other countries; it is autarkic if it does not need to borrow or lend to optimize; it is a capital importer if it is at least partially dependent on foreign capital; and it is underdeveloped if it is completely dependent on foreign capital and cannot produce anything on its own. In each period countries fall into one, and exactly one of these categories, which can be denoted respectively as the sets Ct1, Ct2, Ct3, Ct4.21 Countries in Ct1 and in Ct3 ∪ Ct4 can be interpreted as the core and the periphery, respectively. Veneziani and Yoshihara (2017b, Theorem 1) show that in equilibrium in every period t, a country’s class is determined by the monetary value of its capital stocks at the beginning of the period, pt−1ωvt−1 and call the result the dependency school theorem. The result proves that rich enough countries increase their welfare by exporting their capital and belong to Ct1, while less developed countries without sufficient assets have to borrow on international markets in order to finance their production. This implies that mutual gains from trade for all countries coexist with a core–​periphery structure in which the economic development of the poorer countries depends on capital imports from the richer ones.

The Relation between UE Exploitation and Class One of the key principles of Marxian political economy is the idea that class and exploitation status are strictly related. This view can be interpreted as a key axiom of the Marxian analysis of unequal exchange, and Roemer has christened it the class-​exploitation correspondence principle (CECP). The CECP states that in equilibrium at all t every capital exporter in Ct1 (capital importer in Ct3 ∪ Ct4) is an exploiter (exploited). It is not a priori obvious that the CECP will hold for an arbitrary definition of UE exploitation. Indeed, the concept of UE exploitation defined in the section ‘General Definition of Exploitation’ provides one perspective to look at international relations focusing on labour flows across borders. The concept of class outlined in the section ‘The Emergence of Class Division’ provides an alternative perspective focusing instead on financial flows. In principle, there is no reason why the two perspectives should return the same verdict on the structure of international relations.

246    Cogliano, Kaneko, Veneziani, and Yoshihara Is there a definition of UE exploitation consistent with the framework laid out in the section ‘General Definition of Exploitation’ such that the CECP generically holds true in the international economy? Veneziani and Yoshihara (2017b) prove that there exists an entire class of definitions that satisfy the properties in the section ‘General Definition of Exploitation’ such that the CECP holds, including, importantly, a definition of exploitation based on the so-​called “New Interpretation” proposed by Duménil (1980, 1984) and Foley (1982). In this approach, ctν =​ ctν =​ τtνct, where τtν is country ν’s share of global income,22 and country ν is an exploiter (exploited) if and only if ltν < λτtνct (ltν > λτtνct). In other words, a country is UE-​exploiting if the amount of labour contained, or embodied, in its income is higher than the amount of labour performed by its citizens. But this implies that, contrary to the received view, there exists a definition of unequal exchange that is logically consistent and that, far from being metaphysical, is based on empirically observable magnitudes. If this definition—​whose intellectual origins can be traced back to Duménil (1980, 1984) and Foley (1982)—​is adopted, then a number of key insights of UE-​exploitation theory hold: richer core countries can promote capital exports and exploit poorer countries in the periphery which need capital imports to improve their lot. As in the classical theory of UE, global competitive markets enforce a transfer of labour from developing countries to developed ones.

Conclusions This chapter shows that the news of the death of UE theory is wildly exaggerated. Logically consistent and theoretically robust definitions of UE exploitation exist that preserve the fundamental insights of the Marxian analysis of unequal exchange in the international arena. If these definitions are adopted, it is possible to prove that exploitative international relations emerge in the world economy via trade in competitive international trade in commodities. If a global credit market also exists, this creates a structure of international relations characterized by a core–​periphery structure, whereby richer countries act as capital exporters and poorer countries need to borrow in order to improve their lot. Moreover, the position of a country in the international hierarchy is correlated with its exploitation status: richer countries exploit poorer ones thanks to their dominant position in the credit market. One important insight of the chapter is that international relations need not be characterized by force or massive distortions in order to be marred by major injustices and UE exploitation. The sheer pressure of the competitive mechanism, together with capitalist property relations, is enough for exploitation and class to emerge in the international context. As we noted in the section ‘Characterization for the Emergence of UE’, it is unclear whether competition and international asset inequalities are also sufficient

International exploitation   247 for these phenomena to persist as this result hinges on the existence of a positive rate of time preference. To be sure, it may be argued that this is an empirical matter and perhaps it is plausible to assume ρ < 1, in which case exploitation does persist indefinitely. Besides, even if ρ =​1, exploitative relations, once generated, do not disappear completely at any finite period—​though the economy approaches a non-​exploitative allocation as t goes to infinity. Nonetheless, an explanation of the persistence of UE exploitation that crucially hinges on subjective time preferences may be deemed unsatisfactory, and perhaps our results suggest that other factors—​such as asymmetries in bargaining power—​should be brought into play in order to provide a complete theory of UE. Showing the logical consistency and theoretical robustness of UE theory is a preliminary step in a broader research agenda—​important, but preliminary. Hopefully our discussion shows that it is worth pursuing it.

Notes 1. For more on the world-​systems theory, see, for example, Wallerstein (2011, ch. 7). 2. In the postwar period, a core–​periphery structure consistent with Emmanuel’s theoretical approach characterized the relations between the developed Western capitalist countries—​with the United States as the main hegemonic power—​and the underdeveloped former colonial countries. This structure has undergone major transformations after the first oil crisis and the US defeat in the Vietnam War due to geopolitical factors and to major innovations in financial technology. In the current regime of economic globalization, some countries in the periphery have managed to escape their condition of underdevelopment and position themselves as a new frontier of capital accumulation to alleviate the falling profit rates and excess capital in the developed countries. For a thorough discussion, see Arrighi (1994) . 3. Of course, this is empirically false: both population and human capital vary enormously across countries. Yet none of our conclusions depend on this assumption and the model can be easily generalized to take into account heterogeneous labour endowments. 4. In what follows, for the sake of notation brevity, we shall write ‘at all t’ or ‘in each t’ to mean ‘for all t =​1, . . . T ’. [All of the shaded letter “t” should be italic like “t”.] 5. In the section ‘Incompletely Specialized Equilibria in Pre-​Industrial World Economies’, we consider the emergence of UE in autarky and assume that borrowing and lending takes place only within national borders. In this case, a different interest rate rνt will prevail in each country ν. 6. The notation for vector inequalities is as follows. For any x = ​(x1 , x2 ) , y =​( y1 , y2 ) : x ≧ y if and only if xi ≧ yi for i =​1, 2; x > y if and only if xi > yi for i =​1, 2; and x ≥ y if and only if x ≧ y and x ≠ y. 7. By assuming that welfare increases in consumption we are abstracting from the problems related to climate change and pollution. These are obviously very important issues, but we can set them aside for the purposes of our investigation. 8. This is a methodological, rather than ontological, assumption, and it simplifies the analysis considerably. The main conclusions, however, can be reached in a more general setting.

248    Cogliano, Kaneko, Veneziani, and Yoshihara 9. Recall that our aim is not to develop an empirical analysis of the world economy. Our aim is to investigate UE theory at the theoretical level while abstracting from certain features of real-​world interactions, including the actually existing massive asymmetries in economic weight and bargaining power between countries in the international arena. 10. This implicitly assumes rational expectations and is in line with standard models in the literature (see, e.g., Roemer 1981, 1982). 11. Formally, ct ≡ ∑ν∈ ctν, and likewise for all other variables. 12. Formally, factor price equalization implies that for any two countries ν, μ ∈  and any period t, their domestic wage rates are equal wνt =​ wtμ =​ wt. 13. The literature is too vast for a comprehensive list of references. Classic contributions include Morishima (1974), Duménil (1980), Foley (1982), Roemer (1981), and Flaschel (1983, 2010). For a discussion, see Yoshihara (2010, 2017). 14. See Yoshihara (2010, 2017) and Veneziani and Yoshihara (2015, 2017a, 2017b, 2018). 15. To be precise, the set should be denoted as Bt (( p, r ); pt −1 ωtν−1 , ltν ) and is defined formally as follows



Bt (( p, r ); pt −1 ωtν−1 , ltν ) ≡ {c ∈  2+  pt c = (1 + rt − Rt ) pt −1 ωtν−1 + wt ltν }

where Rt ≡

pt ωt −1

is the inflation rate measured by the total capital stocks as numéraire. pt −1 ωt −1 16. Thus, conditions (2) and (3) reduce to (1) pt−1 ( Axtν + δ tν ) =​pt−1ωνt−1; and (2) pt (xtν + δ tν ) =​ ptctν +​ptωtν. The relevant conditions of a RS are modified accordingly. p a + p20 a21 p a + p20 a22 17. Formally, 10 11 ≠ 10 12 . L2 L1 18. Formally, a necessary condition for the existence of a RS is ω0 ≧ A (I − A) −1 (2b), where the right hand side of the latter inequality represents the minimal capital stocks necessary for the production of 2b as net output. Therefore ω ≡ A (I − A) –​1 (2b) . It can be shown that ωt ≧ ω for every t, and in the limit capital stocks would converge to ω in equilibrium. Therefore, the assumption ω0 =​ ω is without loss of generality and it guarantees that ωt =​ ω holds at all t in a RS. 19. In other words, −ctν =​ c−tν =​ b for any ν at all t. 20. Cogliano, Veneziani, and Yoshihara (2016) develop a many-​agent computational simulation to explore technical change and different distributions of bargaining power as causes of the persistence of exploitation and class relations in accumulating economies. Using a similar framework, Cogliano, Veneziani, and Yoshihara (2019) examine the normative aspects of using redistributive taxes to achieve desirable distributions of assets that result in low levels of inequality or the elimination of exploitation. 21. Formally, at t: ν ∈ Ct1 if it has a solution of MPν such that xtν ≥ 0, ytν =​0, ztν > 0; ν ∈ Ct2, if xtν ≥ 0, ytν =​ 0, ztν =​0; ν ∈ Ct3 if xtν ≥ 0, ytν ≥ 0, ztν =​0; and ν ∈ Ct4 if xtν =​0, ytν ≥ 0, ztν =​0. (1 + rt − Rt ) pt −1ωtν−1 + wt lt 22. Formally, τtν ≡ , for any ν ∈ . pt (I − A)(xt + yt )

International exploitation   249

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250    Cogliano, Kaneko, Veneziani, and Yoshihara Samuelson, P. 1976. ‘Illogic of Neo-​Marxian Doctrine of Unequal Exchange’. In Inflation, Trade and Taxes: Essays in Honour of Alice Bourneuf, edited by D. A. Belsley et al. Columbus: Ohio State University Press. Thompson, E. P. 1967. ‘Time, Work-​Discipline, and Industrial Capitalism’. Past and Present 38: 56–​97. Veneziani, R. 2007. ‘Exploitation and Time’. Journal of Economic Theory 132: 189–​207. Veneziani, R. 2013. ‘Exploitation Inequality and Power’. Journal of Theoretical Politics 25: 526–​545. Veneziani, R., and N. Yoshihara. 2015. ‘Exploitation in Economies with Heterogeneous Preferences, Skills and Assets: An Axiomatic Approach’. Journal of Theoretical Politics 27: 8–​33. Veneziani, R., and N. Yoshihara. 2017a. ‘One Million Miles to Go: Taking the Axiomatic Road to Defining Exploitation’. Cambridge Journal of Economics 41: 1607–​1626. Veneziani, R., and N. Yoshihara. (2017b). ‘Globalisation and Inequality in a Dynamic Economy: An Axiomatic Analysis of Unequal Exchange’. Social Choice and Welfare 49: 445–​468. Veneziani, R., and N. Yoshihara. 2018. ‘The Theory of Exploitation as the Unequal Exchange of Labour’. Economics and Philosophy 34: 381–​409. Wallerstein, I. 2011. The Modern World-​System I: Capitalist Agriculture and the Origins of the European World-​Economy in the Sixteenth Century. New Edition. Berkeley: University of California Press. Yoshihara, N. 2010. ‘Class and Exploitation in General Convex Cone Economies’. Journal of Economic Behavior and Organization 75: 281–​296. Yoshihara, N. 2017. ‘A Progress Report on Marxian Economic Theory: On the Controversies in Exploitation Theory since Okishio 1963’. Journal of Economic Surveys 31: 632–​659. Yoshihara, N., and S. Kaneko. 2016. ‘On the Existence and Characterization of Unequal Exchange in the Free Trade Equilibrium’. Metroeconomica 67: 210–​241.

Chapter 14

Im perialism , U ne qua l Exchange, a nd L ab our E x p ort Raúl Delgado Wise

Introduction In the international political economy, monopoly capital has become more than ever the central player. Through a process of mega-​mergers and strategic alliances, this fraction of capital has reached unparalleled levels of concentration and centralization, to such an extent that Samir Amin (2013) insightfully refers to the current phase of capitalism as the era of generalized monopolies. This trend, associated with an advance stage in the operations of Marx’s general law of capital accumulation, has led to an increasing monopolization of finance, production, services, and trade, resulting in the domination of every major global industry by a small cluster of large multinational corporations. In the expansion of their activities, these corporations have created a global network and a process of production, finance, distribution, and investment that has allowed them to seize strategic and profitable segments of peripheral economies and appropriate the economic surplus produced at enormous social and environmental costs. The aim of this chapter is to analyse this phenomenon with particular emphasis on the emergence of a new international division of labour: the exportation—​direct and disembodied—​of labour power. In a first stage, this process involves low-​skilled labour associated with the dismantling of the production apparatus on the periphery and its rearticulation with the major imperialist powers through the mechanism of global value chains. In a second stage, it comprises highly skilled labour related to knowledge intensive activities and the restructuring of innovation systems, with Silicon Valley at the forefront. This new international division of labour, encompassing the direct and

252   Raúl Delgado Wise disembodied exportation of both low and highly skilled labour power, reconfigures the relations of power and dependence on the North–​South or core–​periphery horizon, giving rise to new and extreme modalities of unequal exchange between and among different countries and macro-​regions of the world capitalist system.

Theoretical and Methodological Considerations Unequal exchange is a key issue for understanding contemporary capitalism and imperialism that has sparked multiple debates regarding the nature of North–​South or core–​periphery relations. Analysis of its dynamics demands an understanding of the dialectical method proposed by Marx, and consequently the need to transcend the level of abstraction envisaged by Marx in his masterpiece, Capital, re ‘capital in general’ (vols. 1 and 2) and ‘many capitals’ (vol. 3). It thus implies rising from these levels of analysis to the sphere of nation states, international trade, and the configuration of the world capitalist system, the analysis of which—​although foreseen in the work plan outlined by Marx in his Grundrisse (Rosdolsky 1977)—​falls outside the scope of his inquiry. This does not mean, however, that unequal exchange is a phenomenon that deviates from the fundamental laws of capitalist development posited by Marx in the three volumes of Capital and other writings, but rather that, relying on them, it is possible to advance towards more concrete levels of analysis related to international trade and the development of the world capitalist system. Without going into much detail, the first thing that should be noted is that, at the most general level of abstraction, the primary source of unequal exchange—​which is at the root of the capitalist mode of production—​is the relationship between capital and labour through the exchange of two basic commodities: money and labour power. The bulk of the debate on unequal exchange, particularly that which arose around the question of development (within the framework of the Marxist dependency school of thought), departs from the formation of the prices of production. In this regard, through the configuration of the average rate of profit and the social distribution of surplus-​value between capitals and branches of production/​commerce, it is possible to understand unequal exchange relations between primary goods and industrialized goods in line with Marx’s theory of value. At the level of abstraction of volume 3 of Capital all exchange—​as Andrea Ricci (2019) appropriately points out—​is unequal. Although, when analysing international trade several critical issues such as wage differentials (Emmanuel 1972) and structural differences in the organic composition of capital across the North–​South divide (Amin 1974) come into play. Beyond these and other issues, such as the potentiation of labour, global labour arbitrage, and the problem of transformation in the international context (Astarita 2006;

Imperialism, Unequal Exchange, and Labour Export    253 Garay 1980; Finger 2020 Katz 2018) currently in debate, it is crucially important to recognize that: 1. Unequal exchange involves both wage differentials and uneven development of the forces of production, without one or the other being independent variables, but rather dialectically interrelated categories in the realm of the social relations of production that distinguish the core from the periphery of the capitalist world system (Dussel 2019; Marini 1974). 2. The debates on unequal exchange have underestimated the central importance of the general law of capitalist accumulation postulated by Marx in understanding the phenomenon. This law, which synthesizes the fundamental contradictions of capitalist development, is related to the growing importance acquired, on the one hand, by monopoly capital and, on the other, by the industrial reserve army of labour. The uneven distribution of both along the core–​periphery axis is crucial for understanding the dynamics of unequal exchange in relation to the capital accumulation process on a global scale. 3. The international division of labour has been, and continues to be, a focal point in the analysis of unequal exchange. Contrary to what most of the analysts of unequal exchange postulate, this division is not static nor unidimensional. As we posit in the following sections of the chapter, the turn from the twentieth century to the first two decades of the new millennium has engendered a new dynamic into the international division of labour: the exportation of labour power.

Genesis of a New International Division of Labour As of the end of the 1970s, large multinational corporations initiated a deep restructuring process, transferring part of their production processes to peripheral regions in the search for cheap and flexible labour. This strategic shift entailed what has been described as the new ‘nomadism’ in the global production system, including commercial and services endeavours, that are supported by the enormous wage differentials that exist and are reproduced along the North–​South divide—​the so-​called global labour arbitrage (Foster et al. 2011a, 18). This, in turn, led to a reconfiguration of global value chains, or more precisely, global networks of monopoly capital, through the establishment of export platforms that operate as enclave economies in peripheral countries (Delgado Wise and Martin 2015). The resulting strategic shift in the organization of industrial production has been spectacular: ‘The top one hundred global corporations had shifted their production more decisively to their foreign affiliates [mainly in the South], which now account for close to 60 per cent of their total assets and employment and more than 60 per cent of their global sales’ (UNCTAD 2010). In a similar vein, it is

254   Raúl Delgado Wise estimated that in the periphery around 100 million workers are directly employed in assembly plants established in more than 5,400 processing zones that operate in at least 147 countries (UNCTAD 2020). This significantly transformed the global geography of production to such an extent that most of the world’s industrial employment (more than 70%) is now located in countries on the periphery (Foster et al. 2011b). It is important to highlight that this phenomenon does not imply an industrialization of the periphery, but rather a doubly regressive process that we have conceptualized as economic sub-​primarization (Cypher and Delgado Wise 2008). This means that, far from moving towards a manufacturing export-​led model, what is actually being exported under the guise of manufactured exported goods and without leaving the country is the labour force itself. It should not be forgotten that the assembly plants installed in peripheral countries operate with imported inputs and tax exemption regimes, meaning that the substance of the manufacturing goods exported by them is the labour power incorporated into the productive process. Hence, it entails an indirect or disembodied export of labour power in the guise of exporting manufactured products (Cypher and Delgado Wise 2012; Márquez and Delgado Wise 2012). Three considerations in relation to the genesis and implications of this peculiar export modality are relevant here. The first refers to the implementation of structural adjustment programmes as pillars of the neoliberal restructuring process grounded on the triad of commercial opening, privatization, and deregulation. The objective of these programs, imposed by the World Bank and the International Monetary Fund, was and continues to be the dismantling and disarticulation of the productive apparatus of these economies for the purpose of rearticulating diverse production processes in an asymmetric and subordinate relation to the dynamics of accumulation in the major imperialist powers under the command of monopoly capital. The second consideration, as a corollary or consequence of this momentous shift, is a destruction of the labour markets in the formal economy which create what analysts (see Standing 2011; Sotelo Valencia 2015) have described as a peri-​urban semiproletariat or ‘precariat’, generating in the process a surplus population thrown into the ranks of informality and/​or forced to emigrate in a South–​North direction. The direct export of labour power, through international labour migration, is subjected to high vulnerability and severe limitations in regard to the labour and human rights of migrant workers. Here we need to take into consideration the fact that under the aegis of neoliberalism trade in all commodities except for labour, is liberalized and workers are forced to emigrate from their countries of origin, subjecting them to restrictive migratory regimes that generate as a matter of State policy a growing mass of ‘illegal’ workers and an undocumented surplus population that, as in the case of the United States, pays taxes without receiving social benefits. This labour force, categorized as ‘illegal’ regardless of the labour market demand, is generally subjected to conditions of super-​exploitation, discrimination, and xenophobia, a situation that not only obscures the significant contributions that migrants make to destination economies and societies, but also contributes to criminalizing them and turning them into ‘public enemies’ with important political dividends for the neoliberal far right.

Imperialism, Unequal Exchange, and Labour Export    255 We must also bear in mind that migrant labour did not grow by spontaneous combustion. Nor was it educated for free regardless of the level of studies. The costs of social reproduction, education, and training were assumed by the families of the migrants and the social capital fund administered by the State in the country of origin. These costs, when weighed against the accumulation of remittances that are returned to their countries of origin, tend to be much more onerous. This implies that contrary to what is proclaimed by the World Bank and other institutions at the service of the interests of the United States and other imperialist powers, remittances—​and therefore labour migration—​do not represent a North–​South subsidy, but precisely the opposite: a South–​ North subsidy (Delgado Wise and Gaspar 2018), which is to say, a disguised modality of unequal exchange. The third consideration is that in addition to the direct exportation of labour power, its indirect or disembodied form of exportation deepens the relation of unequal exchange between peripheral countries and those located in the core, given the fact that through the assembly plants—​most of them involving intra-​firm trade—​what is actually being transferred abroad are total profits, that is, the entire stock of surplus value incorporated into the exported good. It represents a modality of unequal exchange that on an international scale resembles the exchange that occurs between labour and capital at the heart of the production process. It is difficult to imagine a more exacting modality of unequal exchange between countries, with the added aggravation that what remains in the country of origin are wages and benefits that are much lower than those that would be granted in the country of destination. Thus, we have the foundation of a new international division of labour based on the direct and indirect or disembodied export of labour power, although at this initial stage it is nourished by an unlimited supply of low or relatively low-​skilled labour.

The Restructuring of Innovation Systems and the Export of Labour Power Broadly Understood The export of labour power—​be it direct or indirect (disembodied)—​acquires its broader meaning by incorporating a qualified and highly qualified labour force. This development, which involves a transition from the export of labour power in a restricted sense to the export of labour power in a broader sense, is a relatively recent phenomenon associated with the profound restructuring that the innovation systems associated with centres of research and development (science and technology) are undergoing. In this sense it behoves us to take a closer look at the most advanced innovation system that exists today, namely Silicon Valley, which is hegemonized by US capital and which operates as a powerful patenting machine with components operating in several peripheral and emerging countries. The organization of what might be conceived of as

256   Raúl Delgado Wise the ‘general intellect’—​a concept coined by Marx to emphasize the social character of accumulated knowledge—​that takes place in this complex system makes it possible to put at the service of the large multinational corporations an impressive mass of qualified and highly qualified workers, representing an incredible scientific and technological capacity, coming from both the centre and the periphery of the system. In this new scenario, a wide range of agents and institutions interact, broadening and accelerating the rates of patenting and simultaneously reducing the costs and risks associated with the invention process (Delgado Wise 2015; Delgado Wise and Chávez 2016; Míguez 2013). Some of the most salient features of what we conceive of as Silicon Valley’s imperial innovation system are: 1. The internationalization and fragmentation of research and development (R&D) activities under ‘collective’ modalities of organizing and promoting innovation processes: peer-​to-​peer, share economy, commons economy, and crowdsourcing economy, through what is known as open innovation. In contrast to the traditional innovation processes that normally take place ‘behind closed doors’ in R&D departments, internal to large multinational corporations, this trend includes the opening and spatial redistribution of knowledge-​intensive activities with the participation of external partners. This complex innovation system is composed of start-​ups that operate as privileged cells of the innovation architecture, together with risk capital suppliers, headhunters, firms of lawyers, subcontractors, universities, and research institutions (Chesbrough 2008). This new way of organizing the ‘general intellect’ gives way to a permanent configuration and reconfiguration of innovation networks that interact under a complex interinstitutional fabric co-​commanded by large corporate capital in tandem with the imperial state. This network architecture transcends, strengthens, and dynamizes at compulsive rates erstwhile ways of promoting technological change.   It should be noted that in this framework scientific and technological work—​ developed through autonomous agents or ‘start-​ups’—​is not formally subsumed to capital, since the inventors are not employees of large corporations. Hence, its subsumption is subtle and indirect, backed by a legal-​institutional framework: The Patent Cooperation Treaty (PCT) administered by the World Intellectual Property Organization (WIPO) and a sophisticated system fabric that fosters the collective development of the products of the general intellect on a planetary scale and their private appropriation through patents and other proprietary mechanisms mediated by law firms in the service of large multinational corporations. In this sense, a dialectic is established between the accumulated social knowledge, its collective spurt —​accelerated by networks of scientists and technologists—​and its enclosure and private appropriation (Foladori 2017). 2. The creation of scientific cities such as Silicon Valley in the United States and the new ‘Silicon Valleys’ established in recent years in peripheral areas or emerging regions, mainly in Asia—​as is the case of Bangalore, India—​, where collective synergies are engendered to accelerate innovation processes (Bruche 2009;

Imperialism, Unequal Exchange, and Labour Export    257 Sturgeon 2003). In essence, as AnnaLee Saxenian (2006) points out, it configures a new georeferenced paradigm, which departs from the old R&D models, and which opens the way to a new culture of innovation based on flexibility, decentralization, and the incorporation, under different modalities, of new and increasingly numerous actors that interact simultaneously in local and transnational spaces. Silicon Valley appears as the pivot of a new architecture of world innovation, around which multiple peripheral links are woven that operate as sort of scientific-​technological maquiladoras located in regions, cities, and universities around the world. This gives rise to a new and perverse modality of unequal exchange, through which peripheral and emerging countries transfer to central countries and to monopoly capital the costs of reproduction of the highly qualified labour force involved in the dynamics of innovation, as well as the potential for generating extraordinary profits or monopoly rents from innovations. 3. The implementation of new forms of control and appropriation of the products of scientific-​technological labour by the large multinational corporations, through various forms of subcontracting and association, as well as management and diversification of risk capital. This control is established in two ways. On the one hand, through specialized teams of lawyers at the service of large corporations, who are thoroughly familiar with the institutional framework and the operating rules of patenting systems. Under the complex and intricate legal-​institutional framework imposed by the WIPO-​PCT, it is practically impossible for independent inventors to register and patent their products alone. On the other hand, there are law firms that operate as talent hunters, contractors, subcontractors, and managers of various kinds in favour of the large companies based in Silicon Valley. This new form of interference and corporate control of innovation dynamics is known as strategic investment (Galama and James 2008).   The way in which the large multinational corporations are inserted into this dynamic—​incubated and deployed through the Silicon Valley system and its satellites—​reveals that more than an agent driving the development of social productive forces, monopoly capital operates as a rentier agent, that is, an agent that appropriates the products of the general intellect without participating in its gestation and development. In other words, the extraordinary profits that constitute the leitmotif of monopoly capital acquire the character of technological rents according to the meaning that Marx attributes to ground rent: the possibility of demanding a significant portion of the social surplus value because of the fact of being the proprietor of a good, in this case the patent, neither produced nor reproducible by the labour force incorporated into the production process. Hence, in contemporary capitalism, monopoly capital has ceased to function as a progressive agent, as a promoter of the development of the productive forces, and has become a parasitic entity, that even decides which potentially transcendent products (due to their use value and potential social benefits) enter the market and which ones remain petrified in the freezer of social history (Foladori 2017).

258   Raúl Delgado Wise 4. The expansion of the labour force along a North–​South axis in the areas of science, technology, engineering ,and mathematics and the recruitment of a highly qualified labour force from the peripheries through outsourcing and offshoring mechanisms. It is important to note that highly skilled migration from peripheral countries plays an increasingly relevant role in innovation processes, generating a paradoxical and contradictory dependence of the South on the North: more often, inventors are from peripheral and emerging countries. This trend can be traced in different sectors of the global economy, including agricultural biotechnology and bio-​hegemony in transgenic crops, as well as the appropriation of indigenous knowledge related to seed technology (Gutiérrez Escobar and Fitting 2016; Lapegna and Otero 2016; Motta 2016). 5. The creation of an ad hoc institutional framework aimed at the concentration and appropriation of the products of the general intellect through patents, under the tutelage and supervision of the WIPO in agreement with the World Trade Organization (WTO) (Delgado Wise and Chávez 2016). Since the late 1980s, there has been a trend to generate ad hoc legislation in the United States, in tune with the strategic interests of large multinational corporations in terms of intellectual property rights (Messitte 2012). Through rules and regulations promoted by the WTO, the scope of this legislation has been significantly expanded. In this perspective, the office of the US Trade Representative has been promoting the signing and implementation of free trade agreements (FTAs). Because intellectual property disputes within the WTO tend to become increasingly complex by their multilateral nature, the US strategy also includes bilateral FTA negotiations as a complementary measure to control markets and increase corporate profits. The regulations established by the PCT, modified in 1984 and 2001 in the framework of the WIPO-​WTO, have contributed significantly to the strengthening of this trend. It should be noted that according to the nature and characteristics of the innovation system described the United States appears as the leading capitalist power in innovation worldwide, accounting—​between 1996 and 2018—​for 23.9% of the total number of patents granted by the WIPO. However, in the same period, China surpassed the United States in patent applications: 23.1% versus 21.7% (Table 14.1). It is worth adding that the strategic dominance of innovation exercised by the United States worldwide is manifested not only by the volume and pace of patents generated, but also by the following facts: 1. Seven of the first 10 and 36 of the 100 main innovative companies in the world are based in the United States (Thomson Reuters 2018); 2. 46 of the 100 most innovative universities in the world are located in the United States (Ewalt 2018); and 3. even of the 10 most successful start-​ups on the planet are located in the United States (Murgich 2015).

Imperialism, Unequal Exchange, and Labour Export    259 Table 14.1 Patent Applications and Patents Granted: Total and 10 Leading Countries, 1996–​2018 1996-2018​ Patents

Percent Applications distribution Granted

Percent % distribution Granted Ranking

Total

45,361,224

100.0%

19,447,764

100.0%

42.9%

Subtotal

37,412,593

82.3%

15,696,151

80.7%

42.0%

China

10,497,318

23.1%

3,138,160

16.1%

29.9%

3

United States

9,862,774

21.7%

4,646,826

23.9%

47.1%

1

Japan

8,627,834

19.0%

4,093,992

21.1%

47.5%

2

Korea

3,534,255

7.8%

1,811,789

9.3%

51.3%

4

Germany

1,406,340

3.1%

357,246

1.8%

25.4%

7

842,421

1.9%

388,204

2.0%

46.1%

6

Russian Federation

831,702

1.8%

622,539

3.2%

74.9%

5

India

652,043

1.4%

130,933

0.7%

20.1%

13

United Kingdom

601,246

1.3%

165,056

0.8%

27.5%

12

Australia

556,660

1.2%

341,406

1.8%

61.3%

8

Canada

Source: SIMDE-​UAZ. Author’s own estimations based on WIPO, 1996–​2018.

Furthermore, according to the extractive/​rentier logic that governs the new dynamics of innovation, the rate of foreign patenting in the United States rose from 18% in 1963 to 53.2% in 2020 (US Patent and Trademark Office 2021. This increase can be attributed to the role that, in the field of public policy, the US government has played to maintain, strengthen, and deepen its scientific and technological leadership on a planetary scale. This, in turn, is related to the growing demand for a skilled labour force of foreign origin in the United States and other capitalist powers in knowledge-​intensive activities. These activities, as can be seen in Figure 14.1, transcend the sphere of innovation and have become the most dynamic and strategic segment of the main capitalist powers, led by the United States. From this perspective, in addition to the impressive support in terms of public investment in basic and applied science (equivalent to 2.74% of GDP in 2016), the US government distinguishes itself—​especially since the 1990s—​by deploying an aggressive policy of attracting external talent promoted by the National Science Foundation accompanied by a vigorous encouragement of a highly selective immigration policy. This policy explains the high rate of skilled and highly skilled migration to the United States, which nearly doubles that of low skilled migration, as shown in Figure 14.2. Furthermore, the same figure shows that the participation of qualified and highly qualified labour from abroad tends to supplement and complement the relatively slower pace with which the critical mass of scientists and technologists born in the United States

260   Raúl Delgado Wise Health care

83.6%

16.4%

Financial services

14.1%

85.9%

Professional services

14.8%

85.2%

Information technologies

82.8%

17.2%

Knowledge creation 12.6% High-technology services High-technology manufacture

87.4% 75.4%

24.6%

71.0%

29.0% Immigrants

Natives

Figure 14.1 United States: Immigrant and native population with tertiary education in knowledge-​intensive activities, by sector, 2019. Source: SIMDE-​UAZ. Estimation based on US Census Bureau, American Community Survey (ACS), 2019. Classification by Timothy Hogan (2011). University of Arizona.

5.1

5.0

3.4

3.0

2.9

1.7

Less than B.S.

B.S.* Immigrants

Graduate

Natives

Figure 14.2  Annual growth rate (per cent) of the immigrant and native-​age population aged 22 years and over in the United States by level of education, 1990–​2019. *Includes associate BS degree. Source: SIMDE-​UAZ. Estimation based on US Census Bureau, Samples Census 1990 and American Community Survey (ACS), 2019.

grows. It is not just a relationship of complementarity, but a relationship of increasing dependence on the innovative capacity of the labour force coming from abroad. Another significant piece of data is that, as can be seen in Figure 14.3, the most dynamic segment of qualified immigrants is the one with the highest level of qualification. Framed in this way, another revealing feature of the new profile of highly skilled immigration directed to the United States is that the bulk of it comes from peripheral or emerging countries, as can be seen from Figure 14.4. In fact, eight of the ten main countries that graduate immigrants come from these countries. And even more: this increase occurs, as might be expected, mainly with immigrants trained in areas directly related

Imperialism, Unequal Exchange, and Labour Export    261 4.4 3.8 3.4 2.9

2.7 2.3

Degree associated to B.S.

B.S.

Graduate

Immigrants

Natives

Figure 14.3  Annual growth rate of the qualified immigrant population in the United States. Source: SIMDE-​UAZ. Estimation based on US Census Bureau, American Community Survey (ACS), several years.

India

7.5

China

7.3

Mexico

5.7

Korea

5.4

Germany

4.3

Iran

3.7

Philippines

3.6

Canada

3.5

Taiwan Cuba

3.0 2.8

Figure 14.4  Immigrants with graduate studies residing in the United States. Annual growth rate 1990 to 2019 (per cent). Source: SIMDE-​UAZ. Estimation based on US Census Bureau, Samples Census 1990 and American Community Survey (ACS), 2019.

to innovation: science, technology, engineering, and mathematics (STEM areas). It is worth adding that there is a strong correlation between immigrants trained in STEM areas and the labour field in which they work, particularly in professional fields and in areas related to innovation activities. From the standpoint of unequal exchange relations, the export of highly skilled labour power has broader—​though similar—​consequences: in the case of scientific and technological maquiladoras what is transferred is the capacity for achieving extraordinary profits (with all its political connotation in terms of the worldwide power relations) and in terms of highly skilled migration is both its higher reproduction costs and its

262   Raúl Delgado Wise potential for the development of the country of origin and thus for transcending dependency relations.

Conclusion With the advances in knowledge and particularly as a result of the advent of ICTs and the so-​called revolution of the techno-​sciences, ‘knowledge and technological change [are] at the centre of the capital appreciation processes’ (Míguez 2013, 27). Given the undeniable relevance of knowledge as a driving force behind the dynamics of capital accumulation and the growing production of knowledge-​intensive goods, contemporary capitalism is often referred to as cognitive capitalism. However, this does not mean that the aim of the system is to promote knowledge, but rather that it becomes a powerful means to increase profits and more specifically the extraordinary profits of monopoly capital. Thus, the category of intellectual property, existing for centuries, re-​emerges more strongly than ever, as it allows for the objectification of knowledge, enclosing it as if it were a private right. In Bolívar Echeverría’s opinion, ‘the first task that the capitalist economy fulfils is to reproduce the condition of existence in its own way: to incessantly build and rebuild an artificial scarcity, just starting from the renewed possibilities of abundance’ (2011, 85). The legal form of intellectual property, as the exclusive right over an invention through the mechanism of patents, allows the limitation, the segregation of knowledge, its commodification, and its artificial scarcity. In this context, the increase in international migration and its growing selectivity cannot be understood—​as we have been arguing—​apart from the dynamics and contradictions embedded in contemporary capitalism. Hence, the new phenomenon of skilled and highly skilled migration cannot be understood apart from the profound metamorphosis experienced by monopoly capital, both in the geographical redistribution of manufacturing activities and in the restructuring of innovation systems. This metamorphosis is based on the possibilities opened by the third and fourth industrial revolutions, while it spawns the consolidation of a new international division of labour along the North–​South horizon: the direct and disembodied export of labour power, which acquires its broader connotation with the inclusion of the skilled and highly skilled labour force segment. This, in turn, engenders new and extreme modalities of unequal exchange (Delgado Wise and Martin 2015). Given the importance that intellectual work (scientific, technological, immaterial) has in the development of the general intellect, the fact that a growing contingent of intellectual workers originates, precisely, from peripheral or emerging countries, confronts us with a paradox that was until recently unimaginable. Innovation, as an engine for the development of the productive forces, depends more often on the participation of scientists and technologists from the South who are at the service of the North . . . and against the South! When projected onto the North–​South

Imperialism, Unequal Exchange, and Labour Export    263 horizon, this paradox reflects a potential for a reversal of the traditional dependency relationships, at the level of scientific and technological work. This, in turn, leads us to reframe the development question under a new plot between progress and rent-​ seeking circumscribed in the contradiction between progress and barbarism inherent in capitalist modernity. Faced with this scenario, the COVID-​19 pandemic acquires relevance. Due to its magnitude and significance, it represents a crossroads of civilizational or epochal dimensions in the history of capitalism. On the one hand, as Luis Arizmendi (2020, 19) emphasizes: Strictu sensu, the COVID-​19 pandemic is the implacable but particular expression of a planetary epidemiological crisis of a higher order, which has been exposed to change everything, and which reveals its greatest dangers from its interaction with the other constitutive dimensions of the epochal crisis of capitalism.

On the other hand, in addition to incubating a neo-​authoritarian tendency that entails the possible establishment of a globalized state of exception, it also opens, contra sensu, a window of opportunity for the potential transformation or reconfiguration of the capitalist system. If before its irruption neoliberalism was mortally wounded, with the pandemic its death certificate was signed. It is undeniable, in this sense, that we are facing a phase of capitalism in which its contradictions are exacerbated to such a degree that attempts to give it artificial breath are increasingly unsuccessful. The vital signs of capitalism in times of the COVID-​19 pandemic are pregnant with a trail of uncertainty. At the international level, the scene is marked by the bitter inter-​imperialist dispute between the United States and China, where the route that the world’s leading capitalist power would follow after the transition from the Trump to the Biden administration was still unknown. However, above these and other uncertainties, the truth is that the current situation also incubates unprecedented possibilities for social transformation, which are delineated through the very way humanity is facing the virus and its consequences.

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264   Raúl Delgado Wise Cypher, J., and R. Delgado Wise. 2008. ‘Mexico and the North American Free Trade Agreement: Re-​Peripheralisation under the Labour Export-​Led Model’. In International Trade and Neoliberal Globalism: Towards Re-​Peripheralisation in Australia, Canada and Mexico?, edited by P. Bowles, T. Broomhill, T. Gutiérrez-​Haces, and S. McBride. Abingdon: Routledge, 141–​160. Cypher, J., and R. Delgado Wise. 2012. México a la deriva: Génesis, desempeño y crisis del Modelo Exportador de Fuerza de Trabajo. Mexico: Miguel Ángel Porrúa. Delgado Wise, R. 2015. ‘Unraveling Mexican Highly-​Skilled Migration in the Context of Neoliberal Globalization’. In Social Transformation and Migration: National and Local Experiences in South Korea, Turkey, México and Australia, edited by S. Castles, M. Arias Cubas, and D. Ozkul, 201–​218. Basingstoke: Palgrave Macmillan. Delgado Wise, R., and D. Martin. 2015. ‘The Political Economy of Global Labor Arbitrage’. In The International Political Economy of Production, edited by Kees van der Pijl, 59–​75. Cheltenham: Edward Elgar. Delgado Wise, R., and M. Chávez. 2016. ‘¡Patentad, patentad!: Apuntes sobre la apropiación del trabajo científico por las grandes corporaciones multinacionales’. Observatorio del Desarrollo 4, no. 15: 22–​30. Delgado Wise, R., and S. Gaspar. 2018. ‘Claves para descifrar la arquitectura de la globalización neoliberal: Exportación de fuerza trabajo e intercambio desigual’. In La Globalización Neoliberal en Crisis, edited by José Luis Calva, 159–​186. Mexico: Juan Pablos. Dussel, E. 2019. La producción teórica de Marx: Un comentario a los Grundrisse. México: Siglo XXI. Emmanuel, A. 1972. Unequal Exchange: A Study of the Imperialism of Trade. New York and London: Monthly Review Press. Ewalt, D. M. 2018. ‘Reuters Top 100: The World’s Most Innovative Universities 2018’. https://​ www.reut​ers.com/​arti​cle/​us-​amers-​reut​ers-​rank​ing-​inn​ovat​ive-​univ/​reut​ers-​top-​100-​the-​ wor​lds-​most-​inn​ovat​ive-​unive​rsit​ies-​2018-​ idUSKCN1ML0AZ. Finger, B. 2020. ‘Unequal Exchange: Key Issues for the Labor Theory of Value’. Journal of Socialist Theory 48, no. 2–​3: 169–​187. Foladori, G. 2017. ‘Teoría del valor y ciencia en el capitalismo contemporáneo’. Observatorio del Desarrollo 6, no. 18: 42–​47. Foster, J. B., R. W. McChesney, and J. Jonna. 2011a. ‘The Internationalization of Monopoly Capital’. Monthly Review 63, no. 2: 3–​18. Foster, J. B., R. W. McChesney, and J. Jonna. 2011b. ‘The Global Reserve Army of Labour and the New Imperialism’. Monthly Review 63, no. 6: 1–​15. Galama, T., and H. James. 2008. US Competitiveness in Science and Technology. Santa Mónica: RAND Corporation. Garay, L. G. 1980. ‘Hacia una crítica interna de la teoría del intercambio desigual de Emmanuel’. Cuadernos de Economía 1, no. 2: 53–​114. Gutiérrez Escobar, L., and E. Fitting. 2016. ‘Red de Semillas Libres: Crítica a la Biohegemonía en Colombia’. Estudios Críticos del Desarrollo 7, no. 11: 85–​106. Harvey, D. 2014. Seventeen Contradictions and the End of Capitalism. London: Profile Books. Katz, C. 2018. La teoría de la dependencia, cincuenta años después. Buenos Aires: Batalla de Ideas. Lapegna, P., and G. Otero. 2016. ‘Cultivos transgénicos en América Latina: Ex-​propiación, valor negativo y estado’. Estudios Críticos del Desarrollo 6, no. 11: 19–​44. Marini, R. M. 1974. Dialéctica de la dependencia. México: Era.

Imperialism, Unequal Exchange, and Labour Export    265 Márquez, H., and R. Delgado Wise. 2012. Desarrollo desigual y migración forzada: Una mirada desde el Sur Global. Mexico: Miguel Ángel Porrúa. Messitte, P. 2012. ‘Desarrollo del derecho de patentes estadounidense en el siglo XXI: Implicaciones para la industria farmacéutica’. In Los retos de la industria farmacéutica en el siglo XX: Una visión comparada sobre su régimen de propiedad intelectual, edited by A. Oropeza and V. M. Guízar López, 179–​200. Mexico: UNAM–​COFEP. Míguez, P. 2013. ‘Del general intellect a las tesis del capitalismo cognitivo: Aportes para el estudio del capitalismo del siglo XXI’. Bajo el Volcán 13, no. 21: 27–​59. Motta, R. 2016. ‘Capitalismo global y estado nacional en las luchas de los cultivos transgénicos en Brasil’. Estudios Críticos del Desarrollo 6, no. 11: 65–​84. Murgich, V. 2015. ‘Las startup más exitosas (y famosas) del mundo’. Merca2.0. https://​www. merc​a20.com/​las-​star​tup-​mas-​exito​sas-​y-​famo​sas-​del-​mundo. Ricci, A. (2019). ‘Unequal Exchange in the Age of Globalization’. Review of Radical Political Economics 51(2) 225 –​245. Rosdolsky, R. 1977. The Making of Marx’s Capital. London: Pluto Press. Saxenian, A. L. 2006. The New Argonauts: Regional Advantage in a Global Economy. Boston, MA: Harvard University Press. Sotelo Valencia, A. 2015. The Future of Work: Super-​Exploitation and Social Precariousness in the 21st Century. Boston: Brill. Standing, G. 2011. The Precariat: The New Dangerous Class. London: Bloomsbury. Sturgeon, T. J. 2003. ‘What Really Goes on in Silicon Valley? Spatial Clustering and Dispersal in Modular Production Networks’. Journal of Economic Geography 3, no. 2: 199–​225. Thomson Reuters. 2018. ‘The Top 100 Global Technology Leaders’. https://​www.tho​mson​reut​ ers.com/​cont​ent/​dam/​ewp-​m/​docume​nts/​tho​mson​reut​ers/​en/​pdf/​repo​rts/​thom​son-​reut​ ers-​top-​100-​glo​bal-​ tech-​leaders-​report.pdf. UNCTAD. 2010. World Investment Report 2010. New York: United Nations. UNCTAD. 2020. ‘Special Economic Zones and Urbanization’. https://​unhabi​tat.org/​spec​ial-​ econo​mic-​zones-​sezs-​and-​urban​izat​ion. U.S. Patent and Trademark Office. (2021). ‘U.S. Patent Statistics Chart. Calendar Years 1963 –​ 2020’. https://​www.uspto.gov/​web/​offi​ces/​ac/​ido/​oeip/​taf/​us_​s​tat.htm.

Chapter 15

Su rplu s L a b ou r Imperialist Legacies and Post-​Imperialist Practices Christoph Scherrer

Introduction: Unemployment and Underemployment The abundance of persons offering their labour power in relationship to the limited demand for their labour in ‘modern’ industries and services stems from the insufficient absorption of peasants set free from their land. The term ‘modern’ stands here for labour productivity levels in companies with a competitive edge in world markets. Therefore, ‘surplus labour’ neither equals unemployed persons nor the ‘industrial reserve army’. Without state-​sponsored social protection, most outside of ‘modern’ industry must work somehow and somewhere for survival. And most of these workers may not be employed by ‘modern’ industry in an upswing of the business cycle. In my use, the term ‘surplus labour’ encompasses both ‘latent’ and ‘consolidated’ relative surplus population. Karl Marx counted those who were expelled from subsistence and marginal agriculture under ‘latent’ and those who might not be needed at all for capitalist accumulation as ‘consolidated relative surplus population’.1 The data of the International Labour Organization attempts to capture the ‘latent’ surplus labour by its composite rate of labour underutilization which measures official unemployment and signalled interest in working more hours. In 2018, for example, this composite rate stood at 49% in Rwanda and 46% in Zambia.2 The movement of labour out of agriculture has reached a point in the United States where, in 2020, only about 2% of the working population is engaged in agriculture, while in sub-​Saharan Africa it is 53%, and in South Asia 37%.3 However, in many late industrializing countries4 most of those who are leaving agriculture do not find formal employment in the industrial and service sectors. Instead, they move mostly into the informal service sector.5 In Africa, only about one in five workers has found employment in industry after leaving

268   Christoph Scherrer agriculture.6 Overall, only 3.2% of the total sub-​Saharan workforce was employed in the formal industry in the early 2010s.7 Many of those who stay behind in rural areas face harsh livelihood conditions and widespread underemployment.8 Overall, staying behind as well as moving out resulted in a high rate of vulnerable employment especially in South Asia (70%) and sub-​Saharan Africa (74% in 2020).9 This is even true for countries which have seen accelerated economic growth in the first decade of the third millennium. The growth champions in Latin America experienced premature de-​industrialization, the ones in Africa barely maintained their earlier low level of manufacturing activities. The labour force shifting out of agriculture, however, was not absorbed in an expanding sector with globally competitive productivity levels; hence, the overall labour productivity in the non-​agricultural sector declined.10 India reached its peak manufacturing level in 2006 at 17.4% of GDP. By 2016, it had fallen to 15%.11 As the service sector in Africa has absorbed workers faster than the rate of increase of its output, its relative productivity advantage vis-​à-​vis the rest of the economy has diminished.12 Manufacturing seems to be better suited to stimulate productivity increases rather than the service sector for catching up economies. The formal sector manufacturing can absorb a large number of relatively unskilled workers (that is, those coming out of agriculture), allows learning by doing, and provides for spillover effects into the rest of the economy.13 However, even successful countries catching up like China have achieved their key share in manufacturing employment at much lower levels of GDP per capita than the early industrializers. In addition, the share of low-​skilled workers employed in manufacturing has decreased across countries of the Global North and South since the late 1990s.14 A recent report on the impact of automation underlines the threat of unemployment in the manufacturing sector in developing countries.15 Therefore, the capacity for manufacturing to absorb the rural surplus population seems to be limited. Why is this the case? I will answer this question based on a comparison between the conditions prevalent among the early industrializers and present-​day latecomers to industry and advanced services. This comparison provides evidence for differences in population pressure and productivity differentials. Taking a leaf from the pages of critical development studies, I will furthermore highlight the constraints on the manufacturing sector, especially in sub-​Saharan Africa, stemming from colonial heritage and current global economic governance.

Early Industrializers’ Advantage To explain the difficulties that countries in sub-​Saharan Africa and South Asia experience while moving their agricultural workforce into modern productive sectors, Gavin Kitching16 compares present-​day conditions with those when the capitalist core

Surplus Labour   269 and the Soviet Union had moved from agriculture-​based economies to that based on manufacturing. This comparison leads him to highlight a few factors that differentiate past experiences from the present ones: ‘Neither the contemporary industrial technology context, nor the population growth context, nor the price or terms of trade context, is anywhere near as conducive to peasant elimination as it was when the European world accomplished its (demographically much smaller) transformation’.17 While Kitching focuses on the labour supply side, Dani Rodrik (2016) analyses the demand conditions for labour, that is, the limits of employment growth in manufacturing and high value-​added service sectors in many of the late industrializing countries, especially in Latin America and Africa. He argues on the basis of extensive analytical statistics that manufacturing employment stagnated once these countries liberalized their trade policies. According to him, ‘those without a strong comparative advantage in manufacturing became net importers of manufacturing, reversing a long process of import-​substitution’.18 In addition, they were exposed to the decline in relative price of manufacturing caused by technological progress and the rise of Asian exporters. The latter’s success came mostly at the expense of other late industrializers.19 Particularly hard-​hit were the low-​skilled workers,20 that is, those who, most likely, were from the rural background.

Increased Life Expectancy Some development economists have called high growth rates a blessing for respective countries as they would reap a so-​called demographic dividend. The dividend would result from a favourable ratio of working-​age population to children and retired persons, that is, savings from having few dependents would allow for higher capital investments.21 Of greater importance may be the lower reproduction costs of labour because of fewer dependents to be cared for. Under specific circumstances, the resulting lower wages would allow for investments in modern infrastructure and for undercutting international competitors. That specific institutions are required to reap this ‘demographic dividend’ has been acknowledged by the authors who have coined the term.22 Among these circumstances, they list an effective industrial policy. As not all countries have the capacity to pursue an effective industrial policy,23 the ones which can do so will limit the industrial success of the others (see more on this later). Another prerequisite for the ‘demographic dividend’ is a simultaneous significant fall in fertility. Otherwise, the working population must take care of too many children. Unfortunately for Africa, its high population growth rates are not accompanied with significantly fewer children per woman. Rural fertility rates controlled for population density are on an average two children higher than other countries of the Global South. In the 1980s and 1990s, China benefitted from having two economically active persons for every single inactive person, while sub-​Saharan Africa had a ratio of one for one. With the combination of higher fertility rates and an aging population (though slower

270   Christoph Scherrer than in Asia), it is doubtful whether sub-​Saharan Africa will come close to the previous Chinese ratio.24 How does it compare with the experience of the early industrializers? Kitching puts the population growth rate for Europe and Japan during their industrialization phase at roughly 1.5%–​2% per annum (at the peak), while for the developing countries in the 1990s at 2.5% or 3% and over.25 A comparison of Germany’s industrialization period with post-​independent India may illustrate the different population dynamics. The birth rate in Germany per 1,000 people in the population was on average about 38 in the years between 1850 and 1900; India reached almost a similar rate in 1971, but thereafter moved down to approximately 22 in 2010. As at the time, a high birth rate went along with a higher rate of infancy mortality;26 the higher birth rate in industrializing Germany did not lead to a population growth higher than that in independent India. Next to a higher birth rate an increase in life expectancy drives population growth. Higher nutritional standards and medical progress have led to a quicker increase in life expectancy in the last decades in comparison to the nineteenth century. In Germany, life expectancy increased from 41 to 47 years between 1820 to 1900; in India from 32 to 60 years between 1950 to 1999;27 and in Africa from 36 to 51 years between 1950 and 2001.28

Limits to Migration The labour markets of early industrializing countries were relieved from population pressure partly due to massive outflow of people to areas which were less populated in temperate climate zones. After 1815, around 70 million Europeans settled overseas and in Siberia under the umbrella of the military might of the colonial powers or the newly independent white settler republics. On the British Isles and in Norway, mass emigration amounted to more than 30% of their respective populations. 29According to Hirst, Thompson, and Bromley, this migration was three times as high as in the 1990s when measured as a portion of the world’s population.30 Even if these authors might have undercounted the internal migration within large countries such as Brazil, China, and India, the numbers show that for countries which underwent industrialization later, the outmigration safety valve was and still is much narrower. Most importantly, the migrants have currently to rely on the goodwill of the receiving countries or must live there on the margins as persons who have violated the migration laws. Unlike the nineteenth-​century predecessors, they cannot force their way into other territories.

The Productivity Differentials The labour market for late industrializers faces challenges stemming from three productivity gaps—​between the smallholder farmers and modern manufacturing; between smallholders and modern agriculture; and between informal manufacturing and formal manufacturing sectors.

Surplus Labour   271 The early industrializers benefitted from fairly simultaneous productivity advances in agriculture and manufacturing. As industrial technologies were much more labour-​ intensive than today, the industry had a great demand for labour coming from agriculture. Even in many countries of Asia and Latin America, productivity advances in agriculture were followed by employment increases in manufacturing until the point at which manufacturing’s share of total employment reached its peak.31 However, as the relative importance of manufacturing reached its zenith in these countries at a much earlier date than the early industrializers, the absorption powers of manufacturing were exhausted before the process of ‘peasant elimination’ had run its course. In Africa, the productivity gap is even more pronounced.32 Brazil and China have increased land and labour productivity, but the total factor of productivity for agriculture in sub-​Saharan Africa was stagnant between 1961 and 1985 and then increased at about 1% per annum until 2008.33 Among the reasons for the laggard productivity is the diminishing responsiveness to the use of fertilizers due to overexploitation of land, less use of fertilizers, less conducive conditions for irrigation (in comparison to Asia), greater diversity of crops, underinvestment in crop research,34 and the relative neglect of aid to agriculture over the last three decades by donors and governments.35 The large gap between productivity levels of smallholders in Africa and modern manufacturing not only results in a massive labour surplus, but also perpetuates low rural income levels. Low incomes mean low levels of consumption power for industrial products which in turn retards the development of manufacturing. At the time of industrialization of the North, the smaller gap in productivity advances between agriculture and manufacturing translated into better terms of trade for agricultural products vis-​à-​ vis industrial goods. The relatively higher prices for agricultural goods made the population living off agriculture consumers of industrial products and, thereby, stimulated industrial development. In addition, as agriculture was relatively lucrative and industry developed dynamically, ‘peasant elimination’ proceeded at a comparatively ‘moderate pace’.36 The productivity gap leaves African agriculture vulnerable to global competition, causes low prices for land, and thereby makes smallholders’ land attractive targets for agricultural investors operating on a large scale, what David Harvey subsumes under ‘accumulation by dispossession’.37 In addition, the resulting low incomes make farm labour unattractive for the rural youth.38 While these factors lead rural residents to consider moving into the cities, many remain in the countryside because few African cities offer good job opportunities.39 Those who move to the cities take on mostly low productivity, low paid occupations including urban farming.40 To the extent that the surplus labour is absorbed in manufacturing, it mostly ends up in the informal sector. One of the reasons for this tendency is that while productivity differentials remain high between countries in the agricultural and service sectors, productivity levels converge in formal manufacturing across countries irrespective of ‘geographical disadvantages, lousy institutions or bad policies’.41 In other words, agriculture and formal manufacturing are increasing their productivity at different speeds. Higher speed of manufacturing means much less absorption of rural surplus population than at

272   Christoph Scherrer the time of early industrialization, when productivity in manufacturing was much lower and more in line with agriculture in their specific countries. The undercapitalized small, informal firms in manufacturing are also lagging much behind in productivity. Even in high-​growth years, productivity levels in African manufacturing did not shrink the gap to the US level.42 While the low productivity of the small, informal firms is absorbing labour power, these firms are unable to scale-​up and, therefore, their absorption capacity is limited. Higher productivity levels of formal manufacturing imply that investment in manufacturing and its output need to grow fast to be able to compensate employment losses in the much less productive informal manufacturing sector in case the formal replaces informal manufacturing in the marketplace. This investment, however, is lacking. In other words, employment is currently achieved only at the expense of decent work.

Slave Trade and Colonial Legacy While the legacy of colonialism differs among former colonies, they share the fate of having been pushed forcefully into the so-​called old division of labour, that is, being prevented from moving into manufacturing. The enforcement of such a division of labour between the colonizers and the colonized led to deliberate underinvestment in education and skill formation in colonies. It also limited the possibilities for indigenous elites to participate in modern business. Furthermore, the legacy of colonialism meant for most newly independent countries insufficient state capacity and, therefore, weak industrial policies.43 This is not the place to delve deeper into the ramification of colonialism for economic catch-​up. It has received substantial attention in the world-​system and dependencia literature for an overview concerning Africa.44 But one related aspect of great importance for sub-​Saharan Africa has only recently been investigated, that is, the impact of slavery on the homelands of slaves. A pioneering study by Nathan Nunn,45 through sophisticated econometric calculations, suggests that countries with higher losses of people due to slavery in the fifteenth and through the nineteenth century display lower growth rates in their GDP in the twentieth century. A preliminary explanation, among other factors, hints at the resulting low trust between villages and within villages. The warfare and raids by competing villages broke up larger societies into smaller ethnically and linguistically differentiated groups. Within these groups, even family members were betraying each other into slavery out of fear of being betrayed.46 A follow-​up study which correlated modern trust measures in ethnic homelands with rates of slave extraction found that higher extraction rates predicted mistrust towards family members, as well as towards members of other tribes.47 A study by Besley and Reynal-​Querol48 revealed a strong legacy of conflicts due to the slave trades on wars and civil strife today. The British prohibition of the slave trade in 1807 led to local elites fighting for control over other resources; again, with reverberations nowadays.49 Slavery extraction left also an imprint

Surplus Labour   273 on today’s literacy rates.50 A recent study which analysed slavery’s impact on today’s access to finance in sub-​Saharan Africa provides further support to the claim that in high slave-​extraction countries, levels of trust are lower than in countries that suffered less from slavery. The study’s findings are that firms in such countries not only rely less on formal means of credit but also have less access to informal sources of credit, such as from suppliers and customers.51 A positive but unintended outcome of the Atlantic slave traders’ preference for physical strong men and the concomitantly fewer men in the raided communities is a higher labour force participation of women including employment in more prestigious occupations in these communities nowadays.52

Neoliberal Globalization’s Constraints The process of decolonization after World War II did not alter the global economic governance which had been set in place by the former colonial powers. The newly independent states were stuck in the old global division of labour in which their assigned place was suppliers of raw materials. Together with Latin American states, they, therefore, began to challenge the post–​World War II liberal order in the 1960s and 1970s. Under the slogan of a ‘new international economic order’ many of them nationalized key industries and placed limitations on transnational corporations.53 In order to boost development, many took out foreign-​denominated loans which had become available through the recycling of petrodollars in the mid-​1970s. As import substitution required the import of machinery to produce domestically consumption goods, their current account balance tended towards deficits. This was compounded in many newly independent countries, with the major exception of India and socialist countries, by welcoming cheap food imports. Cheap food was supposed to lower the wage bill; however, its major consequence was to make many of the former agriculturally self-​sufficient countries food import dependent.54 When at the end of the 1970s export market contracted and interest rates spiked, many countries in the Global South had fallen in a debt trap by the early 1980s. As some of the Latin American countries were the greatest debtors in default, this debt crisis is called the Latin American debt crisis. The creditor nations ‘hiding’ behind the International Monetary Fund (IMF) pushed the countries ‘catching up’ to abandon import substitution policies in favour of the promotion of exports and foreign direct investments (FDIs). Many of the restrictions on transnational corporations were subsequently lifted.55 The result was an increasing export orientation for agricultural or mineral products. Except for East Asia, many countries experienced premature de-​industrialization and a return to the old global division of labour as providers of raw materials.56 A classic example is Ghana. Its nascent textile industry of the 1970s was reduced to four major textile companies employing less than 3,000 persons in 2005. It became the

274   Christoph Scherrer victim of imports of second-​hand clothing from the North and new cheap clothing from Asia.57 Chinese exporters lowered the ratio of labour-​intensive manufacturing to primary output in other countries by 7%–​10% and the ratio of exports by 10%–​15%.58 Only neighbours close to China are integrated in its manufacturing production chains. They benefit in terms of manufacturing employment from the Chinese success in displacing other countries’ exports.59 The IMF-​enforced structural adjustment programmes were inspired by a static concept of comparative advantage, that is, the countries should concentrate on their comparative advantage in resources and large unskilled labour pools.60 The means of re-​ establishing liberal capitalist domination were not only restricted to structural adjustment programmes but also included military coercion, as happened early in the case of the 1973 coup against President Allende in Chile.61 The blood that has flown in these acts of repression or the pressure on rural agricultural communities to leave the land and to fill the world factories seldom receives attention in the development literature. The main beneficiaries of the neoliberal order are the transnational corporations. Their power rests on the interlaced hegemony of the US state and an emergent international capitalist/​managerial class.62 This hegemony finds its institutional form in the various institutions of global economic governance. They amount to what Stephen Gill63 has labelled a ‘new constitutionalism’. While the ‘old’ constitutionalism defined the rights and freedoms of citizens through the king-​cum-​autocratic state, the new constitutionalism protects property holders against the modern state. The democratic as well as the developmental state have taken an expansive view of property rights: they include obligations towards the common good, for instance, universal service, accountability, or the protection of workers’ health. In contrast, new constitutionalism takes a narrower view of property rights: the interests of stakeholders other than owners such as workers, consumers, or citizens are excluded. It not only aims at committing present governments to its definition of property rights but also tries to prevent future governments from undoing liberal market reforms. Comparable to constitutional rights in the national arena, a simple majority is not sufficient for withdrawal from or revision of the once agreed-​upon-​rights of capital in international agreements. Many of the clauses in recent trade and investment agreements discussed in the next section aim at making the liberalizations agreed upon irreversible (‘ratchet’ or ‘standstill’ clauses). Even more detrimental to aspirations of economic sovereignty is the IMF-​imposed liberalization of cross-​border financial transactions. This liberalization contributes to the power of transnational corporations. Money is the most fungible resource. The speed at which it can be mobilized can be decisive for competitive advantages. Transnational corporations command the largest financial resources in a supply chain. Investments in advanced technologies provide them with efficiency gains and acquisition of smaller competitors increases their market share and, thereby, their bargaining power.64 However, transnationals are not the only ones profiting from the processes of ‘financialization’ which brings about institutions such as a ‘market for corporate control’. The huge liquid sums available to banks, institutional investors, and hedge funds enable

Surplus Labour   275 them to buy, or threaten to buy, even the biggest corporations and, thereby, to take control or influence business decisions up to the point of selling off large parts of these corporations.65 This power of financial actors reinforces the pressure on suppliers in the Global South, squeezing their profit margins. Besides the liberalization of cross-​border trade, the liberalization of financial flows limits the policy space necessary for an industrial catch-​up. The liberalization of capital accounts makes many countries vulnerable to currency crises and capital flight.66 In many countries of the Global South, the economically powerful have transferred their foreign-​denominated debts to their respective state and have secured their own assets abroad. The foreign debts of some countries are almost matched by the private assets of their citizens abroad, for example, 75% in 2000 for Argentina.67 However, by not holding private creditors accountable and allowing the powerful elites of the debtor countries to deposit their assets abroad, the financial actors and governments in the Global North have become accomplices in capital flight.68 Since much has been written about the detrimental impact of the IMF on the Global South,69 I focus in the next sections on the role of trade and investment agreements in enforcing post-​imperialist division of labour.

The New Trade and Investment Agreements: Protection for the Strong The neoliberal backlash side-​lined the developing countries’ forum for their global economic governance agenda, the United Nation Commission on Trade and Development (UNCTAD), by establishing the World Trade Organization (WTO) in 1994. The WTO was accorded the privileges and immunities of specialized UN agencies. With its foundation, all countries were obliged to follow the same rules (‘single undertaking’) after a transition period, that is, discontinuing the previous differential treatment of developing countries, which was one of the few concessions to developing countries in the early 1970s. Furthermore, the WTO added rules for trade in services (GATS), trade-​related investment measures (TRIMS), and intellectual property rights (TRIPS). These rules favour corporations from developed countries which command a lead in advanced services, transnational presence, and technology. Furthermore, thanks to their subsidiaries in foreign countries, transnational corporations are especially well positioned to make use of the WTO dispute settlement process by lobbying the home as well as the host country’s government involved in a dispute about the violations of WTO rules.70 Since the early 2000s, the United States and the EU are turning away from the WTO’s principle of multilateralism by means of regional ‘free trade’ agreements (RTAs) and international investment agreements (IIAs), to further the interests of the corporations

276   Christoph Scherrer based in their countries. They are better able to assert their economic size vis-​à-​vis individual countries than vis-​à-​vis country alliances within the WTO. Their demands include, above all, the extension of intellectual property protection, investment protection, opening public procurement to foreign suppliers, and restricting state-​owned enterprises. By August 2020, 305 RTAs and 2,659 IIAs were concluded. IIAs protect the interest of foreign investors, for example, the right to transfer profits abroad and to be treated the same as domestic firms. Traditionally, tariffs have been imposed to protect economically catching-​up countries. In the last decades, these tariffs have been reduced in most countries. At the same time, the level of protection for enterprises from the early industrialized countries has gone up. The new trade and investment agreements aim at reinforcing this protection of the ‘strong’. These trade agreements are about intellectual property rights, investors’ protection, the liberalization of public procurement, and so-​called competition laws, which restrain the state from subsidizing companies. In what ways do these items on the trade negotiators’ agenda strengthen multinational corporations and reinforce the dependency of countries of the Global South?

Intellectual Property Rights Over time, property rights have been extended to the ownership of intellectual efforts such as inventions of products, processes and software, names, and production regions. Patents, trademarks, and geographical indications protect the first movers against imitators. The first movers traditionally reside in the former colonial powers. Concomitantly, corporations residing in these countries predominantly hold intellectual property rights. This is not by accident, because the individual inventor is rather the exception; moreover, these corporations can make use of an expensive knowledge infrastructure that only rich nations can afford. Only in recent years, a few other countries, especially the Peoples Republic of China, are registering patents and trademarks on a large scale.71 Patents buttress the power of the focal company global value chains by limiting market entrance; trademarks restrict access to final consumers. Geographical indications, such as Champagne or Parma cheese,72 also favour ‘Old World’ agricultural producers over newcomers as they had more time to establish a reputation for good products among consumers of high prestige, which are usually the ones with more money. The powers of the owners of intellectual property rights are enhanced through their enforcement by international treaties. The 1995 Agreement on Trade-​Related Aspects of Intellectual Property Right (TRIPS) under the WTO and the multiplying preferential trade agreements among various countries allow not only for the impoundment of goods that are found to have infringed upon intellectual property rights but also for trade sanctions against the state not willing to adhere to the agreement.73 In the recent

Surplus Labour   277 400 WORLD

350 300 250 200 150 100 50 0 1975

1980

1985

1990

1995

2000

2005

2010

2015

Figure 15.1  Charges for the use of intellectual property, receipts (BoP, current US$), 1975–​2019. Source:https://​data.worldb​ank.org/​indica​tor/​BX.GSR.ROYL.CD?end=​2019&start=​1975&view=​chart.

round of RTAs, for instance, trade negotiators are pushing for stronger patent protection for medicines, in relation to the development and sale of generics.74 Income from intellectual property rights has soared in recent decades to 390 billion USD in 2019 (see Figure 15.1), of which the high-​income countries received 379.8 billion USD and low-​and middle-​income countries 10.7 billion USD.75 Of course, catching up becomes more difficult, if royalties need to be paid for patents.

Investors’ Protection The WTO’s Agreement on Trade-​Related Investment Measures (TRIMS) regulates trade-​related activities of FDIs. TRIMS forbids local content and trade balancing requirements, that is, limiting imports of an FDI firm to the value of its exports. However, it does allow governments to put conditions on FDIs such as requirements to employ local labour or to accept joint ventures. Besides protecting foreign investors against expropriation, IIAs and investment chapters in RTAs usually prohibit many of the restrictions allowed by TRIMS. Furthermore, they protect foreign investors against the risk of new business, labour, or environmental regulations diminishing prospects for future profits. The investors’ protection is enforced by investor-​to-​state dispute settlement (ISDS) proceedings. ISDS provides corporations with the possibility of suing states for compensation before an allegedly independent arbitration tribunal, if they think that a state’s measures run counter to the investment protection enshrined in the agreement. Such dispute settlement procedures also restrict states’ regulatory possibilities, unless the

278   Christoph Scherrer states want to run the risk of having to pay out large amounts of compensation. The danger lies in the vagueness about what constitutes a ‘legitimate’ public interest and what may be regarded as ‘indirect’ expropriation. The greater the room for interpretation, the more important is the quality of the process such as the basis of its legitimation, its transparency, and its independence. Currently, firms’ complaints are handled by arbitration bodies. The proceedings are not held in public, they are often not transparent, and the arbitrators and lawyers concerned have no sovereign or democratic credentials. For the great majority of these proceedings, the arbitrators and lawyers are recruited from only about twenty big, internationally active law firms, which not seldomly take it all in turns and swap roles. Not only do these law firms maintain close relations with the big corporations but also they proactively ‘scan’ national policies and regulation plans in search of promising complaint opportunities, they circulate proposals on that basis, and they fund complaints via the financial markets. Due not only to the damages payable in case of losing an arbitration case but also to the high legal bills that must be footed by the taxpayer come what may, states are deprived of scarce financial resources. The high damages at stake and high costs provide the threat of initiating ISDS with a deterrent impact on regulatory reforms in favour of citizens, workers, or the environment, especially in poorer countries.76

Data Imperialism While the declared goal of the regional trade agreements is to tear down the last remaining export barriers, elsewhere they are being prevented from being erected at all. Since 1998, a temporary ban on customs duties on ‘electronic transmissions’ has applied to all WTO member states. Emerging and developing countries would like to review the tax moratorium because, on the one hand, the number of transactions has increased significantly and, on the other hand, many once taxable services and goods have been converted into online services. Due to resistance from India and the Africa group within the WTO, among others, there is no agreement to start negotiations on an e-​commerce agreement at the WTO level. Instead, since 2019, a total of eighty-​two states, including the EU, United States, and now also China, have begun to negotiate a trade agreement that is binding under international law. In the interests of the large tech companies, the aim is to limit the possible scope for regulation. The ‘free flow of data’ across borders should be secured, and regulations on local data storage or the disclosure of source code should be eliminated. By strictly regulating the licensing of foreign corporations and developing national alternatives, instead, Chinese companies, together with the US companies, now account for 90% of the market value of the largest digital platforms. In contrast, Europe’s share here is 4%; Africa and Latin America together account for only 1%. This monopoly position, albeit with a different regional weighting depending on the sector, makes it more difficult for smaller companies and those that join later to survive in the market.77

Surplus Labour   279

Surplus Labour Is Here to Stay This chapter starts out with defining surplus labour and showing its prevalence in countries that suffered from colonialism. For an analysis of the reasons for the large extent of the current surplus labour, present conditions in the Global South are compared with the experience of industrialization in the imperialist countries. ‘Peasant elimination’ did not lead to a permanent agrarian surplus population in the capitalist core because its countries benefitted from comparatively slow increases in life expectancy and fairly similar productivity rise in agriculture as in industry. Furthermore, imperialist countries were externalizing labour market problems by militarily enforcing outmigration in the ‘temperate’ zones, destroying the industrial competition in the colonies (esp. India), and using the latter as an outlet for their industrial production. Today, outmigration into less densely populated areas is no longer accessible. Migrants can no longer overrun indigenous populations with a colonial power backing them up. The second part of the chapter reveals how the legacies of imperialism in the former colonies limit their capacity for industrial employment. While all suffer from having been forced into the supply of resources and denied broad-​based educational opportunities, in the countries of slave extraction, societal trust has been undermined with negative effects on collective pursuit of economic opportunities. The last part of the chapter covers the impact of post-​imperialist practices such as the forced premature liberalization of their markets and trade as well as investment rules favouring the corporations from the capitalist centres. Some countries, especially in Southeast Asia, have partially succeeded in overcoming these constraints. The success of some of the Southeast Asian countries, however, restricts the opportunities for industrialization for most countries of the Global South. It is a success that rests on massive export surpluses in goods. Yet, the rules governing the world markets limit the value capture also for these successful countries. By strengthening the protection of intellectual property rights and liberalizing financial flows across borders, these rules buttress the power of corporations mainly domiciled in the Global North. Competing against each other and faced with high-​profit expectations from the financial markets, these corporations are dictating the prices of the goods they source from their suppliers.

Notes 1. Quijano (1983, 84). 2. See International Labor Organization (ILO 2020). 3. See World Bank (2020a). 4. The term ‘late industrializing countries’ might not fit all countries in the Global South, either because they started industrialization quite early or because they are already de-​ industrializing. Nevertheless, overall they started later than the core capitalist states, and catching-​up seems to be a widespread official doctrine.

280   Christoph Scherrer 5. Newman et al. (2016, 13). 6. McMillan and Harttgen (2014, 2). 7. Losch (2016, 15). 8. McCullough (2015). 9. See World Bank (2020b). 10. Diao, McMillan, and Rodrik ( 2017, 1–​62). 11. Marlow and Beniwal (2018). 12. Newman et al. (2016, 11). 13. Rodrik (2013, 165–​204). 14. Rodrik (2016, 25, 36). 15. Oxford Martin School and CITI (2016). 16. Kitching (2001, 150–​152). 17. Kitching (2001, 152). 18. Rodrik (2016, 4). 19. Rodrik (2016, 13). 20. Rodrik (2016, 14). 21. E.g., Lee and Mason (2006). 22. Bloom and Williamson (1998). 23. Whitfield (2015). 24. Losch (2016, 18). 25. Kitching (2001, 151). 26. See Roser (2016). 27. Maddison (2001). 28. Riley (2005, 538). 29. Stalker (1994, 16). 30. Hirst et al. (2009, 24); currently, international migrants are 3.3% of the world population. In comparison to the European industrialization phase, outmigration in today’s most populous nations is minimal: 0.7% originating from the Peoples Republic of China, 1.3% from India, 4.8% from Bangladesh (2019). The only African nation among the twenty countries with the largest diaspora communities was Egypt in 2017 in nineteenth place (author’s calculation based on https://​www.un.org/​en/​deve​lopm​ent/​desa/​pop​ulat​ion/​migrat​ion/​data/​ est​imat​es2/​esti​mate​s19.asp). 31. Diao et al. (2018, 29). 32. Diao et al. (2018, 29). 33. Fuglie and Rada (2013, iv). 34. Headey and Jayne (2014, 20). 35. Addison (2017, 133). 36. Kitching (2001, 151). 37. Harvey (2004). 38. Losch (2016, 46). 39. De Brauw, Müller and Lim Lee (2014). 40. Potts (2018). 41. Rodrik (2018, 17). 42. Rodrik (2018, 21–​23). 43. Breman (2013, 117–​119). 44. Michalopoulos and Papaioannou (2020). 45. Nunn (2008).

Surplus Labour   281 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77.

Inikori (2003). Nunn and Wantchekon (2011). Besley and Reynal-​Querol (2014). Fenske and Kala (2017). Obikili (2016). Pierce and Snyder (2018). Teso (2019). Biel (2000). Friedmann (2005). Devlin and French-​Davis (1995). Rodrik (2016). Ackah, Adjasi, and Turkson (2016, 63). See Wood and Mayer (2009). Jenkins (2016). Herr and Priewe (2005). Kohli (2020). Scherrer(2001). Gill (1995). Lawrence, Sippel, and Burch (2016). Höpner and Jackson (2006). Herr and Priewe (2005). Fanelli (2003, 56). Fjeldstad et al. (2017). Wade and Veneroso (1998), Stiglitz (2002), Chorev and Babb (2009). Yildirim et al. (2018). See World Bank (2019). Belletti, Marescotti, and Touzard (2017). Panagariya (2004). Beck (2014). Losch (2016, 15). Eberhardt (2014), Kahale (2018). Rashmi (2019).

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Chapter 16

L o cating Ag ra ria n L ab ou r with i n t h e C on tou rs of I mpe ria l i sm A Historical Review Arindam Banerjee

The production of agricultural commodities, where large sections of the global population, particularly in the South, are engaged, plays a central role in the global economic systems. That this is true not only in the historical past but also in the contemporary world is not so obvious. The Industrial Revolution in England in the eighteenth century and the subsequent industrialization in several Northern countries in the nineteenth century decisively changed the drivers of economic growth and expansion from agricultural land and natural wealth to industrious value-​added manufacturing activities. The physiocratic notion of ‘wealth’ originating from land, and only land, was replaced for good by the stock/​capital-​centric ideas of British political economy that were nursed in that same historical cradle which beheld the rise of the English factory. The growth of the service sector along with such industrialization meant that the share of agriculture in economic output was even lesser. The rise of finance in the late nineteenth century and its resurgence in the late twentieth century furthered the illusion of the declining importance of agriculture in the world economy. More speculative activities creating ‘notional wealth’ and accompanied by a predominantly ‘accounting’ lens of the wealth of nations strengthened the belief that agriculture was now marginal in the global economic system, contributing less than a tenth of the world GDP. Going deeper beneath this accounting view of the economy to understand its processes and mechanisms however underscores that agriculture as a sector and the ‘agrarian’ continue to remain central to the contemporary economic systems. The imperialist world order that started emerging from the sixteenth century, and coinciding with the prevailing mercantilist economic philosophy, was primarily a search for natural wealth in the form of land, biodiversity and minerals. The silver from the

286   Arindam Banerjee South American mines changed the economic geography of trade decisively by allowing the European region to cover for the persistent trade deficits with the Orient. The cost of this settlement was borne by agrarian population elsewhere. The trade settlements evolved with the journey of imperialism into its ‘industrial phase’, which also coincides with the rise of the ‘Second British Empire’. The emergence of industrial capital and its relationship with the ‘agrarian’, prioritized extraction of raw materials at an increasing pace and transfer of surplus for industrial accumulation (Magdoff 1978). A set of economic relationships within the framework of imperial governance came to be predominant placing agrarian labour of the colonies at the centre of capitalist development. This arrangement of international political economy of cross-​border surplus extraction was disrupted by the Great Depression in the 1920s and 1930s and the subsequent process of political decolonization from the 1940s to 1960s. The concerns for food self-​ sufficiency and autonomous industrialization implied a certain degree of decoupling of ex-​colonies from the dominant order of world capitalism. This, however, was not a sustainable proposition if world capitalism had to sustain. Many of the old factors like the ‘continuing need to access the tropical biodiversity and productive land’ to new factors like the ‘rise of transnational capital’ and the ‘energy-​food crisis of the 1970s’ meant that a more complex imperial domination had to return in order to ensure viability of the global capitalist system, now driven in a more volatile manner by speculative big, financial interests. Thus, the old imperialist control of the agrarian in the South has returned in the form of significantly different ‘neocolonial’ exploitation of agriculture in the ex-​ colonies, though not limited to these regions. This chapter attempts to understand the genealogy of the evolving relationship of imperialism with agrarian labour. Agrarian labour includes the landless agricultural labour, small to big peasants who are essentially petty producers or petty capitalist farmers. Agrarian labour is perpetually at a disadvantage vis-​a-​vis the transnational agribusinesses representing big, corporate capital. In the subsequent section, the historical imperial domination of the ‘agrarian’ over several centuries is discussed. In the next section, the emergence of various food regimes and associated changes are discussed to locate the contemporary context global capital. The following section outlines the emergence of neoliberalism as an economic philosophy and the neocolonial mechanisms of exploiting agrarian labour. Finally, the chapter ends with a section on trying to imagine an alternative economic regime for agriculture and the complex set of challenges involved therein.

Agriculture under Old Imperialism The onset of imperial conquests in the Americas integrated colonial land resources into the European-​Mediterranean economy driven by mercantile interests. Apart from precious metals, sugar emerged as an important trading commodity in the sixteenth

Locating Agrarian Labour within the Contours of Imperialism    287 century, joined later by coffee (Magdoff 1978). Livestock-​rearing for the purpose of export of live animals initially and then meat and tallow was yet another reason for annexing large grasslands. The monocultures established in South America undermined and destroyed the sustainable farming practices of the indigenous population. This was at least one of the main reasons for the near decimation of the Amerindian population over the sixteenth century (Bagchi 1982). If we accept the Wallerstein-​Gunder-​Frank hypothesis of the world-​system of capitalism emerging with the European conquest of the American landmass, then that system essentially started functioning with a large-​scale decimation of the indigenous agrarian labour in the Americas (Frank 1967). The consequent ‘labour void’ had to be then addressed by the large importation of slaves, primarily from the West African coast and their employment in plantations and mines. The role of the agrarian population in the colonies changed remarkably with the onset of capitalist relations in the core of the world economic system. With the industrial revolution in Britain and subsequent industrialization in Europe and the North Atlantic regions, the new logic of capitalist industry reoriented the raison d’être of imperialism in more than one way. The ‘agrarian outside’ was put at the service of the capitalist accumulation in modern industry (1) as a source of surplus that can be metamorphosed into industrial capital, (2) as a source of cheap industrial raw materials, and (3) as a source of food (including exclusively tropical products) that would keep industrial wages low and stable. A systematic extraction of the agrarian wealth in colonies emerged as of crucial importance with the introduction of the new capitalist relations of production in the imperial countries. Among the earliest institutional interventions of imperialism was to restructure the property regimes and land tax systems in the colonies. Carried out often in the name of introducing private property rights, supposedly conducive to progressive and dynamic farming, many of these new land revenue systems imposed on colonial societies were to streamline the appropriation of surplus generated from land-​and nature-​based activities. This not only made the governance of far-​away colonies financially sustainable (including recovering the initial costs of conquest) but also introduced a steady flow of surplus, often referred to as the ‘drain’ or ‘colonial tribute’, appropriated for the purpose of speeding up capital formation in the core of the ‘world-​system’ (Patnaik 1984; Bagchi 1982). The colonial tribute system of early imperialism in the form of ‘forced labour’ and ‘forced cultivation’ was inadequate for the scaled-​up need of capitalism. A more systematic and fast-​paced siphoning of ‘agrarian surplus’ emerged with the new land taxes and their management. A sizeable part of the revenue was invested for financing the export bill of the imperial country through an innovative connection between the fiscal and the trade domain of the colonial economy. The colonial exports were paid for by a part of the revenues collected in the colony and not through foreign exchange. To the extent the imperial country saved its foreign exchange, it gathered precious funds for speeding up the process of capital formation in its own country. To the extent the colony was deprived of foreign exchange inflows against long and sustained periods of export-​surplus,

288   Arindam Banerjee economic activities in colonies retrogressed leading to developmental gaps and greater dependence on the core. Estimates of such ‘drain’ show that in case of Britain, at a crucial phase of the Industrial Revolution in 1801, as much as 30% of capital formation can be traced to the contribution of ‘Indian tribute’. Nearly a tenth of the gross domestic material product of British Indian territories were transferred as colonial tribute to Britain (Habib 1995). Accounting for the tribute from the West Indies, this figure went up to nearly 85% of the British capital formation (Mukherjee 2010). Appropriation of surplus as colonial tribute intensified along with the greater integration of the colonies into global trade driven by the expansion of industrial capital during the nineteenth century. In early twentieth century during the Depression years, more than a quarter of the Indian revenues were transferred to Britain as colonial obligations. A similar phenomenon can be observed in Indonesia, ruled by the Dutch where around 6% of the national income was drained every year (Bagchi 1982). The export surplus siphoned off boosted Dutch finance, a large part of which financed English industrialization. The industrialization project was truly global generating massive demand for raw materials from different continents. What started with the cotton textile industry in England, the leading industry of the Industrial revolution, demanding raw cotton supplies from slave plantations in the United States and later from peasant farms of India, emerged into the ‘international division of labour’, where the export of a large variety of primary commodities, including minerals, from the tropics became indispensable for capitalist industry. The Hobson-​Lenin perspective identifies the ‘competition for securing cheap raw materials’ as one important driver of imperialism, the ‘search for markets’ for industrial goods being another. The late surge of imperialism towards the end of the nineteenth century, carving up the African continent amongst various European powers, is largely attributed to the industrialization of the European continent. While, such a specialization of colonies in primary commodities is often explained by the Ricardian comparative advantage theory, it remains a fact that many of these raw materials like cotton, cocoa, tea, coffee, rubber, and so forth, are products that were exclusively available in tropical conditions and without assured access to these many industries in the North would have failed to emerge. The comparative advantage principle does not really apply, as the goods exchanged are not produced in both the trading countries and the Ricardian ‘mutual gains’ also thereby does not accrue to the trading countries (Patnaik 2005). It is more the imperative of industrial capital that required imperialism to exert control over regions which can supply the required raw materials. Thus, the agrarian labour in the colonies were cast into the role of supplying cheap raw materials for the industrial world, sustaining profits rates there, even as value-​added economic activities were stagnating or disappearing in their own societies. This also meant that capitalism at the core of world economy not only depended crucially on the labour of the agrarian population in the periphery but also ensured that they are stuck

Locating Agrarian Labour within the Contours of Imperialism    289 in agriculture and other land-​and nature-​based activities in the absence of employment opportunities in value-​added activities. Apart from raw materials, the tropical biodiversity is also required at the service of capital through the production and exports of food stuffs including grains. The import of food stuffs from the oriental lands, including spices and fruits, by Europeans existed much before capitalism. With capitalism, the import of these items from the tropics at cheap prices became essential for the maintenance of a certain standard of living of the working class and the masses. The cost of the wage-​goods basket had to be kept stable and low for the purpose of preserving the profit rates without escalating social conflicts and unrests. This meant that the supplies of these goods had to be enhanced by raising productivity in agriculture in colonies or devoting more land resources to such crops. Mostly, the latter happened in the absence of investments in land-​augmenting measures, and this meant that food crops which were consumed by the colonial populace were increasingly displaced by commercial export crops. Unlike the prevailing notion that the industrial countries had resolved their agrarian question successfully by raising productivity in agriculture and moving people out of agriculture, it was the colonial economic arrangements operationalized through political and military force that really enabled the industrialization process to go forward. The whole idea that the Industrial revolution in England was preceded by an ‘agricultural revolution’ is not always borne out by agricultural output data (Patnaik 2011). Additionally, even with the introduction of industrial agriculture and its associated high yields (and associated high social and ecological costs), the North continued to remain dependent on the colonies for a certain basket of tropical products that it cannot produce commercially even today. Thus, the resolution of the agrarian question and accompanying transition to an industrial society in today’s advanced capitalist countries was crucially dependent on the imperialist control of land and natural resources in the colonies and their associated capacity to use the agrarian labour in these countries to the advantage of capitalist production in the metropolitan countries. This historical prelude and the associated processes on exploiting agrarian labour in the classical era of imperialism helps us in understanding the continuities and discontinuities that emerged with decolonization in the mid-​twentieth century. The relationship between the ‘agrarian’ in the South and international and national capital were significantly redefined. The appropriation of ‘unrequited export surplus’ as free resources from colonies had to discontinue with political sovereignty. At the same, industry and agriculture in both the core and the periphery of the world economy underwent restructuring. The transformation of food regimes and the restructuring of capital in agriculture and the end of the postwar Keynesian welfarism in the 1980s meant the emergence of new multilateral systems at the service of imperialism. Needless to say, the paradigms and coordinates of imperialism in the late twentieth century are very different from the age of the empire. The following section explores the new conditions that emerge in the global economy.

290   Arindam Banerjee

From Decolonization to Neoliberalism The process of decolonization that started in the 1940s marked a halt to the unbridled surplus extraction from the South and also restricted the unchecked access to the natural biodiversity of the colonies that imperial capital had enjoyed for a considerable period of time. The use of protectionism to nurture nascent industries in the newly decolonized countries meant that the existing monopoly trade channels that transferred ‘surplus’ out the colonial agricultural sectors lost their importance. Further, the push for ‘food self-​sufficiency’ addressing concerns regarding hunger and famine along with the drive for ‘autonomous industrialization’ in a large number of ex-​colonies in Asia and Africa meant that the prevailing regime of ‘international division of labour’ between the industrial North and the minerals/​agricultural crop exporting South was clearly challenged. The classical colonial food regime where the primary role of ‘tropical land resources’ was to remain at the service of metropolitan capital, by providing food and raw materials to the industrial North, could not be sustained in this era of decolonization. Also, with the shift of the centre of gravity of world imperialism from Britain to the United States in the interwar period, the food regime underwent an important change. With the ‘New World’, the settler colonies of the United States, Canada, Australia, and New Zealand, expanding greatly their capacity of producing grains and livestock products and exporting these to the rest of the world, a new food regime emerged by the 1950s (McMichael 2013). ‘Industrial agriculture’ with significant vertical integration of food processing using the large swathes of grassland generated large surplus of grains and livestock products, again not without the associated ecological costs, propelled these regions as major exporters of these products. Rich industrial Europe as well as the relatively poor ex-​colonies emerged as dependent on these exports. Philip McMichael summarizes this development succinctly: The key shift in accumulation dynamic was from an extensive form of accumulation via cheap prairie food staples in the first food regime, to an intensive form . . . combining the incorporation of food manufacturing into accumulation itself with the international disbursement of cheap food staples via the US government-​managed food-​aid programme, based in price support programmes. (McMichael 2013, 33–​34)

In fact, the cheap surplus grains doubled up as food aid from the United States, one of the central components of the US imperialist hegemony. The ‘food-​aid’ imperialism of the 1950–​1970 represented the recreation, or probably retention, of some features of old imperialism. Apart from ensuring that more and more poor nations join the anti-​communist conglomeration led by the United States, it also freed up fertile land resources for the demand of Northern industries and consumers. The cheap food consignments from the United States created a wheat-​dependence, with an acquired new taste for wheat and wheat products among the local population, in these developing countries. This displaced local food-​grains and roots like sorghum or yams from the local diets, effectively

Locating Agrarian Labour within the Contours of Imperialism    291 freeing up lands for the cultivation of more exotic crops for the export market. This would range from horticultural products, like fruits and vegetables, to raw materials for further industrial processing, like cotton or cocoa. The old imperialist relation with southern agriculture was reproduced to the extent this food-​aid imperialism worked. Many ex-​colonies, now independent continued to supply tropical food products for the consumers in advanced capitalist economies crucially keeping the ‘real wages’ stable and also ensured a regular flow of raw materials for the capitalist industries in the North. The other trajectory of development in the South was the adoption of chemical-​intensive cultivation, often referred as a ‘Green Revolution’. In countries like India and many South-​East Asian countries, the high-​yielding variety of seeds were adopted to address the food security challenges. This more water-​intensive and chemical-​intensive agriculture that was imported from advanced capitalist countries did allow a certain self-​ reliance in terms of food production, though this would eventually incur potentially significant ecological costs. It was also expected that this would free up land resources from food growing and can be used for producing non-​food commercial crops or other exotic crops, whether for domestic industries/​consumers or for export. Notwithstanding its challenges, to the extent that the ‘Green Revolution’ unfolded, it meant the development of a range of public institutions around food and agriculture related to production, distribution, research, and so on, along with the emergence of domestic farmer lobbies seeking accountability and exercising bargaining power vis-​à-​vis the national governments. In other words, this kind of autonomous agrarian development was relatively insulated from the circuits of global trade dominated by advanced country agricultural/​retailing capital. One can locate this development as outside the direct interests of the ‘food-​aid imperialism’. However, the development that was embedded within this food regime was the process of accelerated capital accumulation, which would lead to the rise of agricultural transnational companies (TNCs) integrating the input and output value chain on an unprecedented scale. McMichael (2013) observes: The transnationalization of food circuits superseded the politically managed bilateral export of food surpluses and agri-​industrial technologies associated with the postwar food regime. By the twenty-​first century, about a third of this trade represented purchases between corporate subsidiaries. (McMichael 2013, 50)

TNCs like Monsanto, Bayer, and Dupont were already controlling the seed and chemical markets in the developed world by the 1970s and were poised to enter the seed and chemical markets that were expanding in the developing world. In that sense, the Green Revolution by popularizing chemical-​intensive farming in the South, had already acted as a prelude to the subsequent phase of capital accumulation by advanced country corporate capital on a global scale. Added to this were the emergence of agribusiness TNCs in the domain of commodity trade like Cargill or Glencore to food processing (e.g., Nestle, Pepsico) and retailing (like Walmart, TESCO, etc.). In short, there emerged a

292   Arindam Banerjee vertical integration of the agricultural value chain under organized incorporated capital, which now required even larger scales of operation and grand-​sized markets in order to remain viable. This development, in essence, created the necessity of establishing the neoliberal economic regime in the name of globalization. The globalization of capital, primarily originating from the North but looking to partner with (or acquire) smaller-​sized capital from the South, was imperative and common rules and facilitation for entry and access to markets across a large number of countries needed to be imposed. This brings us to the contemporary phase of imperialist intervention in agriculture, distinct from earlier imperialist phases and yet reproducing a few fundamental principles from history.

The Neoliberal Juncture The original Hobson-​Lenin hypothesis regarding the cause of imperialist expansion emanating from overaccumulation of capital seems to be true for the contemporary period with regard to the agricultural sector, though not so for many others sectors of the economy. Newer avenues of investment and expanding markets emerged as absolute necessities for the capital accumulation in Northern agri-​business to continue unabated. The financialization process, of which speculative activities are an integral part, meant that an expansion in the base of natural resources on which finance capital can put money through commodity futures markets, was also imperative. The growing integration between corporate agribusiness capital and finance capital emerged as the primary driver of the globalization process in the 1980s. This was facilitated by the emergence of the Washington Consensus pushing for a neoliberal economic regime in the developing world. The neoliberal juncture is represented by the introduction of the structural adjustment programmes (SAPs), first in the Latin American countries in the 1980s and then in other developing regions. The implementation of SAPs at the behest of multilateral institutions controlled by the advanced countries, like the IMF and World Bank, in a large number of developing countries was based on the economic philosophy of privatization and free markets (Cornea et al. 1987). The withdrawal of the government from social sector expenditures, cut-​back on subsidies, reducing welfare measure in the interest of fiscal discipline was the new doctrine that developing countries had to follow in exchange of any development assistance received from the Bretton Woods institutions. If balanced budgets and free markets were one pillar of the neoliberal economic regime, ‘free trade’ was the other important pillar. The WTO negotiations that began with the Uruguay round in 1987 represent this push towards integrating global agricultural markets with a common set of rules for trade, production, and consumption. This new set of economic rules rationalized or removed existing controls over the cross-​border movement of agricultural commodities and set in place a withdrawal of government support from agricultural producers. The two are

Locating Agrarian Labour within the Contours of Imperialism    293 inter-​connected as when a large number of countries negotiated the opening of their agricultural markets, it was inevitable that they also needed to agree on a common set of principles vis-​à-​vis the nature and extent of government support that farmers would receive in respective countries. In other words, the WTO agreement in 1995 and the Agreement on Agriculture (AoA) therein, set up the conditions for millions of developing country farmers to compete with each other in the common export market. The export liberalization has directly had an impact on prices that farmers receive in developing countries. With the withdrawal on protective import and export duties, the global prices and the factors influencing them, affected the domestic prices to a much greater extent than before. In the immediate aftermath of the signing of the WTO Agreement in 1995, the agricultural commodity prices for major commodities collapsed as evident from Table 16.1. Both food commodities like cereals and edible oils and non-​ food commercial crops exhibit a massive decline in nominal prices globally, indicating a major deflation in the incomes of the rural masses across the developing world. Ironically, the theoretical rationale put forward for trade liberalization in agricultural commodities made the case for better prices for farmers in the poor developing countries by giving them access to the global export markets where prices were high. Unfortunately, much of that economic analysis dished out at the multilateral negotiations was essentially static and partial in nature and assumed many things to remain constant. The economists arguing for trade liberalization from the perspective of enhancing farmers’ welfare missed out on identifying that simultaneous opening up of markets by a large number (nearly 80) of countries amounted to a massive external shock in the global markets. Farm produce from such a large number of countries trying to enter the global markets created a ‘commodity glut’, causing prices to collapse as noted earlier. Table 16.1 Prices of Selected Commodities in USD, 1995 and 2001 Crop

1995

2001

Percentage Change

Wheat (US HW)

216

133

–​38.2

Maize (Argentine)

160

80

–​50.0

Rice (Thai)

336

179

–​46.7

Groundnut Oil

991

788

–​20.5

Palm Oil

626

74.7

–​88.1

Soyabean Oil

479

71.4

–​85.1

Sugar

13.3

9.2

–​30.8

Jute

366

Cotton

98.2

Source: Adopted from Patnaik (2003).

276 49.1

–​24.6 –​50

294   Arindam Banerjee With the policy thrust shifting towards commercial and export-​oriented agriculture, farmers across many developing countries invested in commercial cultivation in the early 1990s. The massive drop in output prices meant that large sections of the farming community not only experienced a simple drop in income, but also were unable to recover their investment costs that were undertaken to make a transition to commercial farming. This led to emergence of debt-​traps for farmers (Banerjee 2009). In India, the cycle of indebtedness that triggered unusually high rates of suicides among farm households persisted over the next two decades with varying extent among different crop farmers. Loan-​waivers have emerged as a policy measure used with greater frequency during the last twenty-​five years as a result. In the 2000s, agricultural commodity prices did start to rise but it did not imply unambiguous benefits for farmers across the board. With food prices rising astronomically after 2005 and this global food crisis continuing until 2012, all ‘net food buyers’ were adversely affected. The nominal FAO food price index abruptly increased from 53.1 in in 2002 to a historical high of 131.9 in 2011 (FAO Food Price Index downloaded from http://​www.fao.org/​wor​ldfo​odsi​tuat​ion/​food​pric​esin​dex/​en/​ on 26 February, 2021), driven by massive diversion of corn to ethanol production in the United States and speculative finance rushing into the commodity markets due to the impending financial crisis and its aftermath in 2008 (Banerjee 2011; Ghosh 2010). While global corporations processing and trading in food-​grains and thin sections of ‘surplus’ food-​ grain growers both in the North and the South benefitted from this grain price boom, majority of farmers not growing adequate food to last them for a full seasonal cycle, agricultural workers and urban workers clearly experienced tightening budgets and possible descent into poverty with the drastic increases in food-​grain and other food commodity prices. The high prices of the Global Food Crisis has been corrected to some degree after 2012, but the larger neoliberal growth processes, which are now well entrenched in the developing countries, ensure that the real earnings of the agrarian population do not witness substantial enhancement even when food prices are falling. The economic slowdown that major countries in the South like China, Brazil, and India started witnessing after 2012 caused a global decline of commercial food and non-food crop prices implying that food-​grain price declines were not always clear gains for farmers (Table 16.2). An assessment of price movements in international commodity markets and agricultural growth or slowdown clearly shows that various sections of the peasantry and other agrarian population bears the brunt of these trends. This is largely due to the squeeze in the share of the peasant producer and agricultural labour in the value-​added in agriculture, thereby sandwiching the petty commodity producers income between the profits of organized capital in the upstream and downstream of the agricultural value chains. More than the cyclical movement of various economic variables, it is a set of structural factors that characterize the neoliberal policy regime which needs to be studied in order to comprehend the nature of the agrarian distress. The neoliberal economic philosophy is represented in terms of the three pillars of (1) removing all kinds of protective measures for the agricultural sectors, thereby placing

Locating Agrarian Labour within the Contours of Imperialism    295 Table 16.2 Price Changes for Selected Commodities between 2012 and 2019 Commodities

Percentage Price Change: 2019 over 2012

Maize

–​42.98

Rice

–​31.66

Sorghum

–​42.45

Wheat

–​40.92

Cotton

–​12.73

Rubber

–​51.15

Tea

–​23.11

Coffee, robusta

–​27.66

Milk

  –​2.93

Note: Based on Primary Commodity Price System Data, IMF (data.imf.org).

petty farmers in direct competition with each other and also with big organized capital represented by TNCs; (2) gradual or rapid withdrawal of economic support to the small-​scale farmers in the form of input subsidies like for power or fertilizers and public research and extension expenditures by the government; and finally (3) the transformation of the role of the government from that of a ‘regulatory’ nature, meant to protect the interests the farming community against predatory/​monopoly practices by organized capital, to that of a ‘facilitative’ one, which now furthers the cause of big, incorporated capital within the agricultural sector. The first two features of neoliberalism were negotiated directly as part of the WTO agreement, driven by the arguments of free trade and non-​distorted markets respectively. This resulted in small to medium to large farmers facing extremely volatile crop prices on one hand and increasing costs of cultivation due to rising input costs. A clear consequence of this was the stagnation or decline of farm incomes, squeezed between declining and volatile crop prices and rising costs of cultivation, something termed as a ‘scissors’ crisis (Reddy and Mishra 2009). Further, with farmers facing losses or low incomes and possible defaults in loan repayments, the institutional banking sector exhibits unwillingness to lend funds in subsequent years, thereby pushing them towards accessing credit from unregulated non-​institutional lenders like local traders and money lenders at exorbitant interest rates. This further raises the costs of credit and eats into the surpluses produced by the farmer. The third feature of the neoliberal policy approach is directly played out within the realms of political economy in the developing South. Cautious in the early days of liberalization and globalization, the local, domestic capitalist classes have increasingly warmed up to foreign capital and has got integrated within global capital. Global

296   Arindam Banerjee agribusiness companies entered into joint ventures with smaller domestic companies in the South or often bought over entire companies to gain market access. This development meant that the respective states in these countries also reoriented their regulatory functions and amended their laws to facilitate advantageous conditions of entry for big, corporate capital in newer crop sectors in agriculture and pursue profits with greater vigour. The public crop procurement systems were dismantled to facilitate the free play of agribusiness monopolies. Agricultural marketing laws were suitably amended to further the interest of corporate players. One of the notable examples of such state withdrawal from regulating agricultural markets was the dismantling of the State Trading Organization (Compañía Nacional de Suminstros Populares, or CONASUPO) in Mexico in 1999 as a consequence of her entry into the General Agreement on Tariffs and Trade (GATT). Through this, the Mexican government completely stopped providing price support to corn growers and also withdrew from the role of stabilizing the grain market through the distribution of subsided food-​grains to the poor (Puyana 2012). The larger thrust of such policies was to allow the global agribusiness giants to dominate the agricultural commodity markets. Corporate agriculture and the expansion of contract farming enhanced the access of big capital to natural resources and biodiversity across the world, more particularly to that in the tropical areas of the South. This also brought an increasing proportion of farmers, representing the agrarian labour, under the direct control of the global corporations. Such access to labour and natural resources enabled the corporation to continuously increase their scale of operations, which sustained these companies and ousted their competitors at one go. Two decades later, we find that the aggressive march of agricultural TNCs has regained new momentum as represented by the three Farm Law amendments in India in 2020. While there were massive protests from over 500 small to big farm unions, the government maintained that the amendments were meant to reform and deregulate markets and promote contract farming under the aegis of big agribusiness. In India, the grains market still has significant government intervention through its agency the Food Corporation of India, which provides a minimum support price to grain farmers and distributes subsidized grains to the poor. The government now intends to withdraw from these operations to free the grains market to the private players and shift to cash transfer as far as food-​distribution welfare policies are concerned. The current policy changes in India seem to be a replay of the Mexican reforms with the same policy bias towards global corporate capital. The examination of the neoliberal juncture clearly reveal the reproduction of many of the old imperial mechanisms to extract surplus from the agrarian labour in the South. The orthodoxy of ‘free trade’ and ‘free markets’ is invoked in a large number of countries to make petty agricultural producers vulnerable to the predatory mechanism of big, organized capital. Much of the old control over natural biodiversity of the South is being recreated by the neocolonial processes. At the same time, one must note that the contemporary neoliberal juncture is different in terms of the geographical coordinates of

Locating Agrarian Labour within the Contours of Imperialism    297 big corporations where the domestic capital blocks from the South are also participating in what can now be truly termed as ‘global capital’. The much greater dominance of finance capital is also a new condition which differentiates contemporary imperialism from that of the past. Thus, it is imperative to re-​examine the contemporary ‘agrarian question’ in the context of the neoliberal hegemony.

Rethinking the ‘Agrarian Question’ The agrarian question and its resolution has increasingly been associated with the economic transformations that has been witnessed in the advanced capitalist countries, mostly in the North but also the exceptional cases of South Korea and Taiwan. The various paths of capitalist industrialization historically, whereby agrarian surplus is mobilized for industrialization, have informed the possibilities of how the agrarian question can be addressed within the domain of political economy and policies (Byres 1996). The agrarian transition, in which a majority of the workforce is located in the industrial and services sector and agriculture assumes more of the ‘industrial’ form, also served as the template for the developing countries to emulate. One strand of agrarian Marxism has identified the process of globalization as a continuation in the resolution of the agrarian question, only no more on a national scale but on a global plane. Henry Bernstein (1996, 2004) puts forward a strong argument that the ‘classical’ agrarian question was no longer relevant for the developing countries due to the twin economic conditions that dominated the contemporary global economy. First, the globalization of capital facilitating the entry of foreign direct investments (FDIs) into developing countries meant that the latter did not need specific political economy dynamics to mobilize their own agrarian surpluses for investment in industry. Rather, he argues that the capital accumulation has already occurred on a global scale and via the FDI route, all developing countries can access required amounts of capital for industrialization and economic development. In fact, Bernstein further argues that the ‘external sources of accumulation’ that imperial countries had access to during their capitalist transformation was finally available to the developing countries in the form of foreign capital. Second, Bernstein argues that with the ‘new Internationalized food regimes’ led by global agribusiness corporations, the food question has been decisively addressed and the original concern for food self-​sufficiency that ex-​colonies had was no more that important. With global food-​grain markets as having low and stable prices, countries can reliably depend on food imports to attain food security. He writes: With contemporary ‘globalization’ and the massive development of the productive forces in (advanced) capitalist agriculture, the centrality of the ‘classic’ agrarian question to industrialization is no longer significant for international capital . . . there is

298   Arindam Banerjee no longer an agrarian question of capital on a world scale. (Bernstein 2004, 202, emphasis added)

The massive price volatility in the grain markets during the global food crisis genuinely raised serious questions regarding the so-​called success of agricultural TNCs in stabilizing food markets. Rather, disaggregated analysis of global and regional food-​ grain production and consumption really revealed that it was intermittent declining consumption of grains in the South and the grain demand collapse in the erstwhile Soviet Union in the 1990s, when they were dismantling their earlier socialist welfare measures, that caused the food-​grain prices to remain low and stable, even as the per capita grain production declined in the world between 1985 and 2002 (Banerjee 2020). The food question remains as alive for most countries of the developing South as immediately after decolonization. However, the first proposition of Bernstein in terms of access to ‘external sources of accumulation’ also needs to be closely examined to understand the contemporary agrarian question in the South. It must be noted that the very specific conditions of old imperialist appropriation of ‘tribute’ or ‘costless surplus’, forcible imposition of free trade and the politico-​military claim over the tropical biodiversity (and on the minerals in some South temperate regions like Australia or South Africa) and their role in industrialization meant that capitalist transition in the early industrial countries occurred within the cradle of imperialism. In fact, there is now an increasing realization that the ‘classical agrarian transition’ and associated economic development was actually a very specific phenomenon that crucially depended on the generation of underdevelopment and backwardness in large parts of the colonial world (Moyo, Jha, and Yeros 2013). This phenomenon is captured in the following passage: Slave labour and other types of forced labour in the old colonies and the markets for precious metals and tropical agricultural commodities which they sustained, were fundamental sources of surplus appropriation and capital accumulation in the leading countries, [ . . . ] The subsequent influx of tropical food goods was just as crucial to capital accumulation in the leading industries, by reducing the wage bill and compressing competing demands in the new colonial territories. [ . . . ] We must conclude that the agrarian question of advanced capitalism has never been resolved: economic progress has been as congenital an ailment as economic backwardness. (Moyo et al. 2013, 99; emphasis in original)

None of these ‘specificities’ of imperialism are comparable with the availability of FDI with the removal of capital controls in the contemporary world. Any FDI would necessarily repatriate profits to their home country or relocate profits and investment on a global scale. Industrialization and associated economic transition is therefore not guaranteed in any single nation although their agrarian and non-​agrarian labour and natural resources will be at the service of global capital.

Locating Agrarian Labour within the Contours of Imperialism    299 Thus, contemporary imperialism is in many ways recreating some of the old contradictions for agrarian labour where the latter is at the risk of a deteriorating bargaining position in the value-​chains or witnessing the dwindling of their autonomy over production decisions or worse, losing access to their natural resources and means of production. The scale and speed of contemporary accumulation of capital, especially with financialization where wealth can grow completely in disproportion to the real conditions of production, also threatens to intensify the ecological contradictions in the South. Finally, this also implies that the pre-​existing contradictions based on race, caste, or gender will be intensified or reappear in new forms in a situation of overall agrarian distress. The ‘agrarian question’ therefore is really about the emancipation of the agrarian labour from the clutches of global corporate-​driven capitalism and pursue a path of ‘autonomous’ development, including industrialization. Such industrialization, if solely driven by foreign capital where the state is subservient, will not be able to address the concerns of either human welfare or the conservation of nature. In that sense, the political component of the agrarian question is to reclaim the State in the interests of ‘agrarian labour’. In this, one needs to carefully note the new character of global capital, which though concentrated in the North has incorporated significant blocks of capital from the South. The metropolitan is no more purely geographically concentrated but rather has dissipated through the creation of ‘elite enclaves and lobbies’ within nearly all countries of the South. The political struggle against the machinations of global capital therefore necessarily must be directed both ‘inwards’ and ‘outwards’ against various coalitions of capital.

References Bagchi, Amiya K. 1982. The Political Economy of Underdevelopment. Cambridge University Press. Cambridge Banerjee, A. 2009. ‘Peasant Classes under Neo-​Liberalism: A Class Analysis of Two States’. Economic and Political Weekly 44, no. 15 (April 11): 49–​57 Banerjee, A. 2011. ‘Food, Feed, Fuel: Transforming the Competition for Grain’. Development and Change 42, no. 2: 529–​557. Banerjee, A. 2020. ‘The “Longer Food Crisis” and Consequences for Economic Theory and Policy in the South’. In Rethinking the Social Sciences with Sam Moyo, edited by Praveen Jha, Paris Yeros, and Walter Chambati. New York: Columbia University Press: 152–​179 Bernstein, H. 1996. ‘Agrarian Questions Then and Now’. Journal of Peasant Studies 24, no. 1–​ 2: 22–​59. Bernstein, H. 2004. ‘Changing before Our Very Eyes: Agrarian Questions and the Politics of Land in Capitalism Today’. Journal of Agrarian Change 4, no. 1 and 2: 190–​225. Byres, T. J. 1996. Capitalism from Above and Capitalism from Below: An Essay in Comparative Political Economy. New York: Palgrave Macmillan. Cornia, G. A., R. Jolly, and F. Stewart. 1987. Adjustment with a Human Face. Oxford: Clarendon Press.

300   Arindam Banerjee Frank, A. G. 1967. Capitalism and Underdevelopment in Latin America. New York: Monthly Review Press. Ghosh, J. 2010. ‘The Unnatural Coupling: Food and Global Finance’. Journal of Agrarian Change 10, no. 1: 72–​86. Habib, Irfan. 1995. ‘Colonisation of the Indian Economy’. In Essays in Indian History: Towards a Marxist Perception, 304–​346. New Delhi: Tulika. Magdoff, Harry.1978. Imperialism: From the Colonial Age to the Present. New York: Monthly Review Press. McMichael, Philip. 2013. Food Regimes and Agrarian Questions. ICAS Agrarian Change and Peasant Studies Series. Halifax and Winnipeg: Fernwood Publishing. Moyo, Sam, Praveen Jha, and Paris Yeros. 2013.‘The Classical Agrarian Question: Myth, Reality and Relevance Today’. Agrarian South: Journal of Political Economy 2, no. 1: 93–​119. Mukherjee, A. 2010. ‘Empire: How Colonial India Made Modern Britain’. Economic and Political Weekly 45, no. 50: 73–​82. Patnaik, Utsa. 1984. ‘Transfer of Tribute and the Balance of Payments in the CEHI’. Social Scientist 12, no. 12: 43–​55. Patnaik, Utsa. 2003. ‘Global Capitalism, Deflation and Agrarian Crisis in Developing Countries’. Journal of Agrarian Change 3, no. 1–​2: 33–​66. Patnaik, Utsa. 2005. ‘Ricardo’s Fallacy: Mutual Benefit from Trade based on Comparative Costs and Specialization?’. In Pioneers of Development Economics, edited by K. S. Jomo. New Delhi: Tulika: 31–​41 Patnaik, Utsa. 2011. ‘The “Agricultural Revolution” in England: Its Cost for the English Working Class and the Colonies’. In Capitalism, Colonialism and Globalization, edited by Shireen Moosvi. New Delhi: Aligarh Historian’s Society and Tulika Books: 17–​27 Puyana, Alicia. 2012. ‘Mexican Agriculture and NAFTA: A 20-​Year Balance Sheet’. Review of Agrarian Studies 2, no. 1: 1–​43. Reddy, D. Narasimha, and Srijit Mishra. 2009. Agrarian Crisis in India. New Delhi: Oxford University Press.

Chapter 17

Women, D ome st i c L ab ou r, and E c onomi c Imperia l i sm Han Cheng

Economic imperialism is an exploitative system that extracts surplus from periphery regions to the core regions (Emmanuel 1972; Amin 1978; Wallerstein 2000). The extraction includes not only the ‘visible’ surplus embodied in tradable goods and services but also the ‘invisible’ labour that maintains the material and social conditions of the reproduction of the ‘visible’ commodities. Women are the major contributors of ‘invisible’ labour and are treated unequally as producers of ‘visible’ commodities (Waring 1988; Gimenez 2019). Women’s unpaid and underpaid labour, as well as the political and institutional structures built upon them, are crucial components of contemporary imperialist order (Dalla Costa 2008; Custers 2012). The relationship between women and economic imperialism is complex, far-​ reaching, and involves debates among economists, feminists, and political activists. In order to give a general picture of the subject matter, this chapter mainly focusses on four issues and the related literature. First, unpaid domestic labour is not only a major form of the oppression of women but also a central mechanism supporting capital accumulation. Second, the expansion of imperialism in the neoliberal era reshaped the social structure in the developing world. The oppression of women in production, reproduction, and gender relations is an integral part of the reshaped social structure. Third, unequal exchange and international migration extract women’s productive and reproductive labour from the developing world and support the consumerist way of life in the developed world. International surrogacy and sex trade directly appropriate women’s body. The global division of labour is gendered in contemporary imperialism. Fourth, the expansion of imperialism has reached its geographic limit. The ‘accumulation of dispossession’ of women labour and body is undermining the quality and quantity of labour power reproduction in the biological, family, and community levels. Women’s anti-​imperialist movements also contribute to the destabilization of imperialism.

302   Han Cheng

Unpaid Domestic Labour and Capital Accumulation Unpaid work includes unpaid care work, unpaid domestic production for family use, unpaid volunteer work, and other unpaid work. Specifically, unpaid care work includes but not limited to food storage, preparation, and serving, home cleaning and repairing, washing and drying clothes, shopping, taking care to children and adults, and providing emotional support. (United Nations 2017). Most unpaid work is domestic work done by women. According to Charmes (2015), women spent at least 50% more time on unpaid work than men in all countries. In developing countries, women typically spend more time in unpaid work than those in developed countries. Women’s total working time (paid and unpaid) is longer than men’s working time in most countries. Although it is widely accepted that unpaid domestic work in one of the major forms of the oppression of women, there is nevertheless an extensive debate about the origin and the nature of domestic work among liberal feminists, radical feminists, Marxist feminists, and socialist feminists. The theoretical foundation of liberal feminism is individualism. Women’s rights are an integral part of human rights. Women’s domestic labour and the oppressed situation in general are the results of women’s limited access to public life, unfair competition in the labour market, and poor education (Mill [1869] 1970; Friedan 1963, 1981). For radical feminists, patriarchy or sex oppression is the paramount institutional structure that confines women to households. The patriarchal social structure is either an extension of different biological structure (Firestone 1970) or a result of social conditioning (Millet 1977). Marxist feminists attempt to explain the economic root of unpaid labour. Mitchell (1966) and Benston (1969) argue that family is basically an economic unit of labour power maintenance and reproduction. Women’s domestic labour is thus basically reproductive labour producing use-​value that is directly consumed, rather than exchange-​value that is sold in the market. Women’s domestic labour is thus closely related to the quantity and quality of the labour force that participates in capital accumulation (Morton 1971; Moore 2018). The discussion about the use-​value and exchange-​value inspired further debate on whether or not women’s domestic work is productive. Dalla Costa and James (1975) push one step forward by arguing domestic labour is productive labour because it produces the most important commodity for capital accumulation: labour power. This point of view created a shock wave among Marxists and feminists and led to further academic and political debates in the following decades (Vogel 2013). Some Marxist feminists are critical of the liberal and radical branches of feminism and question the effect of the rise of identity politics on the liberation of women. For them, capital accumulation is the

Women, Domestic Labour, and Economic Imperialism    303 dominant mechanism that extracts and devalues women’s unpaid labour (Gimenez 2018, 2019). According to Eisenstein (1978), socialist feminism is a synthesis of Marxism and radical feminism that preserves the analytical power of Marxist theory while accepting the broader horizon explored by radical feminists. Socialist feminists agree with radical feminists on the existence of patriarchy as a mechanism of the oppression of women, independent from capitalism. On the other hand, they reject radical feminists’ explanation of the origin of patriarchy and burden of women’s domestic work that focuses only on biology, ideology, and psychology. They argue that patriarchy is an institutional structure which is both a legacy of previous modes of production and an outcome of current power balance of class struggle (Vogel 2013). Although agreeing with the Marxist perspective on the importance of capital accumulation, socialist feminists criticize Marxism for its ‘sex-​blind’ perspective which ignores the different situations of working-​class women and men. Hartman’s (1979) famous article about the ‘unhappy marriage’ between Marxism and feminism points out the centuries-​long uneasy relationship between the men-​led labour movement and the feminist movement pursuing different and sometimes conflicting goals. Women’s domestic work, for socialist feminists, is thus a combination of exploitation in the capitalist era and patriarchal oppression determined by historical, national, and cultural factors. The unpaid nature of much of women’s work makes women ‘invisible’ to the system of national accounts (SNA). In Waring’s (1988) powerful critique of the SNA, she points out its patriarchal foundation. She argues that although the SNA is claimed to be an accounting system that evaluates the economy’s ability to produce goods and services for the economic benefits of the people, the economic benefits are narrowly defined as the benefits of corporations and households headed by men. Much of women’s unpaid labour, since it does not directly contribute to profit and is not sold on the market, is excluded from the realm of economic activities. The bias of SNA, for feminists, is a reflection of the rigid gender stereotype of mainstream neoclassical economics. Folbre and Hartmann (1988) argued that a sharp division between ‘public and private, market and household, economic and noneconomic, self-​interested and altruistic, male and female’ is consciously created in mainstream economics. The division is one of the hidden guidelines of macroeconomic statistics and is used to devalue women’s unpaid work (England 1993; Folbre and Nelson 2000). Waring and other feminists’ works gained great influence and pushed the United Nations to revise its manual of SNA to include more of women’s unpaid work (Ahmad and Koh 2011; Bridgman et al. 2012). However, the revisions are limited and unpaid work like ‘preparation and serving of meals’, ‘care, training and instruction of children’, and ‘transportation of members of the household or their goods’ are still excluded from the production boundary (Saunders and Dalziel 2017). As agreed by the Marxist and socialist feminists, women’s unpaid work is a necessary condition for capital accumulation, which is the raison d’être of any capitalist society

304   Han Cheng (Moore 2015, 2018). Wallerstein (1983) argues that fast capital accumulation typically takes place in countries that have a considerable proportion of semi-​proletarian households whose labour force typically consists of a male ‘breadwinner’ and a housewife. A full-​proletarian household, whose adult members are all workers, has to purchase many reproductive services and finished consumer goods whose prices contain a part of profit. For a semi-​proletarian household, most of the reproductive labour and final processing of consumer goods are done by the housewife, who will typically not ask for more than subsistence living standard. In developing countries where women are also responsible for subsistence production such as collecting firewood, carrying water, milking cows, and harvesting vegetables in backyards, the male ‘breadwinner’ can survive with even lower wages earned from his employer since his daily bread (and some other consumer goods as well) is not only served but also partly produced by his wife (Dalla Costa 2008, 33–​50). Beauvoir once said that ‘one is not born, but rather becomes, a woman’. Unpaid work is a necessary process of ‘becoming’ a woman. Federici (1975) argued that unpaid work not only consumes women much of their time but also shapes their personalities. The female socialization is the internalization of the capitalist society’s standards of femininity. The expectation for girls to be a good listener, a good supporter, and a good follower is an integral part of their education to be a good unpaid domestic labourer. On the other hand, girls are in general not expected to have strong leadership and technical expertise, which are indispensable for the managerial and the professional positions (Lester 2008; Lawson, Crouter, and McHale 2015). Not surprisingly, even in the most developed countries, the majority of the positions such as elementary and secondary school teachers, social workers, nurses, child care workers, secretaries, and waitresses are taken by women (Bureau of Labor Statistics 2020). Most of women’s paid jobs are underpaid because they are more or less the continuation of women’s unpaid domestic work. Unpaid labour, especially care work for family members, frequently cuts women’s schedule into pieces and pushes them into the part-​time labour market and the ‘gig economy’, where they can take two or three jobs at the same time (Milkman et al. 2020). For women from lower socioeconomic strata, single mothers, and women from minority groups, being simultaneously money-​poor and time-​poor is quite common despite their long working time (Hunt and Samman 2019). Women’s unpaid and underpaid labour in the developed countries cannot alone satisfy the ever-​expanding capital accumulation. The second-​wave feminist movement, along with the labour movement and civil rights movement contributed to the collapse of the ‘social structure of accumulation’ in the late 1970s and led to strong downward pressure on profit rate (Boddy and Crotty 1975; Bowles, Gordon, and Weisskopf 1986). In order to retrieve the profit rate by circumventing the labour and feminist movements, international capital turned to the developing countries. This strategic transition opened a new stage of imperialism, which was later referred to as the neoliberal globalization (Harvey 2003, 2007; Smith 2016, 187–​223).

Women, Domestic Labour, and Economic Imperialism    305

Neoliberalism and Women in the Developing World Neoliberalism refers to the expansion and deepening of the capitalist relations of production by incorporating every country into the same set of global division of labour (Wallerstein 2000, 129–​148; Kotz 2002). For capital accumulation to take place, the socioeconomic structure of the developing countries has to be radically adjusted in order to create favourable conditions. Politically, the socialist and nationalist social contracts that maintain interclass compromise should be abandoned and replaced by the universal value of the ‘Washington Consensus’ (Kotz and McDonough 2010; Li 2016, 17–​ 18). Economically, privatization, deregulation, and financial liberalization should be pursued in order to invigorate the ‘invisible hand’ that gives every economic agent the right to choose. Firms will be able to find more business opportunities, consumers can choose from a greater variety of goods and services, workers can choose the jobs that pay them the most, and financial market can choose to allocate capital to those who can best handle the expected revenue and risk. The optimizing decisions of those rational economic agents balancing cost and benefit will finally lead to the maximization of general social welfare: fast economic growth. The benefits of economic growth will somehow ‘trickle down’ to everyone (Aghion, Philippe and Bolton 1997; Rodrik 2011; Duménil and Lévy 2011). The key step towards its success is to dismantle the social and institutional barriers that prevent the free flow of factors of production. In the former socialist countries, the collective farming system is abolished to release rural surplus labour, the ‘monopolistic’ state-​owned enterprises are privatized to create favourable business environment for their private counterparts, the state-​controlled banking system is deregulated in order to facilitate the transition towards the superior ‘modern’ financial system (Li 2008, 2016; Hart-​Landsberg and Burkett 2006; Kotz and McDonough 2010). In the non-​socialist developing countries, the import substitution strategy is abandoned to realize their long-​suppressed comparative advantage in the labour-​intensive and the resource-​extraction industries. The government budget on health, education, and other necessities is slashed to implement ‘sound’ fiscal policy whose major purpose is to pay foreign debts on time. The private and global financial capital gained greater influence in policy making (Harvey 2007; Federici 2020). Neoliberal reforms have been implemented across the developing world. The expected improvements are, however, far from fully achieved. The promised ‘trickling-​ down’ is even less so. The last four decades witnessed the slowing down of global economic growth and the widening international and intranational income gaps (Navarro 1998, 2007; Duménil and Lévy 2011). As the most vulnerable and underprivileged group, women in developing countries disproportionally bear the brunt during the neoliberal transition in production, reproduction, and gender relations.

306   Han Cheng From the mainstream Ricardian trade theory, trade liberalization enables every country to acquire products in the global market at a cost which is lower than the opportunity cost to produce at home, if they specialize in the industries that they have comparative advantage. From ‘factor-​price equalization theorem’, the compensation to the factor of production that is relatively abundant in a country will increase because global trade will open up bigger market of the industries that intensively use that factor (Samuelson 1948; Krugman and Obstfeld 2009; Rodrik 2011). Workers in developing countries will in general have higher income under free trade. Specifically, women will have an even greater income increase since they are the owners of ‘unskilled’ labour, which is the most abundant factors of production (Tran 2019). Trade liberalization is indeed associated with higher labour participation rate of women in developing countries. It is widely observed that the percentage of female workers in export-​oriented manufacturing, such as apparel, electronics, and food processing industries, increased during globalization (Kung 1994; Lee 1998; Salzinger 2003; Berik, Rodgers, and Zveglich 2004). However, the evidence of the improvement of women’s socioeconomic status in countries showing ‘feminization’ in their export sector is at best mixed (Tran 2019). While the gender equality rating of Philippines is as high as 16th of the 152 countries, the rankings of Indonesia (85th), China (106th), and India (112th) are far from good and the improvement is slow (Crotti et al. 2020). The absolute living and working conditions of women in developing countries with export-​ oriented economy is still gloomy. Working-​class women in the special economic zones, free trade zones, and maquiladoras still have to work long hours, receiving subsistence wages, and enduring dangerous working conditions and punitive labour discipline. Sexual harassment and exploitation are commonly seen while maternity leave and child care laws are either non-​existent or non-​enforcing (Federici 2012, 65–​75; Taplin 2014; Smith 2016, 26–​28). There are in general two approaches in explaining the reason of the feminization of export sector in the neoliberal era. The first approach attributes feminization to the pre-​existing characteristics of the supply and demand in the labour market. Because of women’s disadvantages of skill, experience, and union participation, they have lower negotiation power compared to men. Moreover, domestic work and child rearing limit women into elementary occupations because their career path is frequently interrupted. Women’s low wages are particularly attractive to labour-​intensive export factories that rely heavily on seasonal orders and precarious employment (Standing 1989). The second approach emphasizes the active shaping power of the state and enterprises. Amsden (1989) argues that low wages (for women in particular) are the crucial for competitive advantage of the late industrializing countries. Seguino (2000) further argues that gender inequality and high profit in the feminized sectors have positive impact to technological progress and economic growth. Developing states consciously use policies to perpetuate the gender segregation in the labour market. Salzinger (2003) and Caraway (2005) admit the differentiating effects of gender discrimination and patriarchal social norms before women entering the workplace, but propose that the docile and manipulable female gender roles are deliberately imposed by employers to fit in their targets

Women, Domestic Labour, and Economic Imperialism    307 of labour control and profit maximization. The reshaped gender roles interact with the pre-​existing ones through socializing and consolidate the labour market segregation that fixes women into labour-​intensive positions. Along with the industrial upgrading taking place in developing countries, a process of ‘de-​feminization’ has been observed in recent years, especially in East Asian and Pacific countries, confirming conclusions of both approaches (Tejani and Milberg 2016). Women as small producers are also negatively influenced by trade liberalization. In sub-​Saharan developing countries, trade brings about a bigger market for cash crops produced mainly by men in commercial plantations as well as fierce international competition in food crops produced mainly by women. Women’s income and social status are threatened as their family farming losing ground to international grain traders. Their disadvantages in gaining access to credit, seeds, and new technologies only accentuate their hardships (Çağatay and Erturk 2004). The land grabbing backed by multinational enterprises also deprives rural women of the means of production and access to natural resources, throwing them into abject poverty and a highly competitive labour market that they are not familiar with (Lamb et al. 2017; Park 2019). The expansion of neoliberalism also brings about profound changes in the structure of social reproduction in the developing countries. The biological foundation of social reproduction is the reproduction of labour power which includes daily and generational reproduction (Bhattacharya 2017; Hopkins 2017). Since the latter has little direct connection with short-​run profitability, the multinational enterprises and their local subcontractors have strong motivations to have it minimized. For example, the ‘dormitory system’ is widely used in East Asian countries to precisely control workers’ reproductive time after work (Pun 2009). Such highly rationalized reproduction contributes to long working time and high productivity while depriving workers of their time for relationship partners. Along with the dissolution of collective farming, the privatization of state-​owned enterprises, and the disintegration of communities, the reproductive safety net attached to those social organizations also falls apart. Privatized hospitals and schools concentrate their resources to provide customized services for the high-​income households. Working-​class households have to spend more money and time to get their children properly educated and cured (Armstrong, Amaratunga, and Bernier 2001; Blumenthal and Hsiao 2005; Nandi, Vračar, and Pachauli 2020). Although the neoliberal states dismantled the supportive ‘visible hand’ of the government, they do not give up the punitive ‘iron fist’ of demographic policies. Coerced birth control takes place everywhere in the developing world. Out of the fear of the ‘population explosion’ that may hinder economic development, developing countries forced millions of women to submit to permanent and irreversible sterilization procedures. Women in poverty, with HIV, with disabilities, and belonging to racial and ethnic minorities are the major victims of forced contraception. These marginalized women are considered to be a burden of the welfare system and thus ‘unworthy’ of reproduction (Open Society Foundations 2011). A recent article by Braunstein, Bouhia, and Seguino (2020) distinguishes two regimes of social reproduction that could contribute to economic growth. One regime is the

308   Han Cheng combination of high wage share, strong public provision of care and reproductive infrastructure, and a domestically oriented economy. In this case, economic growth is maintained by high domestic demand, high labour productivity in knowledge-​intensive sectors, and domestic class and gender compromise. The other regime is the combination of high profit share, poor public health, and export-​oriented economy. Economic growth is maintained by foreign demand and the comparative advantage of low wage and gender inequality. The neoliberal transition of the developing economies has clear orientation towards the second regime. Women’s disadvantages as producers and reproducers deprive their ability to realize their full social and economic potentials. Free market in the neoliberal era means more of meritocracy of factors of production rather than gender equality based on equal rights (Littler 2013). The value that a common labourer can realize in the labour market is determined by her or his potential contribution to profit. The traditional ‘boy preference’ is as stubborn as before since higher expected income associated with the male gender continues to exist rather than being eliminated in more liberalized domestic and global markets. Gender-​selective abortion and unequal treatment during child rearing led to higher mortality rate for girls (Leone, Matthews, and Zuanna 2003; Banister 2004). The rising education cost after privatization and discriminations in their own families lead to higher school dropouts of female adolescents, depriving their future opportunity for higher education (Wang 2005). One of the main themes of today’s imperialism is commodification of everything, including sex, marriage, and other relationships. Although women are discriminated as workers, family members, and students, they are nevertheless desirable commodities with marketable ‘traits’ that can be exchanged for higher living standards and future opportunities in the so-​called marriage market (Becker 1973). In developing countries with rigid social stratification, marriage becomes an important channel of social mobility for poor women who can never expect to have a decent life merely by selling their labour power (Thadani and Todaro 1984). The flipside of the ‘women drain’ from the rural to the urban areas and from lower to higher social classes is the widespread involuntary singlehood among working-​class men, especially in countries with higher male to female ratios (Li et al. 2010). The meritocratic nature of the labour and the marriage (and the sex) markets pits women against men in developing countries. On the one hand, the female members of the emerging middle class occupy privileged positions and can sell their professional and managerial skills to international employers. They tend to adhere to the liberal wing of feminism and have little sympathy for the common working-​class men who are frequently demonized by the commercial media as losers and male chauvinists. On the other hand, the anger and anxiety of working-​class men who cannot properly finish their generational reproduction of labour provide great opportunities to social movements using misogynous, conservative, fundamentalist, or nationalist rhetoric (Michel 1999). The situation of developing countries’ women in workplaces, in families, and in gender relations are the result of the interactions between the external environment of the global imperialist order and the internal structure of those countries in question. The transfer of

Women, Domestic Labour, and Economic Imperialism    309 surplus to the core regions deprives the necessary human and material resources for developing countries to simultaneously maintain fast economic growth (by high saving and high investment) and decent living standard for the majority of the population (by high consumption). With few exceptions, the gender relations as well as the class relations in developing counties are more repressive than those in the developed countries since gender equality and capital-​labour compromise are not materially affordable. For those developing countries with a somewhat functioning state, the major function of the state is to maintain labour coercion and the associated patriarchy required by their positions in the global division of labour (Shannon 1992, 113–​117; Mies 2014).

The Gendered Global Division of Labour Unequal exchange has different effects in developed countries. The extracted surplus value not only retrieves the profit rate but also maintains the capital-​labour compromise since a significant proportion of the overseas surplus value is finally distributed to the working class (Cope 2012 2013). It has been observed over a century ago that the progressive potential of the working class in those countries had been diluted by the high living standards provided by imperialist expansion and the monopoly of the global market (Engels [1892] 1990; Lenin [1916] 1964). Instead, they turned to more conservative political agenda that emphasizes the ‘civilizing factor’ of colonialism (Schorske 1983, 84). World War I, during which the major social democratic parties supported the colonial empires of their own countries, marked the ‘great schism’ between the labour movement in the developed countries and the national liberation movement in the colonies. Cope (2012) estimated that 37% of the non-​OECD countries’ GDP (about 6.5 trillion dollars) was transferred to OECD countries in 2009. That is to say, the value-​added of totally 925 million non-​OECD workers was transferred to the OECD countries as ‘labour tribute’ in contemporary imperialism. Li (2016, 59–​78) estimated that, in 2012, one unit of paid labour embodied in commodities made in the United States can exchange for about ten units of paid labour embodied in commodities made in China. In the same year, the United States’ net gain of paid labour through unequal exchange was about 40 million workers (or roughly 80 billion hours). In the same year, China lost about 60 million workers or 7.5% of her total labour force paying the ‘labour tribute’. Since both paid and unpaid labour are necessary to maintain the capitalist social reproduction regimes that enable the developing economies to supply cheap goods and services, there is no doubt that the actual amount of total labour extracted is more than what has been shown. The annual flow of the ‘labour tribute’ contains, arguably, tens of billions of hours of women’s unpaid labour. The extracted labour takes forms in both essential consumer goods such as daily necessities in dollar stores, fresh imported fruits and vegetables, cheap gas, and

310   Han Cheng discounted electrical appliances on shopping websites, but also in form of a growing variety and volume of fast fashion goods. Consumption is a physical as well as a social behaviour and its social element is closely related to the consumer’s consciousness of social status (Veblen 1899[2005]). The fashion industry satisfies the need of conspicuous consumption and creates new demand by defining and marketing beauty, uniqueness, and taste. In this case, women are not only commodities in the labour and ‘marriage’ markets but also are themselves huge markets for the fashion industry (Ghosh 2012). It was not until the neoliberal globalization that consumerism realized its full potential. In the United States, about 12.8 million tons of textiles were disposed in 2016 (Gunther 2016). Across the globe, 92 million tons of waste is generated by fast fashion alone (Moore 2020). Most fast fashion products, from the simplest apparel to the most sophisticated cell phones, are produced in the feminized export sector in developing countries. (Berik, Rodgers, and Zveglich 2004; Bick, Halsey, and Ekenga 2018). Much of the discarded fast fashion products and other waste are shipped back to developing countries for recycling because of their low labour cost and lax environmental regulations. Formal waste management services, part of the public sector, are mainly run by men. Women take part in the less regulated informal activities of waste management, such as ‘waste picking, sorting and recovery of recyclables’, wearing little or no protection equipment with their children playing around or helping them in the landfills (United Nations 2019a; Muhammad and Manu 2013). Ironically, the life cycle of fast fashion begins in poor women’s hands and ends in poor women’s hands, whether or not they have stayed on the hangers in the fanciest malls. Migration and immigration, the direct transfer of productive and reproductive labour, are prominent elements in contemporary imperialism. Besides a small proportion of professional immigrations constituting the ‘brain drain’ from the developing to the developed world, most of the immigrants become the rank and file of lower socioeconomic strata, especially the temporary workers in the service sector. In 2019, women took up 47.9% of the world’s total international migrants but more than half of the migrants towards developed regions like North America (51.8%), Europe (51.4%), and Oceania (50.4%) are female (United Nations, 2019b). Suffering from dual discrimination as both migrants and women, female migrants nevertheless help to offset the demographic decline and make significant contribution to the reproduction of the metropolitan work force in developed countries (Kang 2003; Hartmann and Hayes 2017). One of the goals of the second-​wave feminist movement is to liberate women from ‘the tyranny of their reproductive biology’ and reproductive labour (Firestone 1970, 206). Migration under the contemporary imperialist order provides a partial realization of that goal when middle-​class women in the developed countries purchase reproductive labour from care workers whose rank is gradually filled by female immigrants. However, in such a ‘maid and madam’ relationship, the feminist movement is divided rather than united, since the liberation of some women is built upon the exploitation of many others (Federici 2012, 65–​75). What are appropriated are not only women’s labour products and women’s living labour, but also women’s bodies. Thousands foreign children are adopted every year in

Women, Domestic Labour, and Economic Imperialism    311 the United States alone (US Department of State 2020). On the demand side of the international adoption market, the expenditures associated with adoption (which is also known as the ‘value’ of a baby) are closely related to the baby’s racial, gender, physical, and intellectual traits (Goodwin 2006). On the supply side, many poor families in the developing countries have to hand their children to private traders or para-​governmental organizations out of economic despair or the fear of political persecution (such as the ‘One Child Policy’). Such transactions are often against the mothers’ will (Dowling and Brown 2009; Oke and Oluwaleye 2017). In developing countries like India and Nigeria, children for adoption are even mass-​produced in the so-​called baby farms (Pande 2016; Alabi 2018). The recent development of surrogacy technology enables even more customized services in the baby markets, where customers can now choose the egg donor, the sperm donor, and the surrogate mother, balancing the cost and the desired traits of the baby (Roberts 2017). It is worth mentioning that poor women may experience forced contraception and may be despised as ‘unworthy’ if they want have their own children. But they will be praised for being the breadwinners and challenging the traditional gender norms if they bear children for customers in wealthy countries (Rozée, Unisa, and de La Rochebrochard 2020; Federici 2020). Wombs can be a global commodity, so is sex. Prostitution tourism rose along with globalization (Leheny 1995; Brooks and Heaslip 2018). The opening of global market and international tourism expose the huge income gap between the developing and the developed worlds. Expatriate employees and even working-​class men in from Japan, western Europe, and North America now have access sex service in the red-​light districts in South East Asia, Africa, and eastern Europe for prices that are unimaginably low in their home countries. What is sold together with sex is submission. The advance of feminist movement in developed countries jeopardizes the working men’s traditional masculinity and their authority in family, while prostitution tourism provides them good opportunities to circumvent such influence. The frustration and anxiety accumulated in the neoliberal era can be temporarily submerged in the ‘sexual fantasies of otherness and the notion that there are women elsewhere who are desperate for their touch’ (Jeffreys 2008, 129–​151). It is also worth mentioning that although morally humiliated in the developing countries, women working in the international prostitution industry nevertheless create large sums of foreign exchange. Prostitution tourism is an integral part of development strategy adopted by both governments and enterprises (Mies 2014). The global division of labour between the developing and developed countries under contemporary imperialism resembles the gender division of labour between women and men. The developed countries specialize in ‘skilled’ labour in monopolistic, high-​tech sectors such as information technology, finance, and military industry. The developing countries are trapped in performing ‘unskilled’ labour in competitive, labour-​intensive sectors such as agriculture, natural resource extraction, and low-​end manufacturing. Developed countries specialize in consumption while developing countries specialize in production and waste management (Mies 2014, 116). Well-​to-​do families in developed countries can purchase reproductive labour from migrant workers, claim full property rights of the child born to surrogate mothers, and import sex services at low cost.

312   Han Cheng Needless to say, the imperialist stereotype of a masculine West and a feminine East is far from fading away in the era of free flow of capital, labour, goods and services. The ‘unhappy marriage’ between feminism and the labour movement intertwines with the ‘great schism’ between the progressive social movements in the developing and the developed worlds, adding greater complexities and uncertainties to the future of women’s liberation.

The Global Crisis of Reproduction and Women’s Anti-​Imperialist Movements Based on Marx’s concept of primitive accumulation, Harvey (2003) developed the concept of ‘accumulation by dispossession’, which includes but is not limited to coerced labour, forced conversion of common property into private property, and commodification of labour, land, nature, and human bodies at devaluated price. The extraction of women’s unpaid and underpaid labour and the direct exploitation of their bodies are but two components of the global ‘accumulation of dispossession’ in contemporary imperialism. ‘Accumulation by dispossession’ cannot be a self-​sustaining process, because the compensation, if there is any, paid to the people who are dispossessed is never enough to maintain their reproduction. When capital has depleted the available natural and human resources, the profit rate will decline and new geographic areas would be consequently opened up for further dispossession. This process is called the ‘spatial fix’ (Harvey 2003; Arrighi 2006). The latest expansion of imperialism, the neoliberal globalization, has already incorporated all countries into the system. Capital accumulation has for the first time reached its geographical limit. When women cannot or refuse to reproduce their labour power and their bodies, the sustainability of the global imperialist order will be called into question. The crisis of reproduction takes place at the biological, family, and community levels. Fertility rate, the most important index for biological reproduction, is already low in developed countries and is declining quickly in developing countries. In 2018, the fertility rate in Brazil (1.73), Russia (1.57), and China (1.69) were well below the replacement level of 2.1, while those of India (2.22) and Mexico (2.12) were very close to it. The average fertility rate of the low-​income countries is still at a high level (4.06), but its decline is also the fastest (World Bank 2020). The world’s working-​age (15 to 64 years old) population is expected to grow from about 5.08 billion in 2020 to the projected peak of about 6.69 billion in 2100. The space for growth is only 31.7%, which is far smaller than the growth (about 190%) from 1960 to 2020 (United Nations 2019c). Neoclassical explanation of declining fertility is based on utility maximization and intrafamily bargaining. Women’s increasing access to education and while-​collar positions increases the opportunity cost of having children and gives them greater authority in fertility decisions (Doepke and

Women, Domestic Labour, and Economic Imperialism    313 Tertilt 2018). Another explanation emphasizes the cost of child rearing. High housing prices in big cities is one of the driving forces of celibacy of young people. Privatized health care and education systems also add to the economic burden of raising children (Jones 2019). Last but not least, long working hours, physical and psychological stress in the competitive labour market, and the problems of food security are also detrimental to procreative health (Zou et al. 2019). The super-​exploitation in the developing countries is consuming their labour force at a speed faster than its reproduction. The family structure is also becoming less favourable for capital accumulation. When the income of a male ‘breadwinner’ becomes insecure, housewives are pushed out of the household to find a job. The hitherto semi-​proletarian structure of household gradually evolves into a full-​proletarian one. The trend of proletarianization is strong in developing countries with export-​oriented economies, meaning that there will not be as much unpaid labour as before to be ‘dispossessed’ by capital (Wallerstein 1983). In the ‘Global Care Chain’, care workers in developing countries (mostly female) migrate to developed countries and leave their children behind. Long-​term separation alienates the relationship between family members and causes psychological problems among the left-​behind children (Parreñas 2002; Isaksen, Devi, and Hochschild 2008). The domestic seasonal migration towards the special economic zones causes similar problems at a much larger scale. The decrease of government revenue and the shrinking of local market associated with the demographic decline in the rural areas led to tightened budget for rural education. Elementary and middle schools are either dissolved or relocated to towns, making it harder for rural children to receive education. Youth gangs and school bullying are commonly seen among left-​behind teenagers (Wang 2008; Jia and Tian 2010; Ye and Lu 2011). The global competitiveness of the export-​oriented developing economies is maintained at the cost of the quality of labour power reproduction. Communities based on communal, collective, or state ownership of means of production are disintegrating in waves of privatization. Multinational capital and local governments cooperate in projects privatizing land, forest, and water, uprooting whole communities by driving the local people away. The brutal land grabbing South Asia is directly associated with rural poverty and the growth of shanty towns around the cities (Patnaik 2007; Walker 2008; Lamb et al. 2017). In Latin America, rising unemployment and falling wages caused by the neoliberal ‘structural adjustment’ led to the growth of vagabonds and crime organizations. Widespread extreme violence further destroys the structure of communities (Laurell 2015). In Central Asia, the Middle East, and North Africa, military interventions directly led to deaths of millions of people, destroying hundreds of villages, towns, and factories. The disintegrated societies become breeding grounds for extremism and fundamentalism (Springer 2016). The crisis of the reproduction of biology, family, and community constitutes the ‘passive’ side of the crisis. Women also play important active roles in the struggle against imperialism. Historically, the movement of the International Women’s Day was one of the earliest platforms for international solidarity among working-​class women and contributed to Russia’s exit from World War I. Current women’ movements against imperialism are closely integrated with other social movements and take many different

314   Han Cheng forms. According to the central questions they are addressing, these movements can be distinguished into five major directions. The first direction is associated with anti-​ privatization and anti-​ land-​ grabbing movements. Women play active or leading roles in reclaiming the means of production against multinational capital. For example, the indigenous women in the Zapatista movement resist governmental violence, defend communal democracy, maintain biological diversity of local maize, and preserve a sustainable way of life (Olivera 2005). The second direction has to do with the anti-​globalization and related movements pursuing economic justice. Since women suffer disproportionally in the deregulation and trade liberalization in the neoliberal era, protecting local labour markets, suspending financial liberalization, and calling for a revival of the welfare state are the main targets of such movements. The women’s movements in the World Social Forum are good representatives of this direction. The third direction is related to environmental justice. Women have a closer relationship with the environment since their reproductive labour involves processing material directly coming from nature. Water and air pollution and problems of food security do greater harm to women and children. The Wanel-​Edon Development Association in Nigeria and the Red Nacional de Mujeres en Defensa de la Madre Tierra in Bolivia are two examples of women-​ led environmental conservation movements (Sales 2019). The fourth direction mainly refers to third-​wave feminism. As an extension of the second-​wave feminist movement and the civil rights movement that addressed the issues of racial and gender justice, third-​wave feminism address issues such as gender stereotypes, violence against women, and diversity. The analytic framework of intersectionality is developed to study the overlaps of oppressions from, but not limited to, race, gender, class, culture, disability, and physical appearance (Evans 2015). The economic targets of this direction include resisting the meritocratic nature of market economy and promoting equity regardless of personal characteristics. The fifth direction consists of women’s labour movements. While pursuing the original targets of labour movements, they are also concerned with gender-​specific issues such wage inequality and reproductive rights. They are also working on transforming the patriarchal culture among working-​class men and the men-​led trade unions (Mason-​Desse 2020). Although those women’s anti-​imperialist movements are divided by geography, immediate targets, and other social and cultural barriers, they nevertheless share similarities. First, most of them clearly reject neoliberalism and its underlying ideologies. Second, many of them have the common target of resisting ‘accumulation by dispossession’ of mean of production, nature, and body. Third, setting up institutional protections against trade liberalization and the subsequent ‘race to the bottom’ competition is becoming an anti-​imperialist consensus. Fourth, in the real world, a specific movement may cover contents of multiple directions and thus have the potential to mobilize more people to participate.

Women, Domestic Labour, and Economic Imperialism    315 What will be the future of women’s unpaid and underpaid labour? What will be the future of imperialism under women’s passive and active resistance? Will there be a unified women-​against-​imperialism movement that have global acceptance? If so, what are the possible characteristics of that movement? Those are some of the issues of the subject matter that may inspire fruitful inquiries.

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Chapter 18

Protecting Wat e r a nd Fore st Resou rc e s ag a i nst C ol oniz ation i n t h e In digenous A méri c as Macarena Gómez-​B arris

This chapter addresses the relationship between corporate and state extractive industries and the forms of resistance that Indigenous peoples employ to protect land and water biodiverse non-​renewable and biodiverse resources against new forms of imperial-​colonial domination. In particular, it addresses the period of neoliberal privatization following the 1970s with a noticeable spike in the 1990s that has had a particularly devastating impact on Indigenous communities throughout Latin America. Though hydroelectric, oil, silver, gold, copper, tin, and other resources have produced massive devastation, the chapter focuses specifically on deforestation, as well as the growth of timber and radius pine plantations and the legal ratification of the privatization of land and their massive impact on Mapuche peoples in the Southern Bio-​Bio region. In the wake of large-​scale deforestation and the hydroelectric expansion over Indigenous Mapuche, Pehuenche, and Huilliche territories, there has been a profound social and ecological movement of Indigenous water and land defenders, with urban actors producing transversal and coalitional anti-​extractivist agendas. Since the 1990s, and with renewed intensification over the past ten years, the Américas have experienced a new period of what Eduardo Galeano first called the Open Veins of Latin America.1 The concept ‘extractivism’ refers to the predominance of economic activities that are primarily based on resource extraction and nature’s valorization without distributive politics, while the term ‘neo-​extractivism’ is linked to those national governments that use the surplus revenue from extractive activities to fight poverty and enhance the material well-​being of the masses (Gudynas 2009; Svampa

324   Macarena Gómez-Barris 2012; Acosta 2013). In my own research, I use the concept of extractive zones, or areas of high biodiversity that are targeted for resource extraction and often correlate with majority Indigenous areas of Latin America. The intensification of policing and military patrols takes place in such extractive zones to facilitate corporate and state primitive accumulation (Gómez-​Barris 2017). I note how Indigenous activists, intellectuals, and artists of South American regions are noted for their work to protect biodiversity within a long history of exploitative natural resource extraction. Extractive zones are not reductive spaces of elision and passive subjection but instead encompass diverse and powerful human and non-​human agencies that not only resist the extractive onslaught but also generatively enact what Arturo Escobar referred to as ‘worlds and knowledges otherwise’ (2007). Furthermore, these zones proliferate submerged perspectives, or situated modes of perception that see, hear, touch, and imagine life worlds imperceptible to the extractive gaze that, a concept that is akin to James Scott’s (1999) notion of ‘seeing like a state’, that simplifies, flattens, and homogenizes reality in order to command control over vast territories and populations. Submerged sensoria reject the society/​nature and human/​nonhuman binaries that undergird much of Western philosophy and work against the justificatory apparatus that has legitimated both colonial and neocolonial domination. Though it is rarely framed this way, fracking, hydroelectricity, mining, tourism, petroleum and mineral extraction, and forest monoculture, including the expansion of soybean cultivation and palm oil plantations, are symptoms of the system of extractive capitalism that follows the logics of elimination and dispossession by the corporate and military state. In the resource-​rich territories of the Global South, extractivism organizes the local at the scales of the mega and super-​mega, terminology that occupies territories with newfound spatial capacities.2 In such locations, environmental testimonies, and visual evidence of dispossession on cell phones, sometimes taken on a single camera, documents what otherwise would be disappeared from the public view.3 The ruins in the wake of dam flooding, the recent and ongoing fires burning in the Amazon, the loss and theft and continual genocide through slow and immediate violence is largely hidden from the domain of consumers in urban spaces. These biodiverse geographies in the Global South are the shadow spaces of corporate intrusion upon resource rich spaces of primary non-​renewable resources. Such geographies have unreflexively been dubbed as possessing the ‘resource curse’, a terminology that normalizes and facilitates the violent processes of extraction. We might ask, is it a curse to protect and cultivate natural resources and ancestral territories? Who bears the burden of the curse? There are racialized undertones in the terminology of the resource curse that need to be continually challenged, reworked, resisted, and subverted. Indeed, how to represent spaces of biodiversity and its elimination are central to this challenge. If coloniality has rendered nature and usurped language, then it does so in ways that obstruct our capacity to truly perceive the genocidal catastrophe.

Protecting Water and Forest Resources against Colonization     325

Deforestation and Extinction Among the world’s atmospheric scientists, the consensus is that 12% of all ‘man-​ made’ climate emissions now comes from deforestation, mostly from tropical areas.4 The deforestation of tropical forests is responsible for the rise of carbon dioxide, the main greenhouse gas, which remains trapped in the atmosphere and traps solar radiation, which in turn exacerbates climate change. In the late 1990s, ‘The Last Frontier Forest: Ecosystems and Economies on the Edge’, co-​authored by Dirk Bryant, Daniel Nielsen, and Laura Tangley, already sounding warnings about such planetary outcomes triggering public attention when it found that more than half of the world’s original forests had already been eradicated.5 The report’s main objective was to describe the status of the world’s forests, pointing to the Global South as the areas of the planet that contained ‘the large, ecologically intact, and relatively undisturbed natural forests that still remain’ [my emphasis]. Written during the pivotal era of neoliberal structural transformation, ‘The Last Frontier Forest’ used the phrase ‘that still remain’ to attend to forest systems within an increasingly catastrophic global picture. Indeed, to refer to what remains can invoke its opposite, in this case referencing the biodiverse life that had already been disappeared by mass deforestation. ‘That still remain’ brings into analytical relief the temporal and empirical structure of critical anteriority, or the anticipation of biodiverse extinction. We might also read ‘that still remain’ as a clarion cry with respects to the grave and continuing impact of environmental disaster, where extinction already loomed large on the near future horizon of what I have elsewhere described as the colonial Anthropocene.6 From the vantage point of frontier capitalism, the non-​renewable resources that still remain represent a source of capitalist profit for those that squeeze virgin territories for its raw and primary materials. Noting that the frontier evoked romantic imaginaries of fecund, if extractible geographies, the authors described the need to protect and conserve the world’s remaining tropical forests. They also invoked the fragile ecosystems hanging in balance in the face of intensifying frontier capitalism that uses the forest for primitive accumulation as well as colonial expansion in the elimination of Indigenous territories. Though the emergency described in the report responds to empirical facts and its representational language is precise, hidden within its pages is the epistemological violence of Indigenous erasure. Like much of conservation discourse that protects and conserves, the report’s primary concern is to bring into the focus the remaining forest, rather those that live there and who have cultivated biodiversity for centuries. After all, it is the world’s Indigenous forest peoples that are most directly impacted by the political economy of frontier capitalism. The forest and those who live inhabit it are inextricably linked and such entanglement cannot be described through the logics of the remainder. How can we attend to the erasure of Indigenous peoples in relation to forest frontier capitalism? Following Anna Tsing, we might describe the temporal structure

326   Macarena Gómez-Barris of the 1990s as the period of the ‘not yet regulated’,7 or the time when the state abandoned its commitment to regulate capital. During the 1990s privatization and deregulation dismantled the most important protections for Indigenous territories, including eliminating Article 27 from the Mexican Constitution that had famously shielded the Indigenous ejido communal system since the 1910 revolution. Such dismantling and counter-​revolutionary legislation led to widescale dispossession in Mexico, as well as throughout the Americas, including widespread collective resistance, such as the Zapatista uprisings. Against the logics of extraction, deforestation, and extinction, we might consider the empirical fact of ‘that still remain’ as a counter-​referent, a refusal, a collective cry of resistance aligned with the ongoing project of decolonization that puts Indigenous peoples back at the centre of biodiverse protections, rather than erased by settler and extractive capitalism. As Kanaka Maoli scholar J. Kēhaulani Kauanui puts it, Indigeneity is defined by that which endures the onslaught that works to confronts the genocidal project of colonialism.8 Indigenous land and water protectors are key to biocultivation, reforesting, and protecting endangered species in extractive geographies. Against the death drive of capital, Indigenous land and water defenders resist its incursions.

Still Here As Latin America, Asia, and Africa entered into increasingly unequal agreements with the International Monetary Fund, the World Bank, and the Washington Consensus, the rise of debt economies and the quest for primitive accumulation produced devastating consequences for the forest, and for all those living within and on the peripheries and edges of its existence. In the geographies of the Global South and Indigenous territories of the Global North, suffering has been disproportional for those in the ecotones of clear cutting, those in the peripheries of the rural/​urban, and those situated in the shadows of frontier capitalism. The rise of predatory and frontier capitalism has closed in on the untamed forest and those that inhabit it, intensifying the environmental crisis by appropriating and extracting primary materials for commercial enterprises, feeding the voraciousness of the colonial divide. For instance, in the Coca region of eastern Ecuador, the Yasuni remains one of the only areas of protection by Shuar and Quichua Indigenous communities that have produced eco-​tourist reserves of socialism.9 To work against the normalizing language and the extractive view, I use the concept of 'the occupied forest, by which I mean territories of struggle over biodiversity that have been increasingly militarized and that are violent geographies of land and water defence in response to new forms of corporate and state encroachment. Under and since colonialism the forests have been a space of permanent war, plunder, ecocide, and genocide, and a site of mass extinction and rebellion. Deforestation is a pivotal issue of the climate crisis, yet mainstream accounts often vanquish Indigenous peoples from these accounts.

Protecting Water and Forest Resources against Colonization     327 Kyle White offers three ways to consider the climate predicament upon localized territories of struggle that have relevance to my discussion of the occupied forest. First, he notes that anthropogenic (human-​caused) climate change is an intensification of environmental change imposed on Indigenous peoples by colonialism. Second, renewing Indigenous knowledges, such as traditional ecological knowledge, can bring together Indigenous communities to strengthen their own self-​determined planning for climate change. And third, Indigenous peoples often imagine climate change futures from their perspectives, first, as societies with deep collective histories that are well organized to adapt environmental change and second, as societies who must reckon with the disruptions of historic and ongoing practices of colonialism, capitalism, and industrialization. Indeed, in such theorizations, Indigeneity is not an afterthought, but a central axis and episteme for understanding occupation as a settler extractive condition that has shaped important responses. Indigenous peoples know the historical significance of land, river, and tree defence, and the processes of collective management already working with knowledge about geological time.10 The ecologies of the forest and protection cannot be delinked from the long arc of forest peoples’ struggles. Indeed, one source of our current climate predicament is the colonial condition and mode of being that reduces territories and forests to commodities, and Indigeneity to the remainder. In his discussion of the Quichua-​speaking Runa of Ecuador’s Upper Amazon, for instance, Eduardo Kohn makes explicit the ‘living logics’ that tropical forests exhibit, and he invites us to rethink our understanding of the human in the first place.11 As he describes in relation to human and nonhuman entanglements, the work is an ontological exploration of the world that lies beyond the human. He is also interested in breaking down the barriers between the human and non-​human, a precept that follows much of the by now large body of work in Brazilian anthropology.12 I would suggest how the ontological and relational turn in comparative Indigenous studies of the Americas, and in critical Indigenous studies, actually asks us to begin from the perspective of what Jodi Byrd importantly refers to as grounded relationality.13

Mapuche Wallmapu Within the deep southern territories of the Mapuche peoples in the Bio-​Bio region of Southern Chile called Wallmapu, we can see the brutal and specific forces that continually work to separate Indigenous communities from the forest. Violent severing took place, first, through the terror of the colonial militias in the sixteenth, seventeenth, and eighteenth centuries that led to a mass Mapuche rebellion; second, during the nineteenth century processes of nation-​building, where the Republican Chilean State offered citizenship rights and land grants offered to white European settler immigrants from Germany, Switzerland, Poland, and Italy; and third, through the ‘reducciones’ or land reductions that forced Mapuche, Pehuenche, and Huilliche peoples onto reservation

328   Macarena Gómez-Barris tracts. The final piece of attempted eradication has taken place through the expansion of radius pine and eucalyptus plantations during the last forty years during neoliberalism, which has made the great Pehuen, or the monkey puzzle tree, which is the centre of Mapuche daily life, nearly extinct. Policies aimed at Indigenous eradication have been supported through the 1980 Chilean Constitution and its Anti-​Terrorist Law 18.314, as well as articles that directly name the genocidal logic as ‘The Liquidation and Elimination of Indigenous Territories’. Through the Pinochet dictatorship’s Constitution that is still in place and fully activated today, legal practices that ‘eliminate the Native’ and replace to destroy, as Patrick Wolfe first described (2006).14 In a sepia-​toned anonymous photograph that I found in a human rights archive, Mapuche, Pehuenche, and Huilliche women and children survivors are sitting together after they have been rounded up by the military as ‘the remainder’ of the genocidal campaign. The image was taken a little more than two decades after the massacres of Indigenous peoples during the pacification of the Araucaria, an occupation that lasted between 1861–​1883 and annexed the southern third of the Chilean nation state. From the 1990s forward and under the dictates of liberal democracy, there has been an ongoing war carried out against the Mapuche people. In the face of weapons of destruction bought from Israel and the United States that invade the landscape, there is a thriving water and land defence movement that does not seek recognition from the state, but imagines a time beyond it. Filmed in the radius pine plantations, the work of Mapuche director Francisco Huichaqueo in Mencer Ni Pewma (2011) is key. The 38-​minute experimental documentary film represents Wallmapu territory as an affective space of confusion, elision, and of disappearance, but also of a call for Indigenous resurgence. It narrates the history of militant Mapuche Indigenous refusal that dates back to encroachment by the colonial militias in the sixteenth century. In The Extractive Zone: Social Ecologies and Decolonial Perspectives (2017), I detail the film in relation to a poem in which Huichaqueo dreamed about what it means to live in dystopic conditions and create an archive for the future to witness the destruction of the present. In the film, we hear confused and raspy laments of the ancestors, disembodied figures that mourn the loss of human and nonhuman life in the wake of plantation expansion as they search for anchor points in the pine forest that is not a forest because it has no understory. Unlike the settler romance of the forests that focuses on purity or nostalgia, Indigenous representations often shed light on occupied space, overrun and filled with the sounds of chainsaws. Indeed, we must render how occupied territories are often harsh and discordant spaces, brimming with cacophonous activities, checkpoints, and the bureaucracies of the corporate state. ‘Pinos, pinos, pinos, pines, pines, pines’ is the refrain that denounces the destruction in the film, a sonic bridge to ancestral dispossession. At the conclusion, we see the call by the young Mapuche woman to action against the republican nation’s symbol of raison y fuerza—​‘reason and force’. We also witness Indigenous peoples and children in a dream-​like state marching together towards a time beyond occupation.

Protecting Water and Forest Resources against Colonization     329 When I spoke with Francisco Huichaqueo through videochat in November 2019, he was in hiding, fearful of being disappeared in Chile in the recent war by Sebastian Piñera against massive protests. Huichaqueo was under police surveillance because of his capacity, as a filmmaker and artist, to document the violent present. Though he is no longer in hiding and is currently involved in a number of activities and events to support a more complex rendering of Wallmapu, the Mapuche territories that criss-​cross Chile and Argentina, he more recently told me he thought that we had finally caught up to what he had called a future archive, the temporality that organized the film. This is the time of the now, a temporal world space of colonial reckoning within geographies of extraction. In the Indigenous majority spaces that I study, the dystopias of the colonial Anthropocene are not a future event, but environmental disasters and genocidal projects whose temporalities have overlapped for centuries as slow and accelerating violence. Put simply, as we are witnessing more every day, the apocalypse is not forthcoming; it is already here. In this accelerating global climate crisis, the arts of land and water defence point us in the direction of planetary survival, and they point us to the necessity for a massive change of the kind occurring in Chile to completely unbuild neoliberal capitalism. In October 2019, 1.2 million people took to the streets of Santiago to protest a seemingly banal hike in metro fares. The slogan echoing in the streets is: ‘Chile was the birthplace of neoliberalism and it is where neoliberalism will die’. These protests are part of a much longer history, a back and forth between mass movements, state violence, and widespread political disillusion. Importantly, prior to and during the pandemic, there has been a broad-​based rejection of the current neoliberal model imported by Milton Friedman and the Chicago Boys, a rejection of the squeeze on workers, their salaries, and health care, and the recurrent problems of student debt, the untethering of the social safety net, rising food and transportation costs, worsening social indicators, and other forms of radical inequality. Notable about this uprising is its articulation not through specific demands or leaders, as the state would want it, but through a deafening call for dramatic economic and political transformation that understands the urban connection to Wallmapu territories. President Sebastian Piñera used colonial rhetoric and cold war language to justify the state of exception, declaring ‘we are in a state of war against a powerful and well-​organized enemy’; The Chilean people responded by demanding an end to both the neoliberal and the colonial order. On 29 October 2019, not in Santiago, but from the heart of Wallmapu territory, protests erupted and the Chilean military was unprepared for what came next. Mapuche youth went directly to the three most prominent colonial statues in the southern cities of Temuco and Collipuli and destroyed them, acts that were later duplicated in several other places. The statues were the present-​day symbol of an ongoing and historical colonial order, the sovereignty of the nation-​state power that young people wanted upended, just as monuments are visible symbols and sites for mass movements throughout the Américas, such as the taking down of confederate flags and monuments by Black Lives Matter and their supporters.

330   Macarena Gómez-Barris The destroyed and reassembled statue in Plaza Temuco is the full return of the submerged colonial perspectives, a symbol of Indigenous resurgence whose aim is to undo the extractive state. In the hand of the Mapuche warrior Caupulicán is the head of Pedro de Valdivia, the Spanish conquistador who was defeated and killed in 1553. This amputated symbol of the monarchy or crown encapsulates submerged ways of thinking about the world and politics that are not organized through sovereign power, but through land and water defence and decolonial acts that cut off of the conquistador.

Conclusion A focus on forests that remain and the Indigenous land and water protectors that live within them invite us to deepen a South–​North and a global dialogue on Indigeneity at this juncture of planetary exhaustion, corporate accumulation, and state indifference. The powerful call for plurinationalism across the Américas against extractivism and racial capitalism asks us to decolonize relations to land, property, gender, and sexuality. Rather than rely upon juridical regimes or state and corporate definitions of power, these efforts seek a new way to constitute ourselves within the matrix of the colonial order, one that shows the importance of connecting land and water defence to the practices of economic hegemony. It is from within the heart of the occupied forest that we can work to undo the devastating consequences of colonial extraction.

Notes 1. See Galeano (1973). 2. See Gómez-​Barris (2017) and Acosta (n.d.) . 3. ‘The Apocalyptic and Expulsive Force of Dam Occupation’ (n.d.). 4. Vidal (2017). 5. See ‘The Last Frontier Forest’ (n.d.). 6. See Gómez-​Barris (n.d.). 7. See Tsing (2003). 8. See J. Kēhaulani Kauanui (2016). 9. See Gómez-​Barris (2017, ch. 1). 10. In the plethora of new popular work on the environment in the wake of the climate crisis, new work asks us to perceive with geological time, ignoring Indigenous modes of being and time-​senses that predate colonial temporal disruption. See Yusoff (2018) as a critical text that builds upon Black Studies to show the racialized histories of geological thinking. Indigeneity could be more present in the work. For new work that brings Black and Indigenous Studies in conversation on questions of environmental humanities, see King (2019). 11. See Kohn (2003). 12. See the illuminating forum on Kohn’s work and his response (Kohn 2014). 13. See Byrd (2018). 14. Also see Melamed (2011).

Protecting Water and Forest Resources against Colonization     331

References Acosta, Alberto. n.d. ‘Extractivism and Neoextractivism: Two Sides of the Same Coin’. Accessed 29 September 2019. https://​www.tni.org/​files/​downl​oad/​bey​ondd​evel​opme​nt_​e​ xtra​ctiv​ism.pdf. ‘The Apocalyptic and Expulsive Force of Dam Occupation: Seeing with Carolina Caycedo’s A Gente Río, Be Dammed’. n.d. https://​mul​time​dio.hemi.press/​carol​ina-​cayc​edo/​essay/​. Byrd, Jodi. 2018. ‘Economies of Dispossession’. Social Text 36, no. 2. Galeano, Eduardo. 1973. The Open Veins of Latin America. New York: Monthly Review Press. Gómez-​ Barris, Macarena. n.d. ‘The Colonial Anthropocene: Damage, Remapping, and Resurgent Resources’. https://​ant​ipod​eonl​ine.org/​2019/​03/​19/​the-​colon​ial-​anthr​opoc​ene/​. Gómez-​ Barris, Macarena. 2017. The Extractive Zone: Social Ecologies and Decolonial Perspectives. Durham: Duke University Press. Kehaulani Kauanui, J. ‘ “A Structure, Not an Event”: Settler Colonialism and Enduring Indigeneity’. Lateral: Journal of the Cultural Studies Association 5, no. 1: 2016. King, Tiffany Lethabo. 2019. The Black Shoals: Offshore Formations of Black and Native Studies. Durham: Duke University Press. Kohn. Eduardo. 2003. How Forests Think: Toward an Anthropology beyond the Human, Berkeley: University of California Press. Kohn. Eduardo. 2014. ‘Further Thoughts on Sylvan Thinking’. Journal for Ethnographic Theory 4, no. 2: 275–​288. Melamed, Jodi. 2011. Represent and Destroy: Rationalizing Violence in the New Racial Capitalism. Minneapolis: University of Minnesota Press ‘The Last Frontier Forest: Ecosystems and Economies on the Edge’. n.d. Accessed 1 October 2019. https://​pdf.wri.org/​last​fron​tier​fore​sts.pdf. Tsing, Anna. 2003. ‘Natural Resources and Capitalist Frontiers’. Economic and Political Weekly 38, no. 48: 5100–​5106. Vidal, John. 2017. ‘We Are Destroying Rainforests so Quickly They May Be Gone in 100 Years’. The Guardian, 23 January. Accessed 7 October 2019. https://​www.theg​uard​ian.com/​glo​bal-​ deve​lopm​ent-​profes​sion​als-​netw​ork/​2017/​jan/​23/​des​troy​ing-​rain​fore​sts-​quic​kly-​gone-​ 100-​years-​defore​stat​ion. Yusoff, Kathryn. A Billion Black Anthropocenes.

Chapter 19

Im perialism, t h e M ismeasureme nt of P ove rt y, and th e Maski ng of Gl obal Expl oi tat i on Seth Michael Donnelly

Introduction Prior to the onset of COVID-​19, it had become fashionable for leading proponents of capitalist ‘globalization’ to declare that ‘extreme poverty’ had been dramatically reduced and was soon to be eradicated. In 2015, the United Nations issued its Millennium Development Goals Report, celebrating that the UN’s Millennium Development Goals established in 2000 had ‘helped to lift more than one billion people out of extreme poverty, to make inroads against hunger, to enable more girls to attend school than ever before and to protect our planet’. The report claimed that the proportion of the world’s population living in ‘extreme poverty’ in the ‘developing world’ had declined from 60% in 1990 to 14% in 2015. Similarly, the percentage of ‘undernourished people’ living in the ‘developing world’ allegedly declined from 23.3% in 1990–​1992 to 12.9% in 2014–​2016. The basis for the UN’s claim of ‘extreme poverty’ reduction was data provided by the World Bank based on its International Poverty Line (IPL). In 2015, the World Bank issued a press release stating that ‘the number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015 giving fresh evidence that a quarter-​century-​long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030’.1 The Bank credited economic growth fostered by capitalist policies, especially as applied in China, East Asia, and India, for this impressive progress towards eliminating poverty. The United Nations was not alone in relying upon the World Bank’s narrative of poverty reduction. Academics like Steven Radelet, think tanks like the Brookings

334   Seth Michael Donnelly Institution, neoliberal media sources like The Economist, and philanthro-​capitalists like Bill Gates all repeated the Bank’s claims, thereby establishing an elite consensus that vindicated the expansion of global capitalism following the ‘end of the Cold War’. For example, Radelet recycled the Bank’s poverty statistics to write his 2015 book The Great Surge: the Ascent of the Developing World, which argued that poorer countries were catching up to the richer ones. Likewise, drawing from the Bank’s statistics, The Economist titled a 2013 issue ‘Towards the End of Poverty’, arguing that the world was close to eliminating poverty thanks to neoliberal globalization and, most significantly, the rise of capitalism in China.2 This narrative banishes imperialism as a concept and as a reality from its field of vision. Imperialism becomes a thing of the distant past, but not relevant to today’s ‘post–​Cold War’ world based on advanced information technology and free flows of investment and trade. Plunder and exploitation have somehow, inexplicably disappeared. Radelet exemplifies this erasure when he writes about Haiti, noting that it ‘has moved forward since the repressive days of the Duvaliers but continues to suffer from massive governance failures’.3 Absent from his mention of ‘governance failures’ is the 2004 US-​orchestrated coup against Jean Bertrand-​Aristide and the subsequent and ongoing massacres targeting men, women, and children in impoverished, pro-​Lavalas communities like Cite Soleil, Bel Air, and La Saline.4 But the problem is not one simply of omission. The World Bank, as an instrument of imperialism, has established a poverty metric that both grossly underestimates global poverty and gives an illusion of dramatic progress through statistical sleights-​of-​hand. When other, more realistic metrics of deprivation are used, the scale and depth of extreme poverty—​including hunger—​remain massive. Second, the Bank’s metric and data—​based on a fictitious purchasing power parity (PPP) currency—​mask the relentless, huge transfers of value from Third World to First World countries through corporate-​dominated global supply chains that are indispensable to the reproduction of imperialism in the twenty-​first century. Deconstructing these two problems is the focus of this chapter.

How the World Bank’s Poverty Metric Statistically Erases Poverty The Construction of a Poverty Threshold at Odds with Reality The World Bank’s International Poverty Line, or metric for ‘extreme poverty’, is living on less than $1.90 PPP (purchasing power parity adjusted) per day. Before examining the problems with the PPP adjustment, it is first important to review how the Bank arrived

Imperialism, the Mismeasurement of Poverty    335 at its $1.90 standard. The institution’s publications reveal the basis for this figure to be quite slim and arbitrary, based on doubtful reasoning and questionable data collection practices. A FAQ page on the World Bank website explains the more or less circular procedure the Bank used to set the link: In 1990, a group of independent researchers and the World Bank proposed to measure the world’s poor using the standards of the poorest countries in the World. They examined the national poverty lines from some of the poorest countries in the world, and converted the lines to a common currency by using purchasing power parity (PPP) exchange rates. The PPP exchange rates are constructed to ensure that the same quantity of goods and services are priced equivalently across countries. Once converted into a common currency, they found that in six of these very poor countries the value of the national poverty line was about $1 per day per person, and this formed the basis for the first dollar-​a-​day international poverty line.5

Remarkably, the World Bank’s poverty line is not based on any direct and independent assessment of what people really need in terms of housing, food and clothing, but rather on previously existing poverty lines established by a minority of regimes—​undoubtedly influenced by political motivations—​in some of the poorest countries on the planet (only fifteen for the 2005 update to $1.25). Despite the Bank’s periodic updating of its poverty line (for example from $1.25 to $1.90 in 2015), this fundamental problem remains. In 2013, the United Nations Conference on Trade and Development (UNCTAD) admitted: The $1.25-​a-​day poverty line . . . Falls far short of fulfilling the right to a ‘standard of living adequate for . . . health and well-​being’ (Universal Declaration of Human Rights, art.25.1). . . . Taking $5 as the minimum daily income which could reasonably be regarded as fulfilling his rights, poverty would remain widespread even in those regions which might have largely or wholly eradicated extreme poverty [based on $1.25 per day then or the current $1.90 per day now] by 2030.6 [emphasis added]

Here we have a UN agency recognizing the inadequacy of the standard threshold. Of course, figures such as $1.25 or $1.90 per day do indeed seem very low. But to get an understanding of just how low requires delving into the concept of PPP adjustments. The Bank’s $1.90 line does not refer to what a US tourist can purchase if she exchanges that sum for local currency in a Third World country. It refers instead to the purchasing power of $1.90 inside of the United States. As Dr. Jason Hickel points out, that makes the Bank’s poverty threshold manifestly unreasonable: How much is $1.90 per day, adjusted for purchasing power? Technically, it represents the international equivalent of what $1.90 could buy in the United States in 2011. But we know that this amount of money is inadequate to achieve even the most basic nutrition. The U.S. Department of Agriculture calculates that in 2011 the very minimum necessary to buy sufficient food was $5.04 per day. And that’s not taking into account

336   Seth Michael Donnelly other requirements for survival, such as shelter and clothing. . . . We have many examples of this deficit. In India, children living at $1.90 still have a 60% chance of being malnourished. In Niger, infants living at $1.90 have a mortality rate three times higher than the global average. The same story can be told of many other countries.7

Similarly, Peter Edward of Newcastle University developed what he called the ‘ethical poverty line’ (EPL) in 2006, based on income requirements to achieve a normal human life expectancy. This EPL was dramatically higher than the existing World Bank poverty line.8 More recently, in 2016 a research team with the University of Birmingham established the Individual Deprivation Measure as a new way to assess global poverty and its gendered dynamics. Not surprisingly, they found that the ‘existing measures of poverty [i.e., of the Bank] and gender disparity fail to reveal properly the extent and depth of individual deprivation’.9 The $1.90 per day standard is also extremely low in relation to most national poverty lines. It is about one-​fourth of the Third World average, and it is approximately one-​eighth of the US poverty line.10 Since food can be just as expensive in Third World countries as in the United States, it is hard to see the reason for setting the line so low. Consider that, by the Bank’s standard, anyone earning $57 per month in the US context would no longer be considered ‘extremely poor’. Needless to say, living on that sum is almost unimaginable if we consider that it must cover all costs, including food, housing, clothing, health care, education, transportation, and so on, and not just discretionary spending. Though the Bank’s update of its IPL from $1.25 in 2005 to $1.90 in 2015 seems to be more ‘generous’, a case can be made that this update artificially reduced poverty numbers by failing to adequately take into account the rising cost of living—​particularly affecting some food prices in Third World countries such as rice in Haiti—​during the interim decade, as the 2008 food riots in Haiti, Egypt, Burkina Faso, Cameroon, and other countries bore witness.11 In other words, the $1.90 standard today has less purchasing power than the absurdly low $1.25 did in 2005. Indeed, when the Bank raised the IPL to $1.90 per day, it actually lowered the poverty threshold in reality, conveniently erasing 100 million poor people overnight.12

The Role of PPP Exchange Rates in Artificially Reducing Global Poverty The true cost of living facing the world’s poor majority is also marginalized by the methodology behind the PPP adjustments employed by the Bank in its poverty calculations. The International Comparison Program (ICP), started by the UN Statistical Division in 1968, establishes the PPP rates that the Bank uses for its IPL updates. These rates attempt to equalize the purchasing power of different national currencies. In principle, PPPs can be used to compare national incomes in a way more meaningful than market exchange rates, that is, the real-​world, prevailing conversion rates between one currency

Imperialism, the Mismeasurement of Poverty    337 like the US dollar into the Haitian gourde. The ICP establishes its theoretical PPP rates by collecting data on an internationally standardized ‘basket of goods and services’. By comparing the prices of this standard basket in different national contexts, the ICP can establish price ratios between comparable goods and services between countries. These indices are expressed through a common baseline international currency, which is the US dollar.13 As the ICP explained in its 2017 brochure: Suppose that there is a basket of goods and services that costs 50 United States dollars (USD). 50 would be the equivalent of 363 South African Rand (ZAR) when using a market exchange rate of 7.26. However, due to South Africa’s lower price level in relation to the United States, the cost of a similar basket is actually 239 ZAR. Therefore, 50 USD would buy a larger basket of goods and services in South Africa than it would in the United States; the PPP of South Africa to the United States would be 239 ZAR/​ 50 USD, which is equal to 4.77.14

Note the PPP conversion rate between the USD and the ZAR is 4.77 in contrast to the actual market exchange rate of 7.26. This PPP conversion rate has magically inflated the purchasing power of the masses in South Africa. The Bank’s $1.90 threshold would be equal to a person living off of 13.79 ZAR per day in South Africa if normal market exchange rates were used—​an already absurd proposition since 13.70 ZAR would not be sufficient to lift someone from extreme poverty in South Africa. However, the Bank is using the PPP conversion rate (4.77 ZAR: 1 USD) which is based on an even graver absurdity, that someone can live free of extreme poverty on only 9.06 ZAR per day in South Africa based on the allegedly lower cost of living in South Africa. While it is certainly reasonable to compare the cost of living across different countries, the internationally standardized basket of goods and services is at the root of how PPP rates artificially exaggerate the purchasing power of the Third World majority. In forming the PPP rates, the ICP aggregates consumption patterns and priorities of people in both First World and Third World countries, thereby creating international ‘expenditure weights’ within the basket, for example of food and services. People in First World countries spend a larger share of their income on services than the people in the Third World, so the weight of services is exaggerated in the basket. For example, the weight of services in the basket could hypothetically come to 30% by averaging out consumption patterns in First World and Third World countries. In contrast, food consumes a much larger share of the poor majority’s income in Third World countries than it does for people of all classes in First World countries. Food, including basic grains, is far cheaper relative to the costs of other goods and services in rich countries than in Third World countries. But because the weight of food in the ICP’s basket is based on averaging out consumption patterns between the First World and Third World, the weight of food for people in the Third World is artificially de-​emphasized. This means that the PPP ratios between a Third World country such as Haiti and the US dollar are established through comparing the cross-​country prices of services based on artificially enhanced

338   Seth Michael Donnelly weight and the cross-​country prices of food based on artificially reduced weight vis-​à-​ vis the Third World majority. The upshot is to exaggerate the Third World majority’s purchasing power, that is, to create a hypothetical universe in which $1.90 PPP adjusted allows for fictitious consumption of goods and services in the Third World at odds with the realities of deprivation facing billions of people every day. As Sanjay Reddy and Thomas Pogge noted in their detailed 2005 critique of the Bank’s poverty calculations, the prices of food and basic grains are far higher than suggested by the PPP conversion factor for general consumption [the whole basket of goods and service]. . . . In the vast majority of the low-​income countries, food prices are again higher [in the 1993 benchmark year] than consumer prices in general—​27 per cent higher on average. . . . Bread-​and-​cereals prices are on average 51 percent higher than consumer prices in general. By any reasonable judgement, these magnitudes are very substantial, suggesting that using a more appropriate PPP concept would greatly increase the estimated extent of severe income poverty worldwide.15

Sanjay Reddy and Rahul Lahoti updated this critique in their 2016 article ‘1.90 a Day: What Does It Say?’ Here they found that if different PPP adjustments were made that gave more weight to food, global poverty rates were substantially higher than those based on the prevailing PPP adjustment rates established by the ICP and used by the Bank. Here they contrast the Bank’s $1.90 poverty line with the US Department of Agriculture’s 2011 calculator of the minimum cost of achieving ‘recommended dietary allowances’. For a family of four with two children that already has a kitchen and cooking utensils the USDA found that $5.04 was needed to afford minimum food requirements and only these, what it called the ‘Thrifty Food Plan’. The plan did not take into account other costs such as rent, clothing, health care, transportation, and so forth. Despite this extreme limitation, Reddy and Lahoti take the $5.04 standard with different PPP adjustments to get a contrast with the Bank’s rosy prognosis of dramatically falling poverty. They find that using the $5.04 standard leads to a substantial increase in poverty headcount ratios both globally and across all regions. If general consumption PPPs are used, more than 80 percent of people in South Asia and sub-​Saharan Africa are found to live below the line. . . . Even if only half the U.S. level [$5.04] is used, the poverty headcount nearly doubles [from the Bank’s extreme poverty estimates] in East Asia and South Asia. Using more appropriate food PPPs increases the poverty rate across all regions; 90 percent of South Asians consume below the Thrifty Plan level.16

In fact, based on using $5.04 as a standard for extreme poverty, albeit still far too low the threshold for meaningful survival, Reddy and Lahoti find that the absolute numbers of people in extreme poverty has increased severely since 1980 and is still above 1990 levels, an increase that holds true even if PPP ‘general consumption’ rates are used and not just the more food-​sensitive ones.

Imperialism, the Mismeasurement of Poverty    339 Alongside of using an even-​lowered poverty threshold of $1.90 based on fictitious PPP ‘general consumption’ exchange rates, the Bank’s claim of ‘extreme poverty reduction’ also depends upon using intra-​country ‘sectoral PPPs’, that is, allegedly differences in prices between urban and rural areas within China, India, and Indonesia. Interestingly, the Bank did not carry out such analysis in other large Third World countries such as Nigeria or densely populated ones such as Bangladesh. Certainly, it makes sense to attempt to account for price differentials facing urban and rural households, but the Bank’s methods of determining these differentials are open to serious criticism. Among other issues, the Bank assumed for India (and followed a parallel procedure for other countries), firstly that the ratio of rural to urban prices, and thus of sectoral PPPs, could be derived from the ratio of previously determined rural and urban poverty lines; and secondly, that the national price level was a weighted average of the (unknown) rural and urban price levels, with the number of price points sampled by the ICP in its national PPP-​determination exercise defining the weights.17

With India, the Bank adopted rural and urban poverty lines that were so unrealistic that they were even rejected by the neoliberal Indian government. Consequently, by using these lines, the Bank statistically erased much of rural poverty in India and arrived at the absurd proposition that the difference between rural and urban price levels was 51% even though the ICP itself estimated the difference to be only 3%. As Reddy and Lahoti commented on the Bank’s methods in India, as well as in China and Indonesia: It is not only paying attention to sectoral variation that matters, but also which method of inter-​sectoral adjustment is used. The Bank’s chosen approach leads to the most optimistic portrayal of rural purchasing power, and thus of the rural [poverty] headcount. . . . Estimates of global poverty levels are thus enormously affected by this single, very questionable choice. Using ICP national PPPs for China, India, and Indonesia would substantially increase their poverty rates, raising the estimated number of poor people in the world in 2011 figures by an additional 290,000,000. The trend-​rate of global poverty reduction from 1990 to 2011 also appears more favorable using the sectoral PPPs the Bank’s economists have chosen during the cent period.18 [emphasis added]

Case Studies in the Absurdity of the Bank’s Metric The cruel unreality of the Bank’s $1.90 PPP standard is further laid bare by looking at reality in Haiti. Even before the spiraling cost of living in Haiti over the past several years and the painful devaluations of the Haitian gourde, the 2016 market exchange rate between the US dollar and the Haitian gourde was approximately 1:63. Using this market exchange rate, the current $1.90 poverty line would be equivalent to living in Haiti on about 120 gourdes per day. Anyone living in Haiti knows that this is a sick joke, falling

340   Seth Michael Donnelly far short of the costs of securing nutrition, housing, transportation, energy, education, health care, clothing, and cooking utensils, among other necessary goods in Haiti. Yet the Bank’s $1.90 standard is based on the PPP exchange rate between the US dollar and the Haitian gourde, which in 2016 was 1:28. Using the Bank’s PPP rate, Haitians could be classified as not ‘extremely poor’ if they lived on only 54 gourdes per day, that is, the real-​ world equivalent of living on 86 US cents per day in Haiti. The absurdity of this claim is compounded by the fact that many products Haitians need to buy, including rice, are imports from the United States at marked up prices. Turning to India in the earlier part of the millennium, one of the Bank’s principal engines of alleged poverty reduction in the world, the Bank placed the extreme poverty rate at slightly above 30% in 2007 based on its then $1.25 PPP standard.19 The official poverty estimate by the neoliberal Indian government was 26%, based on the number of people living on less than 12 rupees per day, that is about 30 US cents in 2007.20 It appears that the Indian government simply set its official poverty line at the time as equivalent to the Bank’s $1.25 standard. Based on the PPP exchange rate between the USD and the rupee then, $1.25 also came to living on less than 12 rupees per day. In contrast, the Indian state-​run National Commission for Enterprises in the Unorganized Sector (NCEUS) issued a 2007 report that reached very different conclusions. Instead of using 12 rupees as the poverty line, NCEUYS used 20 rupees (50 cents) and found -​ 77% of Indians—​836 million people—​living in poverty in conditions that, in the report’s words, ‘are utterly deplorable’.21 The report further argues that those below the poverty line must generally coincide with the informal sector (what Marx called the ‘reserve army of the unemployed’): One of the major highlights of this Report is the existence and quantification of unorganized or informal workers, defined as those who do not have employment security, work security, and social security. . . . This universe of informal workers now constitutes 92 percent of the total workforce. We have also highlighted, based on empirical measurement, the high congruence between this segment of the workforce and 77 percent of the population with a per capita daily consumption of up to Rs. 20 (in 2004-​–​05) who we have called ‘Poor and Vulnerable’. The number of persons belonging to this group increased from 811 million to 836 million in 2004–​05.22

The core finding of this report is a well-​documented increase in poverty precisely at a time when the Bank claims Indian poverty rates were falling. Based as they are on an analysis of India’s concrete reality rather than abstract Bank parameters, the report’s findings are reinforced by the scholarship of leading Indian intellectuals such as Arundhati Roy, Jayati Ghosh, Ruahul Goswami, C. P. Chandrasekhar, Prabhat Patnaik, and Utsa Patnaik.23 But perhaps nothing reveals the absurdity of the Bank’s poverty claims more effectively than The Financial Times headline on 23 September 2015, ‘Earth’s Poor Set to Swell as World Bank Moves Poverty Line’. This was based on a proposed IPL of $1.92 that would have resulted in 148 million more ‘extremely poor’ people in the world. The Bank

Imperialism, the Mismeasurement of Poverty    341 soon revised the IPL down to $1.90 and avoided this embarrassing predicament.24 And so it is that 2 cents on the US dollar, PPP-​adjusted, saved the world from the debacle of a surge in extreme poverty and enabled the Bank to trumpet in its press release the following month the ‘fresh evidence that a quarter-​century-​long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030’.

Mass Eviction from the Land as a Form of ‘Poverty Reduction’ From the 1950s into the new millennium, hundreds of millions of peasants and indigenous peoples in the Third World have been violently displaced from their lands. The causes include pressure from corporate competition unleashed by US-​, World Bank–​, and International Monetary Fund–​imposed ‘structural adjustment programmes’ and ‘free trade’ policies; growing agribusiness control over seeds and the food system; and land grabs by mining and agribusiness corporations.25 Philip McMichael, an expert on agrarian issues at Cornell University, explains this process: Peasant dispossession intensified with the deepening of colonial mechanisms of primitive accumulation [e.g., land grabs] by post-​colonial states [e.g., neocolonial regimes backed by the United States]. From 1950 to 1997, the world’s rural population decreased by some 25%, and now 63% of the world’s urban population dwells in, and on the margins of, sprawling cities of the Global South.26

This huge, global demographic shift—​what has been termed the largest migration in human history—​has given rise to what Mike Davis calls the ‘planet of slums’.27 Shantytowns, populated by an ever-​growing ‘reserve army of the unemployed’, have proliferated throughout urban centres from Port-​au-​Prince to Jakarta. This eviction and migration of peasants and indigenous peoples into urban slums account for much of the reduction in extreme poverty claimed by the Bank. In urban contexts, as long as someone can scrape together the equivalent of $1.90 PPP per day, as a street vendor or as a wage labourer in a sweatshop, this person has now escaped ‘extreme poverty’, though their living conditions and actual poverty may now be worse than they were in the countryside where basic needs could often be met outside of a market economy. As the economist Michael Yates put it: The World Bank has been instrumental in promoting large-​scale export agriculture in poor countries. Many persons living below the World Bank poverty level are subsistence peasants operating outside of the money economy. Their economic well-​ being is often greater than a dollar a day [or $1.90] would indicate, As they are in effect dispossessed by Bank-​promoted agriculture and move into urban areas, their money income may exceed the World Bank poverty level, but, in fact, they are considerably worse off than they were in the countryside.28

342   Seth Michael Donnelly As an instrument sharpened and wielded by US imperialism over many decades, it makes perfect sense that the World Bank would celebrate global gentrification and mass eviction as an economic success story, thereby blinding privileged people to the depths of suffering faced by the evicted and impoverished.

Contradictions within the Bank’s ‘Income’ Determinations As indicated previously, the Bank’s poverty metric is based exclusively on monetary ‘income’, failing to sufficiently take into account non-​monetized factors determining quality of life. Given the Bank’s income fetishism, it is important to look more closely at how it calculates a person’s income. The Bank relies on ‘nationally representative household surveys’ for its data on per capita income levels.29 The problem with such surveys, which register either household income or consumption, is their sometimes arbitrary relation to people’s needs. On the one hand, some surveys have attached a monetary value to slum dwellings, which might boost a truly poor person above the official poverty line.30 On the other hand, surveys sometimes overlook important even life-​saving subsidies and public services that people might receive. These kinds of errors can lead to profoundly paradoxical outcomes that ideologically buttress global capitalism. An especially clear case is how the free health care, education, and food that people received during the Maoist period in China apparently did not enter into the Bank’s ‘income’ calculation. As a result, Chinese people, who achieved new levels of food security and saw their life expectancy double in this period were found to be more than 80% ‘extremely poor’, according to the Bank. Despite a much higher life expectancy, higher levels of literacy, and lower levels of infant mortality in China than in Haiti, the Bank’s ‘income’ criteria found China to have more ‘extreme poverty’ in 1980 than Haiti under the dictatorship of Baby Doc Duvalier. From the Bank’s perspective, Chinese peasants only ceased to be ‘extremely poor’ once they lost their collective lands, food rations, and medical care, and began making iPhones and other export goods under atrocious conditions.31 The Bank does not always determine ‘income’ through direct household surveys which are not conducted as frequently and rigorously as required. In the absence of such comprehensive data collection, the Bank has relied upon a ‘mean consumption’ to gauge poverty levels. The Bank has assumed that as ‘mean consumption’ rises with economic growth, poverty must therefore be falling.32 However, this ‘trickle-​down’ assumption is clearly not logical; if 10% of a country’s population sees a surge in incomes, boosting overall economic growth and the ‘mean consumption’ in the country, it does not follow that the bottom 90% is experiencing poverty reduction. Many could experience greater levels of poverty, due to rising cost of living fuelled by gentrification, just as the environment can be suffering more destructive externalities, as happened in Brazil during its ‘economic miracle’ under the military dictatorship.

Imperialism, the Mismeasurement of Poverty    343

The Bank’s Data at Face Value Despite all of these problems with the Bank’s poverty calculations, what does the Bank’s data on poverty, taken at face value, really show? Does the Bank’s own data substantiate its good-​news headlines? The Bank’s data was carefully analysed by the Pew Research Center, which issued a 2015 report titled A Global Middle Class Is More a Promise Than a Reality. The report notes the Bank’s data showing that the number of people living below $1.90 PPP per day (the report rounds up to $2 PPP per day) fell by 669 million people between 2001 and 2011, that is from 29% to 15% of the world’s population. However, the number of so-​called ‘low-​income’ people (with between $2 and $10 PPP per day) increased during the same period by 694 million from 50% to 56% of the world’s population. Most of these low-​income people are living below the $5 UNCTAD or Ethical Poverty Line requirement to meet basic needs ($7.40 today using the 2015 updated $1.90 PPP benchmark). ‘Globally, the majority of people live on about $3 a day’, Rahesh Kochlar, associate director at Pew, said in the report.33 As Jason Hickel shows in his research, using Bank data, the ranks of people living below this $5 per day threshold grew by about 1 billion from 1980 to the present and includes 4.3 billion people, more than 60% of the world population.34 Taken together, as the Pew report documents, 71% of the world’s population is in the low-​income category, with most living in severe poverty. Most low-​income earners in 2011 lived closer to the poverty line ($2 per day) than the threshold for middle-​income status ($10 per day). Indeed, in both 2001 and 2011, living on $1–​2 or $2–​3 per day was the most probable outcome, globally speaking. Overall, in both years, the vast majority live on less than $10 per day.35

The premise that living on $10 PPP per day somehow makes you ‘middle class’ is absurd. By that logic, someone whose income is $300 per month in the United States would be ‘middle class’. How would $300 even begin to cover food, housing, clothing, transportation, and other essentials in the United States?

Other Metrics for Assessing Global Poverty In contrast to the Bank’s $1.90 PPP standard for measuring poverty rates, there is the Multidimensional Poverty Index (MPI) developed in 2010 by the Oxford Poverty and Human Development Initiative and the United Nations Development Programme (UNDP). The MPI does not focus on income but on deprivations in the areas of health, education, and living standard. Within these three categories there are a series of weighted indicators. For example, the category of living standard including indicators dealing with cooking fuel, sanitation, drinking water, electricity, floor type, and assets. A person is considered poor if deprived of at least one-​third of the weighted indicators.36

344   Seth Michael Donnelly Using this methodology, the 2017 MPI report found that ‘a total of 1.45 billion people from 103 countries are multidimensionally poor. . . 26.5% of the people’.37 Some of these countries are middle-​to high-​income, so the percentage of multidimensionally poor is considerably higher if they are removed from the picture. For example, in South Asia, 41.6% of the population was MPI poor, which was more than twice the Bank’s rate of extreme poverty for that region. In sub-​Saharan Africa, multidimensional poverty affects 60.1% of the population, a rate of one-​third higher than what the $1.90 per day established. Based on concrete deprivations, the MPI paints a much more disturbing picture of global poverty than the Bank’s income metric. Although the Bank claims that the MPI data complements its own findings, the MPI yields a far higher percentage of poor people worldwide, while depicting the especially dire situation of the world’s children. It should be remembered that to be MPI-​poor requires 33% deprivation of basic life indicators; a less severe, more humane threshold, for example, 20% deprivation, would have widened the gap between MPI data and the Bank’s poverty rates even further. Shifting focus exclusively to hunger and malnutrition, data from the UN’s Food and Agriculture Organization (FAO) provided the basis for the UN 2015 MDG Report’s claim that the percentage of ‘undernourished people’ living in the ‘developing world’ declined from 23.3% in 1990–​1992 to 12.9% in 2014–​2016. However, just as with the Bank’s poverty data, FAO hunger data and its methodology are extremely misleading. Everything points to the FAO having shifted goalposts to paint a rosier picture in time for the 2015 expiration of the Millennium Development Goals (MDGs). In their article How We Count Hunger Matters, Frances Moore Lappé et al. systematically deconstruct how this apparent progress is based on a new methodology for measuring hunger that the FAO employed for its 2012 State of Food Insecurity in the World, thereby contradicting its 2010 report that hunger had been increasing over the new millennium.38 For its 2012 report, the FAO measured food deprivation based on the minimum number of calories a person needs to consume based on a sedentary lifestyle. As Lappé et al. note: While an assumption of calories needed for a ‘sedentary lifestyle’ produces the publicized estimate of 868 million undernourished worldwide, the data in the online indicators show the consequence of assuming a caloric threshold required for ‘normal’ activity. The rise is dramatic: the number of undernourished people in 2010–​2012 could be as high as 1.33 billion—​or 53 percent greater than the official 868 million estimate—​thus putting the positive message that frames SOFI 2012 in a different light.39

Going a step further, according to the annex in SOFI 2012, if hunger is measured by the minimum level of calories required for intense activity, rather than simply ‘normal’, the number of hungry people would have risen in 2012 to 2.56 billion, reflecting an increase in global hunger, not a decrease.40 Similarly, Jason Hickel has shown how the FAO’s methodology for its 2012 findings involved ‘revised data on average population heights, which are used in turn to calculate

Imperialism, the Mismeasurement of Poverty    345 the minimum dietary energy requirements’ and reducing the calorie thresholds significantly downward at the end of the data collection period.41 As a consequence, people needed fewer calories to be counted above the hunger threshold as the millennium progressed than they did in 1990, the reference year. The claim that shorter people need fewer calories confuses cause and effect. Indeed, ‘shorter stature in population is quite often a sign of undernourishment, so it makes little sense to conclude—​as the FAO does—​that as populations get shorter, they require fewer calories. Indeed, in many cases, it is probable that the opposite is true’.42 As if this sleight-​of-​hand was not enough, the FAO kept revising upward its previous 1990 baseline of hungry people—​the 786 million hungry people registered initially had become 980 million in later reports—​thereby creating an illusion of progress.43 There is a disturbing parallel between the Bank’s metric for poverty and the FAO’s metric for hunger: both use standards so removed from reality that they simply erase the problems they propose to measure. For the FAO, the hunger line is set at a minimum level of calories, regardless of real nutritional needs. Since the quality and content of these calories are not taken into account, people having serious vitamin or other nutrient deficiencies are not counted as undernourished. As Lappe et al. state: A third shortcoming of a narrow hunger indicator is that it considers only caloric intake and does not incorporate data on the quality of food consumed. When food prices rise, as they have in recent years, poor people may shift spending, foregoing other expenditures in order to eat or choosing less expensive foods that are also less nutritious.44

This much is admitted by the UN World Food Programme in its 2020 report, warning of growing malnutrition: The report presents evidence that a healthy diet costs far more than US$ 1.90/​day, the international poverty threshold. It puts the price of even the least expensive healthy diet at five times the price of filling stomachs with starch only. Nutrient-​rich dairy, fruits, vegetables and protein-​rich foods (plant and animal-​sourced) are the most expensive food groups globally. The latest estimates are that a staggering 3 billion people or more cannot afford a healthy diet. In sub-​Saharan Africa and southern Asia, this is the case for 57 percent of the population—​though no region, including North America and Europe, is spared. Partly as a result, the race to end malnutrition appears compromised. According to the report, in 2019, between a quarter and a third of children under five (191 million) were stunted or wasted—​too short or too thin.45 [emphasis added]

Finally, though there has been an overall improvement over recent decades in basic health indicators such as infant and maternal mortality, deaths from preventable diseases and from malaria, such improvement stems primarily from the wide provision of basic vaccines, medicines, and medical procedures that should have been accomplished long ago, sparing literally hundreds of millions of lives needlessly lost in

346   Seth Michael Donnelly the Third World.46 Despite such improvement, UNICEF warned in its 2016 State of the World’s Children report that ‘unless the world tackles inequity today . . . 69 million children under age 5 will die between 2016 and 2030’.47 This is nearly five million children who will die each year from preventable illnesses and poverty. In the words of Share the World’s Resources, a research and information centre: According to calculations of Dr. Gideon Polya based on figures from the UN Population Fund, over 17 million ‘avoidable deaths’ occur every year as a consequence of life-​threatening deprivation, mainly in low-​income countries. . . . As the term suggests, these preventable deaths occur simply because millions of people live in conditions of severe poverty and therefore cannot access the essential goods and services that people in wealthier countries have long taken for granted—​not even nutritious food or safe drinking water.48

How the World Bank’s Poverty Metric Masks Global Exploitation The same $1.90 PPP metric that statistically erases poverty also masks the huge transfers of value from Third World to First World countries—​predicated upon unequal exchange and the super-​exploitation of Third World workers through global supply chains dominated by First World corporations. As these global supply chains have expanded over the past fifty years, so too has global inequality. Others have extensively examined the imperialist nature of these supply chains and their mechanisms of value transfer.49 The purpose here is more narrow: to show how the PPP rates used by the Bank for its poverty metric also serve to camouflage the real scale of unequal exchange, labour exploitation, and global inequality at the heart of the imperialist system today.

PPP Rates and Unequal Exchange: Imperialism has created and reproduces a huge gap between the value of labour power in the Third World and the First World, a gap that cannot be explained by alleged differences in productivity stemming from any technological disparities on the job.50 Restrictive immigration policies by the United States and other OECD countries compound this gap by blocking the access of impoverished Third World workers to these First World zones of privilege. Imperialism has also created and reproduces a huge gap between the value of resources, including land, raw materials, and minerals, as well as the value of the currencies in the Third World and First World. Based as it is on the systematic undervaluation of Third World labour power, resources, and currencies in

Imperialism, the Mismeasurement of Poverty    347 relationship to those in the First World, international trade between these zones cannot be anything but unequal exchange. A powerful example of this dynamic is starkly revealed by the artificial power of the US dollar in relationship to Third World currencies. Even though the United States runs the world’s largest trade deficit, the US dollar remains strong and over-​valued, allowing US businesses to buy labour and resources in the Third World and US consumers to purchase the products imported from the Third World ‘for cheap’. The US dollar owes much of its power to the ‘special relationship’ forged between the US government and the Saudi monarchy—​consolidated during the mid-​1970s—​in which the latter agreed to sell Saudi oil for US dollars and, in turn, was lavishly rewarded by massive weapons deals. Other OPEC countries also agreed to sell oil for US dollars, giving rise to ‘petro dollars’, and consequently created an international demand for the US dollar, thereby propping its value.51 Despite all of their problems, ‘normal’ market exchange rates between different First World and Third World countries consistently reflect these imperialist disparities in value, as known all too well by people living in a Third World country like Haiti, where the ‘dollar is king’ while being subjected to painful devaluations of their own currency. In contrast to these ‘normal’ market exchange rates, the theoretical PPP rates deployed by the World Bank fail to adequately reflect these disparities in value. Recall that the ICP constructs the PPP rates by first establishing the standardized basket of goods and services with internationally aggregated expenditure weights. For reasons discussed earlier, the PPP rates grossly exaggerate the purchasing power of people in the Third World and the international power of the Third World currencies in relationship to the dollar. Returning to a previous example, the PPP ‘private consumption’ rate between the dollar and the Haitian gourde was only 1:28 in contrast to the prevailing market exchange of 1:65 in 2016. The PPP rate more than doubled the power of the gourde in ratio to the dollar. This is reflected in the PPP rates between other Third World currencies and the dollar. While research has found very little deviation between the PPP rates and market exchange rates between First World countries, the opposite is true for Third World countries. For the latter, comprehensive study has found that ‘the poorer the country, the lower will be the exchange rate value of its currency in relation to the PPP value of its currency’.52 The Bank, the ICP, and the OECD use the PPP rates not just to set the extreme poverty threshold but also to compare the GDPs of different countries. By using the PPP rates, the ICP can better gauge the real size of the world economy, just as the Bank claims to better gauge extreme poverty rates. According to the Comprehensive Report by the World Bank Group of the 2011 International Comparison Program: PPPs are calculated in stages: first for individual goods and services, then for groups of products, and finally for each of the various levels of aggregation up to GDP. PPPs continue to be price relatives whether they refer to a product group, to an aggregation level, or to GDP. As one moves up the aggregation hierarchy, the price relatives refer to increasingly complex assortments of goods and services. Therefore, if the

348   Seth Michael Donnelly PPP for GDP between France and the United States is 0.95 Euro to the dollar, it can be inferred that for every dollar spent on GDP in the United States, 0.95 Euro would have to be spent in France to purchase the same volume of goods and services.53

Since PPP rates are also applied in this broader context, including global trade, they undoubtedly underestimate the true transfer of value from the Third World to the First World by inflating the power of Third World currencies or, conversely, deflating the power of the dollar. Since international trade is based on official exchange rates—​rates that continue to disadvantage Third World countries with deteriorating terms of trade, with low prices for Third World exports and high price for imports from First World countries—​the use of mythical PPP rates understates the problem. Haitians must buy rice imported US rice based upon official exchange rates, a brutal reality they only wish they could erase through recourse to mythical PPP rates.

PPP Rates and Labor Exploitation For the same reasons, PPP rates underestimate the magnitude of surplus value generated by Third World workers that is appropriated principally by First World corporations through global supply chains. Much has been written about the vast outsourcing over the past forty years of industrial production by First World corporations to Third World countries through foreign direct investment or ‘arm’s-​length contracting’.54 Export-​processing zones (EPZs) are particularly important links in these global chains. EPZs are sometimes called ‘free zones’, and in fact provide an almost complete freedom to capital. Corporations send raw materials and intermediate goods into the zones, where environmental and labour regulations are minimal, to make products for re-​export into First World markets. According to John Smith, writing in 2015: EPZs have experienced accelerating growth—​the numbers employed in them nearly tripled between 1997 and 2006, the latest year for which there are statistics, when 63 million workers were employed in EPZs in 132 countries . . . EPZs were responsible for 75% or more of export earnings in Kenya, Malaysia, Madagascar, Vietnam, Dominican Republic, and Bangladesh, while Philippines, Mexico, Haiti, and Morocco earned 50% to 60% of exports from their EPZs. The ILO [International Labour Organization] Employment in EPZs database reports that Asia’s 900 +​ zones employed 53 million workers, 40 million of them in China and 3.25 million in Bangladesh.55

With this reconfiguration of global production, Third World countries’ share of the world’s industrial employment grew rapidly from 52% in 1980 to 83% in 2012.56 Within this context, not only do PPP rates disguise the real rate of exploitation but also the $1.90 PPP poverty line creates an illusion for people in the First World that such

Imperialism, the Mismeasurement of Poverty    349 low wages in the EPZs are sufficient to avoid extreme poverty. The 1996 documentary Mickey Mouse Goes to Haiti: Walt Disney and the Science of Exploitation, offers a window on the gruelling working and living conditions of the men, women, and children who labour in EPZs across the globe. Yet, since the Haitian workers in the film were earning approximately $2.40 per day making garments for Disney, they cleared the Bank’s poverty line by a long shot. In the eyes of the Bank, they were dangerously close to being ‘middle class’, despite malnutrition and living in overcrowded slums with no access to plumbing or consistent electricity, to say nothing of health care or decent education. To the misinformed, the $1.90 PPP appears to be a global minimum wage, consequently absolving First World consumers of too much cognitive dissonance over how their phones and shirts were made.

PPP Rates and Global Inequality In tandem with exaggerating the power of Third World currencies and statistically disappearing millions of impoverished people in the world, PPP rates also exaggerate the GDP per capita of Third World countries, thereby giving an appearance of falling global inequality. When PPP rates are applied, the GDP per capita of Third World countries as a share of GDP per capita of rich countries rose from just under 13% in 1960 to 18% in 2008. However, if PPP rates are jettisoned in favour of normal market exchange rates converted into the US dollar, the GDP per capita of Third World countries as a share of that of First World countries fell from just under 18% in 1960 to 15% in 2008. Using normal exchange rates, if China is excluded, the Third World share fell from just under 10% in 1960 to about 6% in 2008.57

Conclusion By minimizing the magnitude of global poverty and advancing the dominant narrative of progress through capitalist growth, the World Bank’s research methods and findings serve to legitimize global capitalism precisely at a time when the system is being increasingly challenged by popular, grassroots struggles throughout the world, particularly in the Third World. It is the participants in these struggles—​from the factory workers in China and the farmers in India to the street vendors in Haiti and Indigenous activists in Bolivia, from the cobalt miners in the Congo to the ‘Moms for Housing’ in Oakland, California—​who can provide the desperately needed counter-​narrative grounded in the real world, lived conditions of the people. Towards this end, it is worth closing with Audre Lorde’s message, made nearly forty years ago, ‘the master’s tools will never dismantle the master’s house’.

350   Seth Michael Donnelly

Notes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

World Bank (2015, 7). ‘Not Always with Us’ (2013). Radelet (2016). Mirkinson and Donnelly (2019). World Bank (n.d., emphasis added). UNCTAD (2013, emphasis added). Hickel (2015). Edward (2006). Wisor et al. (2016,1). Kochhar (2018). Orlan Ryan and agencies (2008). Jason Hickel argues that $1.92 a day would have preserved the original value of the existing poverty line. Yet this would have shown an increase in world poverty. So it was revised downward by two cents (Hickel 2015). 13. For a clear explanation of this process, see Kohler and Tausch (2002, 46–​49). 14. International Comparison Program (2017). 15. Reddy and Pogge (2009, 26). 16. Reddy and Lahoti (2015, 11). 17. Reddy and Lahoti (2016, 5). 18. Reddy and Lahoti (2016, 5). 19. Singh (2016). 20. Reuters (2007). 21. Reuters (2007). 22. National Commission of Enterprises in the Organized Sector (2007). 23. See, for example, Chandrasekhar (2012), Ghosh (2013), and Goswami (2013). 24. Ackland, Dowrick, and Freyens (2013). 25. For documentation of this displacement, see Richter (2000), Burback and Flynn (1980), Ross (2014), Davis (2017), and the many books by Vandana Shiva on the subject. 26. McMichael (2009). 27. For a critique of the misleading claim made by the UN in its 2015 MDG Report that ‘slums’ have been recently and slowly been disappearing in the Third World, see Donnelly (2019). 28. As quoted by Ness (2016, 15). 29. See http://​iresea​rch.worldb​ank.org/​Povcal​Net/​meth​odol​ogy.aspx. 30. Smith (2015, 340). 31. For solid information on realities of economic insecurity and exploitation in post-​Mao China, see Gao (2008), Hart-​Landsberg (2008, 2011), Burkett and Hart-​Landsberg (2004). Also see China Labor Watch (http://​chin​alab​orwa​tch.org/​home.aspx) and Yates (2016). Here Yates states that ‘while money incomes are higher for peasants in China than they were before its leaders pushed it sharply toward capitalism, more than 600 million rural residents have lost their communal lands and their collectively provided food rations and medical care, none of which is subtracted from their current money incomes’. Also, see Xu (2018). 32. Reddy and Pogge (2009, 26). 33. Luhby (2015). 34. Hickel et al. (2015). 35. Kochhar (2018).

Imperialism, the Mismeasurement of Poverty    351 36. See Alkire and Robles (2017, 3), for the list of categories and indicators. Like the World Bank’s international poverty line, the MPI initiative provides poverty headcounts. But it also considers the intensity of poverty in each country (the average percentage of deprivation in each of the three categories of health, education, and living standard of those poor people). The MPI per se for a country is the percentage of poor people multiplied by the intensity of their deprivation. 37. Alkire and Robles (2017). 38. Lappé et al. (2013). 39. Lappé et al. (2013). 40. The Food and Agriculture Organization of the United Nations ( 2012, Annex 2, 55.) 41. Hickel (2016). 42. Hickel (2016). 43. Hickel (2016). 44. Lappé et al. (2013). 45. United Nations World Food Programme (2020). 46. For a more in-​depth examination of this, see Donnelly (2019). 47. UNICEF (2016, 3). 48. Share the World’s Resources (n.d.). 49. Most notably, see Cope (2012, 2019); also see Smith (2015), and Suwandi (2019). 50. For a thorough deconstruction of this, see Cope (2012). 51. Donnelly (2019, 70–​7 1). 52. For a thorough examination of this discrepancy between PPP and market exchange rates, see Kohler and Tausch (2002). 53. World Bank Group (n.d., 33). 54. See Ness (2016) and Smith (2015). 55. Smith (2015, 55). 56. Foster (2015). 57. Freeman (2008, 4).

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Chapter 20

Tertiariz at i on, F inancializ at i on, a nd E c onomic Impe ria l i sm Kalle Blomberg

Introduction Tertiarization in the imperialist core is inseparable from the fact that value has become increasingly associated with intangible assets. In mainstream discourse terms like ‘de-​materialization’, ‘post-​industrial society’, and ‘knowledge economy’ are frequently used to describe this structural transformation away from manufacturing to service activities.1 The basic assumption underlying such descriptions is that intangibles, most notably different kinds of knowledge-​based capital, have now replaced physical assets as the main value-​generating resources in advanced economies (Powell and Snellman 2004, 201; OECD 2013). Since intangibles are not covered in the national accounts, a growing concern in recent times has been to estimate their part in the generation of value. This can be done by conceptualizing them as the assumed underlying wealth that produces a stream of future earnings. Using this approach, the World Bank estimated that in 2005 intangible assets accounted for as much as 80% of the wealth in high-​income countries (World Bank 2011, 7). Human capital, as reflected in the monetary remuneration of labour, makes up the most significant part of this intangible wealth (see Hamilton and Liu, 2013). During the neoliberal period, the theory of human capital has emerged from relative obscurity to become the default explanation for all sorts of social phenomena. Although not a new notion, the modern neoliberal version of the theory is mostly associated with the names of Becker (1962) and Schultz (1961), who introduced it in the context of educational investment. As the postmodern theorist Foucault was prescient to point out, in their reformulation of labour the concept of ‘capital-​ability’ completely replaces that of labour power (2008, 225), so that what is left of ‘the wage’ is simply ‘the income allocated

356   Kalle Blomberg to a certain capital, more specifically ‘an ability-​machine’ (2008, 226). Despite facing considerable resistance initially, today human capital is almost a universally accepted category (Fine and Milonakis 2009, 34–​35). What is it then about the social mediations of neoliberal capitalism that makes possible (1) the widespread acceptance of this concept and (2) the phenomenon it purports to explain? The emergence of human capital as the privileged explanation of value generation and distribution coincided with heightened financial fetishism in the core. Far from a mere coincidence though, the concept itself derives from the financial form of capital (M-​M’). Marx called this ‘the most complete fetish’ because all connections to the actual production process are erased at this point, making capital appear as if it was able to valorize itself without the exploitative relation to labour (Marx 1989b, 450). It is this fetishism that has permeated the political economy of the imperialist core to an unprecedented degree during the neoliberal financialized era. Labour has simultaneously been more deeply drawn into the financial process in a way that enhances the abstraction of value. The intensified financialization of labour income makes the distinction between labour and capital less discernible (see Bryan et al. 2009) and as workers in effect get a financial stake in the exploitation of their own class, the real connection between capital and labour in the generation of value becomes increasingly blurred (see Soederberg 2011). This fetishism, however, has a wider reach and the disguised relations, extend beyond the borders of these financialized economies. As I will show in the case of human capital, the self-​valorizing appearance of financial capital is projected back onto labour power itself, the very opposite of capital, to account for differences in productivity and labour income. Hence, reification seems to have come full circle. I will argue that it is precisely the increasing abstraction of value under neoliberalism that underpins the conceptualization of labour as human capital. It is this abstraction that accounts for the concept’s prominence despite it being intrinsically flawed; conflating what is essentially a consumptive role of high-​wage earners in the global economy with that of a productive one and thereby disguising the imperialist value transfers which sustain that role. Financialization, as well as the human capital concept buttressed by the increasing fetishism of the neoliberal development is in reality a single global process, ultimately dependent on value extracted elsewhere.

The Intangibility of Human Capital Tertiarization in the core has been closely intertwined with growing inequality. Between 1980 and 2016, 27% of global income growth went to the top 1% of the population, a share equalling the one received by the bottom 61% (World Inequality Lab 2018, 51). Although the neoliberal period saw a decrease in the inequality between countries (largely due to the growth of emerging economies), the distance between the richest and the rest has only increased. This is also true for labour income which follows a hockey stick pattern showing the steeply rising share of top earners. The stark inequality is evident from the fact that while the top decile in 2017 received an average wage of US$7,445 (PPP) per

Tertiarization, Financialization, and Economic Imperialism    357 month, the corresponding figure for the bottom 50% was US$198 (PPP) and a meagre US$22 (PPP) for the bottom decile (ILO 2019, 70). From a mainstream perspective these widening disparities are linked to tertiarization, being largely explained in terms of a technological progress that has resulted in a wage premium for high skilled labour (see OECD 2019). This unequal remuneration of labour in the neoliberal period has predominantly been explained by the theory of human capital. The concept gained currency providing a straightforward explanation for the growing disparity. The central premise of the theory is that skills, knowledge, capabilities, and other individual attributes can be treated as a form of capital open to investment and accumulation (Becker 1962; Schultz 1961). ‘At its essence,’ Blair explains in the Handbook of Human Capital: ‘Human capital theory’ says simply that workers with different levels of knowledge and skill differ in their productivity and, therefore, earn different rates of compensation according to their skill level. Moreover, the theory explains that education and training are likely to increase the knowledge and skills of workers, thereby increasing their expected earnings. By analogy to investments in physical capital, expenditures on education and training, therefore, operate like investments in better and more efficient machines to increase labor productivity. Such investments, the theory says, can thus be analyzed in ways analogous to the way social scientists analyze investments in physical capital. (Blair 2011, 50)

In other words, the high wages for top earners are justified on account of their higher productivity and contribution to value creation. An illustrative example of how the theory is applied can be found in a report by the World Bank (Lange et al. 2018, 48). Here human capital is measured in terms of the present (discounted) value of life-​time future income. By this procedure the report estimates that human capital represented around 70% of wealth in high-​income OECD countries in 2014, two and half times that of produced capital (28%) and more than twenty times that of natural capital (3%). In comparison, natural capital was the most significant part of wealth (47%) in low-​income countries. This in itself, according to the report, suggests a ‘progression’ that ‘makes sense because economies can only move beyond subsistence production of food and shelter to manufacturing and services with the addition of human capital, infrastructure, and other produced capital’ (48). Progress and ‘development’, the report continues, go ‘hand in hand with a rapidly increasing share of human capital in wealth’ (49). This idea of a universal development path resulting in a natural relative distribution of wealth, however, presupposes that labour income is essentially the same as interest on capital. Such misguided conception of labour income can be seen as originating in the most fetishized, abstract form of capital expressed in the formula M-​M’: money here returns with an increment at the end of the exchange without any direct connection to the labour process. ‘The form of interest-​bearing capital’ as Marx writes ‘is responsible for the fact that every definite and regular money revenue appears as interest on some kind of capital whether it arises from some capital or not’ (Marx 1998, 462). Marx traced this illusory conception to interest-​bearing capital since in this form of ‘self valorising value’

358   Kalle Blomberg capital ‘no longer bears any trace of its origin’ (Marx 1989b, 451). In reality, the owner of interest-​bearing capital gets a share of the surplus value extracted from labour in production in the form of interest. The real abstraction of the financial form ‘obliterates’ the source of surplus value in the contradictory relation to labour and replaces it with a relation between different forms of capital as expressed in their monetary exchange (Marx 1998, 377; 1989b, 456). Consequently, this ‘complete’ fetishism produces the impression that capital as money has a magical quality to grow on its own, even without the value generated from the exploitation of labour in production (Marx 1989b, 463). Having severed the connections to the labour process and to the generation of surplus value from the exploitation of labour, any income stream can now be treated as a type of capital because in the money form nothing distinguishes one income stream from another. Marx realized that it was this heightened abstraction of value that made it possible to turn every type of income into fictitious capital ‘by calculating it on the basis of the average rate of interest, as an income which would be yielded by a capital loaned at this rate of interest’ (Marx 1998, 464). Hence, income streams that are not originating from capital, e.g., labour income, can be modelled as if they were precisely that (estimating them on the basis of discounted future earnings, see Jessop 2015, 25) as is done in the case of human capital accounting. The same abstraction is present in the valuation of paper claims to future value in the form of financial securities. These paper claims can be traded as fictitious commodities in their own right whether or not the actual value they constitute claims on will be realized in the future. The price ‘movement’ of this fictitious capital is thus separated from the actual value of output of capital and commodities to a large extent (Marx 1998, 467–​468; Foster and McChesney 2012, 56; McNally 2009, 66). Fetishism is intensified by the fact that monetary revenues now become increasingly associated with the price of this fictitious capital, seemingly unrelated to value extracted in production. Human capital in effect relies on taking this—​the most far-​reaching fetish conception of value in fictitious capital—​as a point of departure to explain differences in productivity and remuneration of labour. Simultaneously, the concept naturalizes the social relation of capital by subsuming it under the category of individual human traits, now thought of as possessing value-​creating forces of their own. Since human capital is considered to be the most important economic asset in the global economy today, accounting for roughly two-​thirds of total global wealth (see World Bank report cited above, Lange et al. 2018, 121), the concept implies a naturalizing explanation of global inequality and levels of development. The World Bank thus found that as much as 87% of total global wealth is concentrated in upper-​middle-​income countries (22% of total) and high-​income OECD countries (65% of total), with human capital per capita in high-​income countries estimated at ~$500,000, almost 100 times of that in low-​income countries ($5,564 per capita) (122). Yet, this picture is based on a reversal of the actual social relations involved because it mistakes labour to be a form of capital. The ‘insanity of the capitalist mode of conception reaches its climax here, for instead of explaining the expansion of capital on the basis of the exploitation of labour, the matter is reversed and the productivity of

Tertiarization, Financialization, and Economic Imperialism    359 labour power is explained by attributing this mystical quality of interest-​bearing capital to labour power itself ’ (Marx, 1998, 463). In line with Marx’s insight, the aim of the following sections is to retrace the real sources behind the intensified mystification in recent times.

Financialization and Fetish Capital in the Imperialist Core In reality, human capital is a reflection of the higher level of abstraction characterizing global value relations. The neoliberal period has witnessed an incredible expansion of fictitious capital in different forms. According to one estimate, the total value of financial securities in the world had reached $242 trillion in 2013, more than three times the global GDP of that year (Sanyal 2014, 1–​2). By contrast, in 1980 the value stood at a level equal to GDP at $12 trillion (Farrell et al. 2005, 40, 42). In core imperialist economies this transformation is known as financialization, as finance has come to occupy a dominant position in relation to the rest of the economy (Epstein, 2006; Foster and Magdoff, 2009; Krippner, 2005). One important aspect of this financial dominance, which has received little attention in the literature, is how this proliferation of fetish capital is making its imprint on social consciousness. The expansion of capital and surplus value, on the basis of exploitation of labour, has not only become more concealed but also more spatially removed through the globalized production process. These two aspects in combination strengthen reification in the financial/​neoliberal age to an unprecedented degree, creating the fetish milieu that has made human capital a plausible explanation of differences in income. The explosion of finance was from the start inextricably connected with transfor­ mations in world money. Since 1971, the reserve currency of the world is based on an intricate relationship wherein the debtor status of the US in relation to the rest of the world is continuously ‘rolled over’, underpinning the financial power of the United States (Hudson 2003, xv; Gowan 1999, 20). ‘In aggregate’, as Norfield explains, this seigniorage role means that ‘the US economy does not exchange its own resources for a portion of its imports’ and that ‘foreign suppliers have delivered the commodities and held onto the bits of paper’ (Norfield 2016, 164). This circumstance, though, is a precondition for the consumer role of the US economy in relation to the rest of the world as it can keep going deeper into debt to sustain domestic consumption of imported goods (see Ivanovna 2010). Financial fetishism, in other words, became internal to world money from the moment gold was replaced by fictious capital (in the form of US state debt as backing behind the dollar). The move to fictitiously based world money increased the abstraction of value in yet another sense. Floating exchange rates, after the removal of the dollar from gold anchorage, created a new volatile situation for global value wherein increased

360   Kalle Blomberg opportunities for speculation on price movements and a higher exposure to risk gave impetus to financial innovation and an array of new financial instruments (McNally 2009, 46). Profits that can be gained through arbitrage and speculation have increased the disconnect between fictitious price and value globally. In this way, the rising fetishism of world money disguises the simultaneous deepening interdependence of global value relations and the underlying imperialist division of labour. Relatedly, the increasing abstraction of value is evident in the gigantic derivative market that has expanded in this new volatile context. In 2014, the notional value of outstanding OTC (over-​the-​counter) contracts stood at $630 trillion (about eight times global GDP, BIS 2019, 248). This phenomenon is intimately tied to the enhanced interconnectedness of global value relations and the higher risks these involve, even though the derivative itself signifies a higher degree of separation from those same relations. As LiPuma and Lee explain, the derivative commodifies abstract risk and it is the ‘totality that is priced, marketed and circulated’ (2005, 416). This, as they say, ‘amplifies the sociality of the object, the derivative, in ways that, quite paradoxically, mask its sociality by subsuming, equating and then quantifying all the varied forms of social relations material to the fact of specific concrete risks’(ibid). Additionally, it means that price movements are increasingly disentangling themselves from the original source of value. In the derivative it is not even the actual assets themselves that are being traded, only their attributes, as these now ‘can be separated out, priced and traded in their own right’ (Bryan and Rafferty 2006, 10). The possibility to reap monetary gains from what are essentially bets on price movements leads to the relative autonomy of the financial sphere and of the circulation of money capital (LiPuma and Lee 2005, 417). The self-​valorizing appearance of money has thus been brought to a new level with financial derivatives. Another phenomenon that adds to this increasing abstraction of the social relation of value is the creation of fictitious capital out of previously untapped income sources. Neoliberal financialization has intensified the process of capitalization—​the modelling of any repeated income stream into a form of capital on the basis of its expected future flows as something that can be turned into a security and sold in its own right (see Leyshon and Thrift 2007). As suggested above, such a capitalization process presupposes an increasing fetishism which makes the differences between income sources disappear. One consequence of this capitalization is that labour income in the core of the global economy has started to take on features of capital. As financial forms increasingly come to mediate even the reproduction of labour power itself, one argument advanced in the literature is that this financialization of labour income ‘constitutes labor as a form of capital’ (Bryan et al. 2009, 462). However, it is important to remember that labour here is being turned into a specific kind of fictitious capital. What is glossed over in the financial form is that this labour as fictitious capital necessarily maintains a paradoxical relation to the exploitation of labour and the source of surplus value (see Soederberg 2011). Since labour income is deprived of the capacity to extract surplus value, interest payments eat into already realized value in the money form. Such payments constitute a form of financial expropriation that takes place in the sphere of circulation and ‘involves existing flows of money and value, rather than new flows of surplus-​value’ (Lapavitsas

Tertiarization, Financialization, and Economic Imperialism    361 2009, 131). But since this difference is erased in the financial form, fictitious capital of labour income adds to capital fetishism in the financialized core, as capital therein (more than ever) seems to confront only capital and not labour. Nevertheless, no matter in what form, financial profits are still dependent on surplus value extracted from labour in production. As Norfield argues, even if the price of the securities on the financial markets depends on factors like demand and interest rates, nothing is produced there, so in the last instance ‘all of its profits, as well as its costs, are a deduction from the total surplus value produced elsewhere’ (2016, 144–​145). Financial transactions can only move value in the already realized form of money. On the other hand, as long as the price of fictitious capital can be successfully realized in a sale it constitutes ‘a claim on society’s resources, even if no extra resources have been created’ (147). Although trading revenues and prices of the financial security in this way are not directly related to surplus, the only independent source of profit that can be generated in the financial sphere is a form of profit-​upon alienation—​in other words what one wins the other loses (Lapavitsas and Levina 2011, 16). This is the purely monetary profit that can be gained from selling financial instruments at higher prices than they were bought at. The real question then is where the surplus money spent on financial instruments comes from, since that is what ultimately sustains the expansion of finance. Non-​financial corporations have since the 1980s increasingly used financial markets ‘as an outlet for “investments in financial assets” ’ rather than as a source for financing their productive activities (Orhangazi 2008, 81). This has provided a steady flow of excess money surplus into the financial sphere. ‘Unable to find profitable outlets for their investment-​seeking surplus within the productive economy’ Foster and Magdoff explain, ‘corporations/​capitalists sought to augment their money capital by means of financial speculation, while the financial system in its turn responded to this increased demand for its ‘products’ with a bewildering array of new financial instruments—​including stock futures, options, derivatives, hedge funds etc. The result was the rise by the 1980s of a financial superstructure that increasingly took on a life of its own’ (Foster and Magdoff 2009, 72). The new financial superstructure built in this way could thus absorb some of the realized surplus in the money form. But in the era of globalized production the problem of surplus absorption has only deepened because of an ever larger surplus value extracted from super-​exploited labour (see Foster and McChesney 2012, 151; Amin 2013, 21). Global value chains and outsourcing of production have created huge markups and excess money capital that companies increasingly have channelled into financial investments (Milberg 2008, 435). Financial innovation and a growing supply of financial products during the last decades have led to a profusion of such opportunities. In this way, money capital can keep on circulating in the financial sphere, inflating the prices of the fictitious capital there and seemingly valorize itself without the mediation of the labour process. This financial fetishism that has characterized the development in the imperialist core in the last decades buries the real source of value ever deeper in a way that lends phenomenal support to the concept of human capital. Profit seems to arise magically from

362   Kalle Blomberg prices of different kinds of capitals—​labour power included. It is the specific illusory property of money to generate more money out of itself (summed up in the financial formula M-​M’) that here is being transferred to the category of labour, making its income indistinguishable from the income to capital. Both seem to arise as interest on a certain kind of underlying capital lent out in the economic process-​and each consequently only receives an income in proportion to size and contribution. This fusion of income sources through the financial form offers clues to why the concept of human capital has gained traction although it systematically misrepresents the real mechanism at work.

Consumption of Value in the Core The heightened fetishism of value in the financialized core obscures the complex set of interconnections that underlie globalized productivity and value creation in the neoliberal era. This fetishism underpins the illusion that value and wealth correspond to the human capital content of activities taking place in these high-​income countries themselves, hiding both the unequal ecological exchange and the exploitation of labour that this value is intrinsically bound up with. It is a central contradiction of the age that the intensifying global value relations go hand in hand with increasingly abstract forms of value exchanged in the sphere of circulation. These financial forms appear as independent self-​valorizing things—​a property that thenceforward can be assigned to anything that has a price, can be converted into money, and is associated with a repeated stream of money. Beneath this appearance, however, hides a different reality: the highly paid sections of the global labour force, who have increased their share of income distribution during the last decades, are paid out of surplus extracted elsewhere in the global economy. This exploitation, together with the ecological degradation connected with it, is displaced through the mediation of money. Far from being the most productive labour, I argue that it is precisely because these human capital intensive sections are not productive in the capitalist sense that they can be paid high wages, rooted in the fact that they play a largely consumptive rather than productive role in the imperialist division of labour. The seed of financial fetishism is present already in the money exchange between labour and capital. The concealment of the social relation of capital starts in the conversion of the alienated labour product into money because at the point when labour ‘buys from the capitalist’ then ‘in his money, every trace of the relationship and of the operation by means of which it was obtained has disappeared. He confronts the capitalist in circulation simply as M [money]’ (Marx 1986, 354). So, it is ‘this ultimate money form of the world of commodities’, as Marx pointed out, ‘that actually conceals, instead of disclosing, the social character of private labour, and the social relations between individual producers’ (Marx 1996, 86). The real abstraction inherent in the money form in turn makes it possible for things that are not actually commodities—​that is, alienated

Tertiarization, Financialization, and Economic Imperialism    363 products of the labour process—​to have a price (Marx 1994, 115). Anything can subsequently be turned into a fictitious commodity by being converted into money even though it was ‘not produced in order to be sold’ (Jessop 2015, 24). Labour itself can be seen as a fictitious commodity in this regard. The price of labour, as Marx explains, is in fact an ‘irrational expression’ since value is precisely what is given up as an alienated product by labour: ‘The “irrationality” consists in the fact that labour itself as a value-​ creating element cannot have any value, nor can therefore any definite amount of labour have any value expressed in its price, in its equivalence to a definite quantity of money’ (Marx 1997, 36). The wage instead refers to the part of value that labour is able to buy into (capture) through its price. And, as Marx writes, in ‘order to sell a thing, nothing more is required than its capacity to be monopolised and alienated’ (Marx 1998, 627). So that which determines the price of the fictitious commodity of labour, as with other things without value but with price, is the ability to monopolize the “thing” and buy into a share of the alienated labour product (value) in proportion to this ability. This means that rather than being proportional to value produced, as the human capital theory holds, the wage or the price of labour refers to the value of the commodities that go into consumption and reproduction of labour power because ‘it produces wealth, not in proportion to the exchange value it produces, but in proportion to its own exchange value’ (Marx 1989a, 105). Therefore, it is more accurate to say that labour is paid in relation to what it consumes and not to what it produces (Cope 2019, 115). It is the conversion of the fictitious commodity of labour into money that dispels this relation altogether. Thereby the generative mechanism that lies behind the expansion of capital as a social relation, and the inequality that is inseparable from it, also disappears. Value, and thereby the social relation of capital, is fundamentally reproduced in the difference between necessary labour time as represented by the price of labour power and the surplus labour time embodied in the alienated product in the form of value (Marx 1994, 131). The extent by which the latter exceeds the former defines the estranged form of productivity under capitalism. Today, when the capital-​labour relation increasingly takes the form of capital centred in the North and super-​exploited low-​wage labour in the South (Smith 2015, 85), this relation between necessary and surplus labour time is a globalized phenomenon. During the neoliberal period, since the 1980s, global productivity has increased faster than the compensation of labour as visible in the declining share of labour income (UNCTAD 2013, p. 14; ILO 2019, 67). Labour as a whole, in other words, has captured a decreasing share of global value through its fictitious price. At the same time the labour income distribution has become increasingly unequal and skewed to the top high-​income earners. Behind this observed pattern of inequality in labour income is the fact that labour performs two different roles essential to the reproduction of capital, one as consumer and one as producer -​roles that are bound to come into contradiction with each other. As Marx highlights, as much as the individual capitalist strives to keep the wages of his own productive labourers as low as possible, he has the opposite interest in relation to the rest of the labour force which serves as the basis for the consumer demand in money

364   Kalle Blomberg for his products (Marx, 1986, 346). The reproduction process of capital, thus, consists of two distinct but interconnected phases: one of production and one of realization of the value produced. However, the money form eliminates this difference and creates the phenomenal ground for the illusion that all labour (and all other factors of production) is remunerated in accordance with the value it produces. Such a perspective misses that it is precisely in the relation between these two separate phases that capitalist productivity and value emerge. Neoliberalism has witnessed an intensified quest for lowering necessary labour time by outsourcing and offshoring production to low-​wage countries in the south. ‘The socially necessary labour costs associated with actual manufacturing labour globally are now’, as Suwandi writes, ‘defined by unit labour costs in the South rather than the North, while the realization of value is primarily determined by the sales conditions in the North rather than the South’ (Suwandi 2019, 156). The central mechanism here is the often-​mentioned global labour arbitrage, where multinationals through global value chains take advantage of differences in labour income to move production to places in the global economy where unit labour costs are lower (Smith 2016; Suwandi 2019). Decreasing the price of labour power relative to the commodity value realized in the consumer markets in the core, enables the multinationals to reap a larger surplus value and to achieve the larger markups observed in recent decades. And by ‘increasing the profit rate of companies’, a World Bank report notes, ‘GVCs also generate a force that results in a lower share of an economy’s income being paid to labor’ (World Bank 2020b, 86). As suggested previously, the super-​exploitation of low-​wage labour, fundamental as it is, is only one side of the reproduction process of capital. The other side is that the larger surplus value extracted in this way must be realized; in other words it must be converted from surplus value in the form of commodities to surplus value in the form of money. ‘The volume and the rate of profit’, is as Szlajfer points out, ‘determined by both the rate of exploitation and the conditions of realization of production, that is, by effective demand’ (1984, 274). This change of form presupposes that there exists an effective demand for the commodities external to the one represented by the price of the labour power producing it (see also Minsky 1982, xix). The shift of global production to low-​wage countries geared to export to the core has also required ever larger ‘external markets’ to realize the value produced by low-​wage labour in the South (Hart-​Landsberg 2013, 36). Considering capital as a totality, surplus value cannot be realized by money wages of productive labour in circulation because it is a precondition for the expansion of the surplus part of value in the first place that these eat into an ever decreasing share of total value. The demand in money corresponding to this latter surplus part, and which is able to realize it, must come from other sections of the economy that are less-​or non-​ productive in the strict capitalist sense (see Marx 1986, 346–​349). These different roles assigned to labour have been increasingly separated out on opposite sides of the global labour arbitrage in the last decades. The increasing fetishism that has accompanied this process disguises yet another distinction that Marx traced out with regard to wages—​whether labour is being paid out of

Tertiarization, Financialization, and Economic Imperialism    365 revenue or exchanged with capital. The obfuscation of this difference takes place in the conversion to the money form, which enables the conflation of use-​value with exchange value. It is this conflation that is responsible for the fact that everything that is sold on the market becomes per definition productive although ‘nothing is produced’ there (see Smith 2012, 96). This conversion into money is also automatically equated with value creation in standard neoclassical economics. Marx, however, distinguished between the case where money is ‘advanced’ as capital and where it is ‘expended’ out of revenue (Marx 1988, 135). In the latter case, money is paid to labour for its use-​value alone out of revenue (here I refer to capitalist use-​value). This differs from the case where money is expended as capital because here labour is paid for its own exchange value, which in other words means its own price as a fictitious commodity, attractive to the capitalist because of the difference between this price and the value of the commodities produced by that same labour power—​the difference that constitutes the surplus value extracted. The former kind of labour, which is paid for its use-​value alone, is still premised on the expansion of the surplus labour of the latter because the wage here is paid out from surplus value in the form of revenue (Marx, 1989a, 96). These different kinds of wages are in other words internally related. The growth of non-​production activities in the service economy during the course of capitalist development, therefore, relies on the increasing productivity of material labour (see Magdoff and Sweezy 1980, 7). At the same time, ‘non-​productive labour’ plays an increasingly essential part in realizing the ever-​ growing surplus value extracted from productive labour (Szljafer 1984, 308). It is against this background that we can begin to understand the observed growth of a human capital intensive service sector in the core and the increasing wage share associated with a specific segment of this sector. While non-​market services have been on the rise since 1970, around ‘two-​thirds’ of the expansion in service employment has taken place in market services, especially in areas like ‘financial intermediation, real estate, and business activity’ (IMF 2018, 138). The location of those activities in the economic process, where they assist in the circulation of value in various ways indicates that they perform a non-​productive role. The wages associated with these activities are therefore defined in relation to already realized value in the money form. As such these wages can be understood as a deduction from value in essentially the same way as other necessary circulation costs (see Marx 1998, 298). On the other hand, in relation to surplus value in the commodity form this service labour consumes rather than produces value, and doing so in proportion to how highly remunerated it is. To the extent that the price of the fictitious commodity of labour, i.e. the wage, deviates upwards from the global median, it eats into the surplus value produced by others elsewhere in the global division of labour. By comparing consumption level with contribution to global production for different income segments, Cope and Kerswell estimated that the top 20% of the income distribution actually consumes around 4.6 times more value than they produce (Cope and Kerswell 2016, 1063; 2019, 114; see also Amin 2013, 25). The top earners, usually associated with the largest human capital content and value added, are thus able to claim a much larger part of value than it gives up in the form of alienated labour. This applies especially to the top decile income group,

366   Kalle Blomberg which has captured an increasing share of total labour income during the neoliberal era. In 2017, this segment laid claim to 48.9% -​nearly half of total wage pay -​while 20.1% of it went to the decile below leaving 31.0% to the bottom 80% of the labour force (ILO 2019, 70). Rather than being a sign of their relatively higher level of marginal productivity, the inflated wages of the top represent the larger share of the surplus value that they can buy into through the monopolization of labour power as a specific capitalist use-​value. The money demand required for paying these higher wages has its source in the same excess surplus in the money form that enables the explosion of fictitious capital in the financial sphere, performing a similar absorbing function. It serves first as an outlet for excess money surplus and then in the possession of the wage owner it constitutes money demand for surplus in the commodity form produced by others. This often-​unrecognized condition contributes to making this higher labour income resemble the income of capital; a resemblance that is consummated in human capital as the default explanation for the same income inequality. Not only are the causes of this income inequality totally upended through the intensified fetishism in global value relations, but so also is the relation between the (essentially) consumptive role of high-​wage earners and the growing material resources needed to sustain it (so as to realize the surplus value connected with this position). Although an increasing part of the labour force in the core produces ‘immaterial products’, the obvious fact that they still consume ‘material products’ is often curiously neglected (Marx 1989a, 179). During the neoliberal period when intangible assets have gained importance in the core, the material flows globally have increased from 22 billion tons in 1970 to 70 billion tons in 2010 (Schandl et al. 2017), and high-​income countries consume around ten times (~25 tons) as much materials per capita as the poorest countries (2.5 tons) and two times the global average (~12.5 tons) (835–836). However far-​reaching the reliance on intangibles may be in these high-​income countries, there is -​in other words-​a ‘tangible’ materiality connected with the invisible consumption side of these economic activities. Yet, the relation between the two sides of the reproduction process of capital, as we have seen, is lost in the conventional perspective of value and wealth generation. Much of this high consumption in core regions such as Europe and North America is sustained through net imports of raw materials from regions such as Asia and the Pacific, which have conversely played the role of exporters of such materials (Schandl et al. 2017, 832). This hidden connection involves a relationship of unequal ecological exchange: less in terms of natural resources is exchanged for more, a material relation mediated by unequal exchange of time and labour input (see Foster and Holleman 2014; Hornborg 2013; Jorgensen 2006). Moreover, the displacement of environmental problems that goes hand in hand with this relation is emphasised by the fact that while the core accounts for several times larger per-​capita-​footprint than countries with the lowest footprints, ecological degradation is more concentrated in the latter group of countries (Jorgenson 2003). In this way money also obscures the deeper dynamic of time, labour, and space that these complex relationships involve. Value, as a specific alienated social relation, requires an ever-​larger material throughput to reproduce itself. Postone has aptly called

Tertiarization, Financialization, and Economic Imperialism    367 this the characteristic ‘treadmill effect’ of capital’s mode of production: it takes increasingly more material use-​values to realize the same total amount of abstract value, since although the measure of value remains the alienated labour hour, this measure itself is constantly being redefined and reconstituted by a larger output and scale of material production (1993, 288–​289). Today this ‘treadmill effect’ is primarily produced in and through the widening gap between necessary labour time, pressed down in low-​wage countries, and the concomitant surplus labour time realized in the consumer markets of the imperialist core. Productivity, in other words, is an exclusively relational phenomenon, as it enables the lowering of the fictitious price of labour or the necessary labour time in relation to the surplus part (Marx 1993, 133–​134). The common view that technology has made it possible to ‘save time’ allowing for the natural ‘progression’ in advanced economies towards human capital intensive activities is, therefore, deeply misguiding. In reality that ‘progression’ depends on unequal transfer of time and space from other parts of the global economy (see Hornborg 2013, 42). The whole set of relations between exploitation, degradation of nature, and consumption activated around this mechanism is completely lost in the money form. This is the basis, as we have seen, not only for the increasing prevalence of capital fetishism itself, but also for the ideological forms presented as theories of this development in mainstream economic discourse.

Conclusion In this chapter I have identified human capital, a central category of the tertiary shift in the core economies, as an ideological concept that legitimizes the hierarchical global division of labour, income inequality, and unequal ecological exchange. It has been nurtured under neoliberalism by an increasing financial fetishism that makes every income stream without exception seem like an interest payment proportional to an underlying capital. Modelled on this basis, labour power as a form of capital appears to be an independent source of value automatically responsible for its own remuneration. The concept hereby veils the deepening imperialist dependence that lies behind this social process of valorization; it mistakes remuneration for contribution of value when, in reality, a form of monopolized value capture is taking place. While this makes human capital an illusory category that systematically misrepresents social relations, it is crucial to recognize that the illusion nevertheless has ‘real effects’ on the reproduction of these same relations (Jessop 2015, 22). The theory naturalizes the social relations generating both global inequality and ecological degradation by obfuscating how these are intertwined in the global reproduction process of capital. If remuneration is proportional to any capability, it would be to the specific one that monopolizes labour power as a capitalist use-​value and through its (fictitious) price captures alienated labour (value) produced by others (primarily in the Global South). But this capacity, rather than an attribute of individuals turned into ‘enterprise units’

368   Kalle Blomberg and entrepreneurial selves as in human capital theory (Foucault 2008, 225–​226), is contingent on the specific position in the global division of labour and is internal to the reproduction process of capital. Here the ‘human capital’–​rich part of the global labour force receives its pay out of revenue in the realization phase. Their inflated wages are paid out of the already realized surplus value in money form, which subsequently turns into an external demand for realizing surplus value in the commodity form. This essentially consumptive role is directly associated with an increasing material throughput tied to ecological deterioration, a fact that immediately disappears in the money form. When this connection is retraced, however, it is hard not to recognize human capital as an illusory concept that signifies a fundamental, if only historically specific, social incapacity to relate both to one’s own species and the rest of nature in a sustainable way. At the same time, it is precisely this increasing separation that constitutes the source of value in the current mode of production. That this condition is ignored in the mainstream discourse on value and wealth production is not surprising as it tends to take for granted the reifying, absenting effects of money. Remaining within an abstract notion of value defined by the boundaries of those effects, one naturally fails to see that value in its capitalist form essentially consists in social capacity being given up as alienated labour (see Ollman 1976); implying a loss of control at the point of social production. Increasing productivity under such conditions can only mean the continual growth of an estranged form of social power with its characteristic ‘treadmill effect’ and environmental deterioration (Postone 1993). The immensely destructive consequences of such a development have become obvious in the Anthropocene. Yet, it is only an awareness of the generating mechanism of value rooted in alienated social power that has the potential to translate into real transformative agency and change.

Note 1. In 2017, services accounted for ~70% of value added across high-​income countries, up from a share of 65% twenty years earlier. During this time the share of manufacturing fell from 17.5% down to 14%. This pattern was also mirrored in employment where the share of people employed in services rose from 62% in 1991 to 74% in 2019 while the share in manufacturing decreased from 31% to 23% (World Bank 2020a).

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370   Kalle Blomberg Jorgenson, K. A. 2003. ‘Consumption and Environmental Degradation: A Cross-​National Analysis of the Ecological Footprint’. Social Problems 50, no. 3: 374–​394. Jorgenson, K. A. 2006. ‘Unequal Ecological Exchange and Environmental Degradation: A Theoretical Proposition and Cross-​National Study of Deforestation, 1990–​2000’. Rural Sociology 71, no. 4: 685–​7 12. Krippner, G. 2005. ‘The Financialization of the US Economy’. Socio-​Economic Review 3: 173–​208. Lange, Glenn-​Marie, Quentin Wodon, and Kevin Carey, eds. 2018. The Changing Wealth of Nations 2018: Building a Sustainable Future. Washington DC: World Bank. https://​ doi:10.1596/​978-​1-​4648-​1046-​6. Lapavitsas, C. 2009. ‘Financialised Capitalism: Crisis and Financial Expropriation’. Historical Materialism 17: 114–​148. Lapavitsas, C., and I. Levina. 2011. ‘Financial Profit: Profit from Production and Profit upon Alienation’. Research on Money and Finance. Discussion Paper no. 24, May: 1-​28. Leyshon, A., and N. Thrift. 2007. ‘The Capitalization of Almost Everything: The Future of Finance and Capitalism’. Theory, Culture, and Society 24, no. 7–​8: 97–​115. LiPuma, E., and Lee, B. 2005. ‘Financial Derivatives and the Rise of Circulation’. Economy and Society 34, no 3: 404–​427. Magdoff, H., and P. M. Sweezy, 1980. ‘The Uses and Abuses of Measuring Productivity’. Monthly Review 32, no. 2 (June): 1–​9. Marx, K., and Engels, F. 1986. ‘Economic Manuscripts of 1857–​1858’. Collected Works 28. London: Lawrence & Wishart. Marx, K., and Engels, F.1988. ‘Economic Manuscripts of 1861–​1863. A Contribution to the Critique of Political Economy’. Collected Works 30. London: Lawrence & Wishart. Marx, K., and Engels, F. 1989a. ‘Economic Manuscripts of 1861–​1863. A Contribution to the Critique of Political Economy’. Collected Works 31. London: Lawrence & Wishart. Marx, K., and Engels, F. 1989b. ‘Economic Manuscripts of 1861–​1863. A Contribution to the Critique of Political Economy’. Collected Works 32. London: Lawrence & Wishart. Marx, K., and Engels, F. 1993. ‘Economic Manuscripts of 1861–​1863. A Contribution to the Critique of Political Economy’. Collected Works 33, London: Lawrence & Wishart. Marx, K., and Engels, F. 1994. ‘Economic Manuscript of 1861–​ 1863 (Conclusion). A Contribution to the Critique of Political Economy’. Collected Works 34. London: Lawrence & Wishart. Marx, K. and Engels, F.1996. ‘Capital: A Critique of Political Economy, Volume I’. Collected Works 35. London: Lawrence & Wishart. Marx, K. and Engels, F.1997. ‘Capital: A Critique of Political Economy, Volume II’. Collected Works 36. London: Lawrence & Wishart. Marx, K and Engels, F. 1998. ‘Capital: A Critique of Political Economy, Volume III’. Collected Works 37, London: Lawrence & Wishart. McNally, D. 2009. ‘From Financial Crisis to World-​Slump: Accumulation, Financialisation, and the Global Slowdown’. Historical Materialism 17: 35–​83. Milberg W. 2008. ‘Shifting Sources and Uses of Profits: Sustaining US Financialization with Global Value Chains’. Economy and Society 37, no.3: 420–​451. Minsky, H. 1982. Can ‘It’ Happen Again:. Essays on Instability and Finance. New York: M. E. Sharpe, Inc. Norfield, T. 2016. The City: London and the Global Power of Finance. London: Verso.

Tertiarization, Financialization, and Economic Imperialism    371 OECD. 2013. Supporting Investment in Knowledge Capital, Growth and Innovation. Paris: OECD Publishing. https://​doi.org/​10.1787/​978926​4193​307-​en. OECD. 2019. OECD Employment Outlook 2019: The Future of Work. Paris: OECD Publishing. https://​doi.org/​10.1787/​9ee00​155-​en. Ollman, B. 1976. Alienation: Marx’s Conception of Man in Capitalist Society, London: Cambridge University Press. Orhangazi, Ö. 2008. Financialization and the Us Economy. Cheltenham: Edward Elgar. Postone, M. 1993. Time, Labor, and Social Domination: A Reinterpretation of Marx’s Critical Theory. New York: Cambridge University Press. Powell, W. W., and K. Snellman. 2004. ‘The Knowledge Economy’. Annual Review of Sociology 30 (August): 199–​220. Sanyal, S. 2014. ‘The Random Walk: Mapping the World’s Financial Markets 2014’. Deutsche Bank Research. April: 1-​23. https://​etf.dws.com/​DEU/​DEU/​Downl​oad/​Resea​rch-​Glo​bal/​ 47e36​b78-​d254-​4b16-​a82f-​d5c5f​1b1e​09a/​Mapp​ing-​the-​World-​s-​Financ​ial-​Mark​ets.pdf. Schandl H., M. Fischer-​Kowalski, J. West, S. Giljum, M. Dittrich, N. Eisenmenger, et al. 2017. ‘Global Material Flows and Resource Productivity: Forty Years of Evidence’. Journal of Industrial Ecology 22, no. 4 (August): 827–​838. https://​doi.org/​10.1111/​jiec.12626. Schultz, T. W. 1961. ‘Investment in Human Capital’. American Economic Review 51, no 1 (March): 1–​17. Smith, J. 2012. ‘The GDP Illusion: Value Added versus Value Capture’. Monthly Review 64, no. 3: 86–​102. Smith, J. 2015. ‘Imperialism in the Twenty-​First Century’. Monthly Review 67, no. 3 (July–​ August): 86–​102. Smith, J. 2016. Imperialism in the Twenty First Century: Globalization, Super-​Exploitation, and Capitalism’s Final Crisis. New York: Monthly Review. Soederberg, S. 2011. ‘Cannibalistic Capitalism: The Paradoxes of Neoliberal Pension Securitization’. Socialist Register 47: 224–​241. Suwandi, I. 2019. Value Chains: The New Economic Imperialism. New York: Monthly Review Press. Szlajfer, H. 1984. ‘Economic Surplus and Surplus Value under Monopoly Capitalism’. In Faltering Economy, edited by J. B. Foster and H. Szlajfer: 263–​293. New York: Monthly Review Press. UNCTAD. 2013. ‘Adjusting to the Changing Dynamics of the World Economy’. Trade and Development Report. Geneva: United Nations. https://​unc​tad.org/​sys​tem/​files/​offic​ial-​ docum​ent/​tdr​2013​_​en.pdf. World Bank. 2011. The Changing Wealth of Nations: Measuring Sustainable Development in the New Millennium. Washington, DC: The World Bank. https://​doi:10.1596/​978-​0-​8213-​8488-​6. World Bank. 2020a. ‘Services, Value Added (% of GDP)—​High Income’. World Development Indicators [World Bank national accounts data, and OECD National Accounts data files]. https://​data.worldb​ank.org/​indica​tor/​NV.SRV.TOTL.ZS?locati​ons=​XD. World Bank. 2020a ‘Manufacturing, value added (% of GDP)—​ High income’ World Development Indicators [World Bank national accounts data, and OECD National Accounts data files]. https://​data.worldb​ank.org/​indica​tor/​NV.IND.MANF.ZS?locati​ons=​XD. World Bank. 2020a ‘Employment in services (% of total employment) (modeled ILO estimate)—​High income’ World Development Indicators [based on data from International Labour Organization, ILOSTAT database. Data retrieved 21 June2020]. https://​data.worldb​ ank.org/​indica​tor/​SL.SRV.EMPL.ZS?locati​ons=​XD.

372   Kalle Blomberg World Bank. 2020a ‘Employment in industry (% of total employment) (modeled ILO estimate)—​High income’ World Development Indicators [based on data from International Labour Organization, ILOSTAT database. Data retrieved 21 June 2020]. https://​data.worldb​ ank.org/​indica​tor/​SL.IND.EMPL.ZS?locati​ons=​XD. World Bank. 2020b. World Development Report 2020: Trading for Development in the Age of Global Value Chains. Washington, DC: World Bank. https://​doi:10.1596/​978-​1-​4648-​1457-​0. License: Creative Commons Attribution CC BY 3.0 IGO. World Inequality Lab. 2018. ‘World Inequality Report’. https://​wir2​018.wid.world/​files/​downl​ oad/​wir2​018-​full-​rep​ort-​engl​ish.pdf.

Chapter 21

The Hegemony of t h e Gl obal Expl oi tat i on of Hum ans and Nat u re The Imperial Mode of Living Ulrich Brand and Markus Wissen

Introduction Economic imperialism is not just constantly reproduced through capitalist commodity production and distribution and their intrinsic relationship to highly unequal power relations and to imperatives such as growth and development. Economic imperialism has an everyday dimension in the sense that wage earners might also benefit from imperialist policies and relations, that certain consumption patterns are enabled by economic imperialism, and that this is accepted to a large extent even by those who are exploited and supressed. For instance, consumerism and consumer culture depends upon the import of underpriced commodities as well as on human and natural resources, not exclusively but particularly from the dependent countries of the world economy. In many respects, citizens of the advanced capitalist countries benefit from the transfer of undervalued goods and services from the countries of the Global South. And these everyday dimensions of capitalism are secured politically at various spatial scales, from the local to the international. We propose the term ‘imperial mode of living’ in order to better understand this constellation. A crucial reference for us is the concept of hegemony. Antonio Gramsci wrote almost one hundred years ago: ‘Obviously, the fact of hegemony presupposes that the interests and tendencies of those groups over whom hegemony is exercised have been taken into account and that a certain equilibrium is established’.1

374    Ulrich Brand and Markus Wissen

The Imperial Mode of Living: The Relevance of the Concept We call a mode of living and production that depends on inner-​societal and global relations of power and exploitation imperial.2 With this term we want, first, to make visible the forces that facilitate the everyday life of production and consumption of people in the Global North, as well as of a growing number of people in the Global South, without necessarily passing the threshold of conscious perception or crossing into critical reflection. Our aim is to understand how normality is produced precisely by masking the destruction in which it is rooted. In other words, the term ‘imperial mode of living’ helps to understand the practices of everyday life and the social and international relations of power that undergird them, generating and maintaining domination over human beings and nature. With the term ‘imperial mode of living’ we want to explain, second, how and why this sense of normality is produced in a time when problems and crises are accumulating, intensifying, and overlapping in so many different areas: social reproduction, ecology, the economy, finance, geopolitics, European integration, democracy, and so forth. In this regard, the imperial mode of living seems central to us. It is a paradox located in the very centre of multiple crisis phenomena: this mode of living affects and exacerbates worldwide crises such as climate change, the destruction of ecosystems, social polarization, widespread impoverishment, the destruction of local economies, and geopolitical tensions which seemed until recently to have been overcome with the end of the Cold War. Furthermore, this mode of living creates these crisis phenomena. At the same time, however, it stabilizes social relations in the countries where its benefits are concentrated. Thus, it would have been vastly more difficult after the deep economic crisis of 2007 to ensure the reproduction of the lower social classes of the Global North without the cheap food produced elsewhere at such high cost to humans and nature. This is not meant at all to downplay the social inequality that was accelerated in the Global North by this crisis.3 Third, we would like to show how contemporary crises and conflicts are a manifestation of the contradictions at the heart of the imperial mode of living. That so many problems are intensifying today can be attributed to the fact that this mode of living is in the process of succeeding even at the cost of self-​destruction. By its nature, it implies disproportionate access to natural and human resources on a global scale—​in other words: an ‘elsewhere’. It also demands that others abstain from their own proportional share. The less these others are prepared to accept this situation, or the more they themselves depend on access to an ‘elsewhere’, to external resources and the imposition of costs on this external world, the sooner the imperial mode of living will undermine the very conditions of its existence.

The Hegemony of the Global Exploitation of Humans and Nature    375 And this is exactly the situation we find ourselves in today. As emerging countries such as China, India, and Brazil develop as capitalist economies and their local middle and upper classes adopt the ‘northern’ images and practices of the ‘good life’ as their own, so these countries’ demand for resources and their need to externalize costs, such as CO2 emissions, grows. Consequently, they become the Global North’s competitors, not only in economic but also in ecological terms. The results are eco-​imperial tensions that crystallize in global climate and energy politics, for example. Additionally, fewer and fewer people in the Global South will be prepared to risk their own lives for the sake of the North’s imperial mode of living. The current movements of refugees and migrants should also be seen in this light. They furthermore emphasize the unbroken attraction that the imperial mode of living possesses among those who until now have not been able to participate in it: refugees seek security and a better life, which is more easily accomplished under the conditions of the mode of living in the centres of capitalism than anywhere else. This also explains why the repressive and violent sides of the imperial mode of living—​such as conflicts over raw materials and the rejection of refugees—​appear so clearly nowadays. The imperial mode of living is based on exclusivity; it can sustain itself only as long as an ‘outside’ on which to impose its costs is available. But this ‘outside’ is shrinking as more and more societies access it and fewer people are willing or able to bear the costs of externalization processes. The imperial mode of living is thus becoming a victim of its own appeal and universalization. All that remains for the centres of capitalism is to try to stabilize their mode of living through isolation and exclusion. The forces that execute this policy, ranging from social democrats to liberals and conservatives, generate precisely what they take to be their enemy: authoritarianism, racism, and nationalism. That reactionary forces are on the rise in many places is also due to their ability to present themselves as the better guarantors of the exclusivity of the imperial mode of living, an exclusivity that is now under threat. And, by contrast to their bourgeois establishment competitors, the authoritarian, racist, and nationalist groups can both offer to consign their supporters to a subordinate position and, at the same time, free them from their post-​democratic passivity. Nora Räthzel has aptly termed this mechanism ‘rebellious self-​subjugation’, referring to the racism that emerged in Germany in the early 1990s. People are enabled ‘to establish themselves as agents in circumstances that are beyond their control’.4 If this diagnosis is correct, then—​fourth—​demands for an alternative would have to be phrased more radically than has been the case hitherto in the mainstream socioecological debate. It is, then, no longer enough to push for a ‘green revolution’5 or a new ‘social contract’ and,6 despite all the strong rhetoric, to leave the political economy of the problem as well as the imperial mode of living itself untouched. Nor will it be enough to hope, implicitly or explicitly, that official politics will finally draw the correct conclusions from the irrefutable and scientifically ever more exactly proven fact of an ecological crisis—​this only disregards the reality that the supposedly governing body of the ‘state’ is in no way a potential challenger to the imperial mode of living, but, rather, an essential aspect of safeguarding it institutionally.

376    Ulrich Brand and Markus Wissen Instead, the ecological crisis must be recognized for what it is: a clear indication that the Global North’s norms of production and consumption, which evolved with capitalism and have now become universal, can be maintained in their ecologically modernized form only at the cost of ever more violence, ecological destruction, and human suffering, and, at that, in an ever-​smaller part of the world. We now see an unprecedented accumulation of contradictions as a result of an authoritarian politics that is increasingly based on the exploitation of nature and on social inequality. The reproduction of society and its biophysical foundations can be guaranteed less and less by the capitalist growth imperative. We are living through a crisis of crisis management, a crisis of hegemony and the state. Proceeding from this insight, the manifold existing alternatives must be surveyed for their possible generalization and connection, such as to increase their social efficacy: to what extent do movements for energy democracy, food sovereignty, and a solidarity economy indicate a process of societalization that is democratic in a strong sense, that is, grounded in the principle that all people have equal rights in decisions whose consequences affect them? This is, in our view, one of the central questions, because it points to a principle of social organization to which the imperial mode of living is diametrically opposed.

Outlining the Concept The core idea of the concept is that everyday life in the capitalist centres is essentially made possible by shaping social relations and societal relations to nature elsewhere, namely, by means of (in principle) unlimited access to labour power, natural resources, and sinks—​ecosystems (such as rainforests and oceans in the case of CO2) that absorb more of a particular substance than they emit into their environment—​on a global scale.7 The capitalist centres fundamentally depend on the way in which societies elsewhere and their relations to nature are organized so that the transfer of the products of (often cheap) labour and elements of nature from the Global South to the economies of the global North is guaranteed. Conversely, the imperial mode of living in the Global North structures societies in other places in a decisively hierarchical way. We choose the vague expression ‘elsewhere’ quite consciously. Many necessary everyday items are tied to a range of activities that are invisible during their purchase, consumption and use: the origin of raw materials used in household appliances, medical devices or transport; water and energy infrastructures; the working conditions under which these materials are extracted or textiles and food are produced; and the expenditure of energy required for these. ‘Cultural products’, such as print or digital media, are also part of this invisible economy. The invisibility of the social and ecological conditions is precisely what enables us to experience the buying and use of these products as a natural given. ‘Food from nowhere’ is what the agrarian sociologist Philip McMichael has called this strategy of obscuring the origins and production of foodstuffs, in which the spatio-​temporal

The Hegemony of the Global Exploitation of Humans and Nature    377 unlimited availability of the latter is normalized.8 Examples include grapes from Chile offered in northern cafeterias in winter, tomatoes grown and picked by undocumented migrant workers in California for the North American market or by illegalized workers in Andalusia for the northern European market, and shrimp for the Global North that are farmed by destroying Thai or Ecuadorian mangrove forests. But it also includes the disastrous environmental conditions and cheap labour power of Romanian workers in German meat factories that ensure cheap meat in Germany and neighbouring countries. The concept of the ‘imperial mode of living’ points towards the norms of production, distribution, and consumption built into the political, economic, and cultural structures of everyday life for the populations of the Global North.9 And it works, increasingly, in the countries with ‘emerging economies’ of the Global South, as well. However, we mean not only material practices but also, and especially, the structural conditions and guiding social principles and discourses that make these practices possible. To put it pointedly: the standards of a ‘good’ and ‘proper’ life, which often consists of the imperial mode of living, are shaped by everyday life, even when they are a part of comprehensive societal relations, and especially of material and social infrastructures.10 In this respect, our concept of a ‘mode of living’ stands in the tradition of Antonio Gramsci and regulation theory, as we assume that a contradictory social form such as capitalism can only reproduce itself if it is embedded in everyday practices and common sense, thereby becoming, so to speak, ‘natural’. With the adjective ‘imperial’ we want to emphasize—​now moving beyond Gramsci—​the expanding global and ecological dimensions of this mode of living (again, also within the countries of the Global North).11 The imperial mode of living is an essential moment in the reproduction of capitalist societies. It establishes itself in discourses and world views, it cements itself in practices and institutions, and it is the result of social conflicts in civil society and in the state. It is based on inequality, power, and domination; it sometimes relies on violence; and at the same time it also generates these forces. It is not separate from its subjects. Indeed, it shapes subjects and their common sense, normalizes it and enables their capacity to act: as women and men, as individuals who maximize use and feel superior to others, as people striving for particular forms of the good life.12 The adoption of the hegemonic worldview coincides with the constitution of the subject. By orienting and directing myself, I subjectify myself. Integrating hegemonic views of the world into common sense is not simply a matter of being forced into it, it is a form of self-​activity, precisely because hegemony is not the same as coercion and is based on consensus.13

This also means, however, that this mode of living is contested. There is a constant influx of alternative and subversive interpretations and practices, the integration of demands and alternative desires. In this respect, every mode of living always contains a contradictory simultaneity of subjugation and appropriation.14 The imperial mode of living links people’s everyday life with the partly globalizing societal structures. It intends to make visible the social and ecological prerequisites of the

378    Ulrich Brand and Markus Wissen dominant norms of production, distribution, and consumption, as well as the relations of power and domination behind them. And it clarifies how domination is normalized in neocolonial North–​South relations; in class, gender, and racialized relations; and in the everyday practices of consumption and production, to the point where these are no longer perceived as such. The concept thus also implies the mode of production and takes into account the forms taken by capital and labour organizations in their relation to the norms of consumption.

Everyday Practices and Social Structures The concept of the imperial mode of living emphasizes that ‘everyday practices like going on holiday, driving or walking, nutrition, water or energy consumption and other areas of everyday life are shaped primarily by habits, routines, and rules of daily life’.15 In determining the acceptance or rejection of everyday practices, immediate perceptions, affects and emotions, as well as guiding themes—​such as the pre-​eminence of consumerism, eating meat and private car ownership—​are important. The reality of these practices presents obstacles to any alternatives. To put it pointedly: unsustainability is a very practical fact that is mostly lived unconsciously. But living ‘unconsciously’ does not mean that the imperial mode of living is not connected to multiple intentional strategies for its continuation. There can be no doubt about that—​think of the investment in automobile and animal factories or coal-​based power plants, of free trade policies and marketing slogans that encourage people to shop themselves to happiness. Or think of the fact that in climate policy, complex ecosystems such as rainforests are reduced to their function as CO2 sinks; think of the construction of infrastructure projects such as ports, which first made the global trade of raw materials possible; or think of saving for the next car. But these myriad forms of intentional actions and the strategic decisions that precede them—​such as government policy or business management—​have a history that begins long before the moment of action and decision making, a history of which individuals do not need to be aware. The ‘truth of the interaction’, as Pierre Bourdieu puts it, ‘is never entirely contained in the interaction’.16 Activities and decisions are embedded in a societal context that allows them to be seen as rational or normal, a context inscribed into the subjects who carry out or make these decisions. In order to understand these interactions and the decisions behind them, we must take account of the habitus, the ‘class culture turned into nature, that is, embodied’, as well as the internalized social relations of the subjects themselves.17 The activities and decisions can then be seen as acts of ‘recognition’ and of ‘misrecognition’, as conscious actions that depend on a variety of unconscious preconditions.18 Thus purchasing a car is unquestionably a conscious action. If it is understood, however, merely as an act of rational choice that follows from an individual

The Hegemony of the Global Exploitation of Humans and Nature    379 cost–​benefit analysis, then a crucial dimension is missed, namely that the act of purchasing essentially results from infrastructural and institutional conditions as well as from dominant imaginations which have been habitually internalized.19 A road system built to the detriment of public transport, government incentives for buying and driving personal vehicles, dominant images of masculinity and representations of individual freedom, value chains that allow for the cheap acquisition of resources and labour from elsewhere,20 lax emission standards, the competition for social status via automobiles—​all these and other factors, existing beyond the individual, and which the individual is not required to know, influence the decision to make a purchase. These conditions lend the decision its ‘rationality’, allow it to seem normal, and erase the preconditions that justify and reproduce hegemony, including its structural and sometimes overt violence.21 The category of habitus, by mediating between conscious action and its unconscious preconditions, also allows the levels of everyday activity to be linked to those of societal structures. The following interrelations are important here: capitalism reaches its economic and social productivity in the centres—​and increasingly in the ‘emerging countries’—​by virtue of the fact that labour power and nature are first valorized and monetized elsewhere and values and matter are then transferred to the centres. Through this mechanism, the various living conditions are linked with one another by the global exchange of commodities—​and not only in terms of end products, but also in terms of intermediary and primary products such as raw materials. ‘[A]‌tractor or railway engine would simply not be feasible were it not for the uneven ways in which human time and natural space are priced in global society’.22 Marx had already pointed out that cheap materials were essential for capitalist development, particularly due to, on the one hand, the accompanying transfer of value to the capitalist centres and, on the other, the importance of the falling price of raw materials as a ‘counteracting tendency’ to the tendency of the rate of profit to fall.23 These market-​mediated forms of wealth transfer are accompanied by forms of dispossession that are achieved politically, legally or by force, as in the privatization of the commons or public property. These dispossessions crucially result from pressure applied by companies in the Global North. Often, they go hand in hand with displacement, impoverishment, and destruction of nature. The designation of CO2 sinks—​or rather the reduction of ecosystems to their ability to absorb CO2—​sometimes contains elements of dispossession and market-​oriented exchange. When, for example, a piece of land extensively used by small farmers in the Global South is declared ‘uncultivated land’ and the established right of customary use is transformed into a formalized legal system that marginalizes the previous users, then this is an act of dispossession.24 If the same piece of land is sold to an energy company from the Global North, which sets up a eucalyptus plantation for the sake of CO2 absorption, thereby fulfilling a part of its duties to reduce CO2 emissions, then it is integrated into the international emissions trading system.25 This is thus a market-​mediated process. Land previously used by the local community is subjected to an eco-​capitalist logic of exchange through a process of dispossession, privatization, and integration into

380    Ulrich Brand and Markus Wissen the global market. The previous users are marginalized, and the ecological complexity of the land is reduced to a highly questionable form of climate protection in the interest of stabilizing the Global North’s ecologically destructive norms of production and consumption. The powerful metaphor of the ‘ecological footprint’ is,26 in a way, the expression of this ecologically unequal exchange, as the country-​or social-​group-​specific ‘footprints’ are extremely different from one another and make clear that some countries live at the ecological expense of others. The appropriation of natural resources and labour power (especially in the Global South), as well as the disproportionate use of sinks located predominantly in the Global South, therefore take the form of market-​mediated exchanges and/​or legal, political, and forced dispossessions. In social, economic, and ecological terms, these processes are highly unequal and are shaped by power and domination. Not all people or groups can rely equally on labour power and resources ‘elsewhere’, particularly in other parts of the world (but also within their respective societies). Rather, this access varies according to different lines of inequality: class, gender, and race map especially closely onto lines of neocolonial North–​South relations. The imperial aspect of this inequality is expressed in the monumental and generally destructive access to the labour power of other humans and nature.27

On the Use Value of the Concept In the following, we summarize in nine points the political and scholarly value offered by the concept ‘imperial mode of living’. First, the concept clarifies the intimate link between the capitalist mode of production, everyday practices, and forms of subjectivity—​ including both paid work and forms of unpaid labour. Strategies of valorization and exploitation of capital, and the structures and processes of state policies, as well as the dominant power relationships, are articulated in mechanisms of thinking and acting, are inscribed in people’s identities and bodies, and are chosen and desired. They thus penetrate the pores of everyday life. Second, with the concept of the imperial mode of living—​which, thanks to the adjective ‘imperial’, joins a strongly political semantic—​the finger of moral disapprobation is not to be pointed at people who have and drive a car, or at those who, without questioning it, take flights over short distances despite the availability of alternative transport, or at those who eat industrially produced meat. These behaviours should be criticized and changed—​through individual behaviour, legal restraints, or even prohibitions, while also making alternatives possible on a societal level. But this is not the scope of the concept that we employ politically and analytically. In this sense the core starting point for social change is not ‘taking personal responsibility’ and making an individual choice ‘between moral and immoral behaviour’.28 Rather, it is primarily a question of pointing out the social structures and patterns of inequality that reproduce the imperial mode of living.

The Hegemony of the Global Exploitation of Humans and Nature    381 Third, our concept points towards an important cause of the fact that resource-​ depleting and emission-​producing practices display a high durability despite widespread awareness of the ecological crisis. The concept shows that social reproduction above all in the capitalist centres is essentially achieved through access to the labour force and the natural resources elsewhere, which has had a stabilizing effect during the crisis of neoliberal globalization. Moreover, it indicates that social relations in other places—​even through their inclusion in the world market—​are structured for these purposes. Fourth, the concept shows why the established forms of global environmental politics since the 1990s have been ineffective. We are living through a veritable crisis in crisis management, as the imperial mode of living plays no role whatsoever as a core element of current policies—​best expressed by the annual Conferences of the Parties to the Framework Convention on Climate Change. Thus, for example, the 2015 Paris Agreement contains not a single reference to fossil energy sources as the main cause of climate change. The dominant forms of national environmental politics also take place within a tunnel of ecological modernization and do not approach the problematic modes of production and living.29 For that reason, the concept of the imperial mode of living discourages high expectations from governmental and intergovernmental policies regarding the required fundamental socioecological transformation—​without relieving them of their responsibility or being content to look cynically at the established forms of policy. For it is the dominant relationships of social forces and orientations that lie at the heart of current societal nature relations; these cannot be overcome through state policy alone. This fact is also reflected in the ‘progressive governments’ of Latin America, which have largely failed to develop any alternatives to world market-​oriented neo-​extractivism, and therefore continue to mine raw materials and fossil fuels and to grow agricultural products at almost any ecological cost for sale on the global market. As a result of social struggles, they see getting a greater share of the world market pie, but they do not question either the pie itself or the conditions of its production. Fifth, the concept explains why, despite multiple commitments to sustainability and some remarkable efforts in dealing with the ecological crisis, our present is dominated by neo-​imperial resource policies, new forms of extractivism and policies of externalizing ecological and economic problems. Another capitalist valorization of nature pretends to both deal with the crisis and, at the same time, stimulate the capitalist economy. This approach is promoted not only by the dominant power relationships, institutions, and interest groups but also by the hegemonic mode of living. However, this does not mean at all that we want to weaken the idea of imperialism itself with the concept of the imperial mode of living. Rather, the intention is to illuminate the hegemonic entrenchment of imperialist politics in everyday practices and perceptions, especially in the middle and upper classes of societies in the Global North. For us, it is a question of hegemony-​theoretical grounding and, along with that, an explanation of the perseverance of imperialist politics at a time when the socioecological contradictions of the imperial mode of living are increasingly apparent.

382    Ulrich Brand and Markus Wissen Sixth, the concept of the imperial mode of living qualifies high expectations about good arguments, public and rational discussion, and the enlightened self-​interest of ‘humankind’ or even of dominant social forces. For all these mechanisms often fall through the grid patterns of perception as they are constituted by deeply rooted social orientations and practices, or they are selectively integrated into the latter, resulting in a consolidation rather than a challenge to specific norms of production and consumption through their partial modernization. Similarly, this is also true for many (supposedly) alternative approaches in which the deep entrenchment of the imperial mode of living remains, at best, neglected, as in the case of a green economy (cf. in more detail Brand and Wissen 2021, ch. 7). Seventh, the concept always contains an aspect of struggle and change. We assume that the essence of capitalist societies consists precisely in their permanent state of self-​transformation. The question is, which direction(s) will this transformation take? Which rule of logic will be applied? Which constellations of interests and power relationships will be at play? The imperial mode of living is definitely becoming ‘greener’ in terms of ecological sustainability. But it is also becoming ‘browner’ by increasing the use of fossil energy and other non-​renewable raw materials. There is no zero-​sum game between ‘green’ and ‘brown’ industries, but the expansion of certain sectors often is related to the simple fact of where capital can make profits. The imperial mode of living thus must constantly revolutionize itself—​or rather, must be revolutionized by many actors with their specific interests—​in order to have its essential features maintained. This also means that the specific embodiment of this mode of living is and will be contested. For instance, people who are negatively affected, such as workers in countries of the Global South or their governments, can raise social or environmental standards and thereby influence the specific forms of externalization. Eighth, the concept of the imperial mode of living illuminates the preconditions, starting points, and forms of an emancipatory politicization of the ecological crisis. It seems initially important to us to oppose the now widespread catastrophic fatalism which is itself an instrument for stabilizing those social relations that play a primary role in causing the imagined catastrophe. This does not mean turning a blind eye to well-​ founded scenarios such as those of the IPCC. But even if time is running out—​not least because of the threat of reaching dangerous tipping points of the climate system (like the thawing of permafrost soils which would release massive amounts of the aggressive greenhouse gas methane)—​it is worth adhering to the complicated and contradictory project of emancipation and opposition to authoritarian and technocratic forms of handling the crisis which, in fact, only deepen the problems. Ninth, the concept therefore forms a starting point for possible emancipatory projects and the horizon of socio-​ecological transformation. Forming real alternatives requires constant critique of current conditions and false alternatives, anti-​hegemonic strategies and an appealing mode of living that is liveable for everybody without being socially or ecologically destructive. This entails conflict and push-​back against both powerful actors and the current imperial practices in the dominant mode of living. It also requires

The Hegemony of the Global Exploitation of Humans and Nature    383 to be aware of the latter’s historical development and the current forms of its expansion and reproduction (cf. Brand and Wissen 2021, ch. 4 and 5).

Class, the Imperial Mode of Living and Alternatives To conclude this chapter we highlight one point that sometimes created misunder­ standings in the reception of our approach. The imperial mode of living has highly contradictory effects, and one of these is that it divides workers in the Global North from those in the Global South. Since Fordism, the exploitation of the former has been alleviated by the exploitation of the latter. In other words, the reproduction of the Northern working class has benefitted not only from the institutionalized compromises of class struggle in the Global North itself, but also from the possibility of accessing nature and labour power on a global scale and externalizing the socioecological costs of resource-​and energy-​intensive patterns of production and consumption—​a possibility that has been safeguarded by an imperialist world order. This is far from blaming the working class or escaping to a mere moral form of critique. Rather, it is about understanding the mechanisms through which workers in the Global North are structurally—​that is, through their own subaltern status of having only their own labour power to sell and nothing more—​involved in the imperial mode of living. The integration of workers in the Global North into the imperial mode of living has always been a subaltern relationship. The equalizing effects of the imperial mode of living have always been superseded by its hierarchizing effects. And, more recently, the latter have been moving into the foreground.30 Our argument is that the environmental crisis, the economic crisis, and deteriorating working conditions even in core sectors of the Global North (such as the automotive industry) could indicate a situation in which the promises of the imperial mode of living seem to be less and less achievable, not only for most of the people in the Global South but also for an increasing number of workers in the Global North itself. Future jobs and wealth could—​assuming authoritarian solutions are excluded—​no longer rely on environmental destruction but on the very protection of the environment. This would create the possibility of new perspectives for a socioecological transformation that aims to overcome the imperial mode of living, and the possibility of the active participation of workers and unions in that transformation. A crucial component of a ‘working-​class environmentalism’ (Stefania Barca and Emanuele Leonardi) is not only strengthening an organic link between wage labour and ecology but also realigning production with use values and the reproductive needs of people and society, thus putting social reproduction and care work centre stage.31 The concept ‘imperial mode of living’ aims to contribute to debates on historical and current economic imperialism by broadening the perspective. This does not deny the

384    Ulrich Brand and Markus Wissen strategies of powerful actors to impose their interests on others and to promote the exploitation of nature. This remains decisive. However, the functioning of economic imperialism is related to broader and in many respect hegemonic societal relations, including societal relations to nature. This is not just analytically of utmost importance but also when we think of emancipatory strategies and struggles to promote socioecological transformations and the creation of a solidary mode of living (cf. Brand and Wissen 2021, c­ hapter 8).

Notes 1. Gramsci (1996, Notebook 4, 183). 2. In the following we reproduce a slightly changed version of the third chapter of our book (Brand and Wissen 2021). We thank the publisher and particularly Sebastian Budgen for all the support and the permission to publish an excerpt of our book in this Handbook. 3. Milanovic (2016), Piketty (2014). 4. Räthzel (1991, 25). Also see the informative 2016 article by Christoph Butterwegge on the overlap between rightwing populism and neoliberalism. The author looks at the apparent paradox that the lower middle class votes for the right even though parties such as Alternative für Deutschland (Alternative for Germany—​AfD) pursue a neoliberal agenda that contravenes the electorate’s material interests. Butterwegge explains this phenomenon, first, with the concept of the ‘nest-​like’ warmth and security of the ‘national community’ (Volksgemeinschaft) promised by the right. He also identifies ‘locational nationalism’ as an important trait shared by rightwing populism and neoliberalism. Locational nationalism not only implies outperforming other countries economically but also singles out groups within one’s own country and in other countries who are declared unable or unwilling to perform, and should be therefore excluded from a share in the achievements supposedly obtained only through local and national economic efficiencies. ‘The most important overlap between neoliberalism and rightwing populism lies in the conviction that one should be proud of the ‘economic location Germany’ and seek to improve it in order to improve the prosperity of all. Neoliberalism creates the ideal breeding ground for locational nationalism, social Darwinism and a chauvinism of affluence by focusing on this contest of performance with other economic localities’. Butterwegge (2016). 5. Fücks (2013). 6. Wissenschaftlicher Beirat der Bundesregierung Globale Umweltveränderungen (2011). 7. The concepts of ‘resources’ and ‘sinks’ will be raised as problems later, as they already contain, terminologically, an instrumental understanding of nature, external to humanity and for its use. Actually, of course, natural phenomena are not resources or sinks per se, but have been used as such with respect to specific, historically variable social needs. Similar reservations could be expressed regarding the concept of the labour force. The separation of a person from her or his labour power is a particularly capitalist abstraction: in contrast to feudal lords, capitalist entrepreneurs, instead of having the entire person at their disposal, only have their labour power. That having been said, we will continue to use the terms because the questions that interest us would be difficult to discuss otherwise, and because it is precisely the terms’ critical-​analytical use that can show its instrumental character and the social relations (with humans and nature) in capitalism that characterize

The Hegemony of the Global Exploitation of Humans and Nature    385 power. We could also admit a temporal component in the concept of the imperial mode of living. For the everyday reproduction of our societies postpones many problems to a future date. This is clear in the case of emissions from burning fossil fuels that will change the climate system for a long time, or in the case of nuclear waste, whose dangers remain in force for thousands of years. However, this kind of temporal extension—​into the future—​ is not primarily meant here. 8. McMichael (2009). 9. Hobson and Seabroke (2009). 10. Kramer (2016, 29). 11. We outline our theoretical sources such as regulation theory, practice theory, and governmentality more systematically in Brand and Wissen (2017, 2018). 12. Gramsci (1977, Quaderno 11, 1375). 13. Ludwig (2012, 113); cf. Gramsci (1977, Quaderno 10, 1341). 14. Ludwig (2012, 113), Habermann (2008). 15. Jonas (2017, 120); cf. Jonas and Littig (2015). 16. Bourdieu (1977, 81). 17. Bourdieu (1977, 19). 18. Bourdieu (1977, 319). 19. Kramer (2016, 29). 20. See the rich empirical material in Dicken (2015). 21. Sonderegger (2010, 18–​39). 22. Hornborg (2010, 43). 23. Marx (1981, 339). See also an instructive reading of history around the ‘cheap thing’ in Moore and Patel (2018). 24. See, for example, Heuwieser’s study on Honduras: Heuwieser (2015). 25. See Newell and Paterson (2010, 132–​133). 26. Wackernagel and Beyers (2010). 27. For a more detailed account on four ‘mechanisms’ that reproduce the imperial mode of living—​valorization, accumulation, and reproduction; hegemony and subjectivation; hierarchization; externalization—​, see Brand and Wissen (2021, 49–​64). 28. Welzer ( 2013, 78). 29. Brand and Wissen (2018). 30. Wissen and Brand (2021). 31. See also the special issue of Globalizations 15, no. 4 (2018), on Labour in the Web of Life.

References Bourdieu, Pierre. 1977. Outline of a Theory of Practice. Cambridge: Cambridge University Press. Brand, Ulrich, and Markus Wissen. 2017. ‘The Imperial Mode of Living’. In Routledge Handbook of Ecological Economics: Nature and Society, edited by Clive Spash, 152–​161. London: Routledge. Brand, Ulrich, and Markus Wissen. 2018. The Limits to Capitalist Nature: Theorizing and Overcoming the Imperial Mode of Living. London and New York: Rowman & Littlefield International. Brand, Ulrich, and Markus Wissen. 2021. The Imperial Mode of Living: Everyday Life and the Ecological Crisis of Capitalism. London: Verso.

386    Ulrich Brand and Markus Wissen Butterwegge, Christoph. 2016. ‘Stolz auf den ‘Wirtschaftsstandort D’: Bei der AfD gehen Neoliberalismus und Rechtspopulismus eine Synthese ein. Auch deshalb ist die Partei so erfolgreich’. taz, 1 August (taz.de). Dicken, Peter. 2015. Global Shift: Mapping the Changing Contours of the World Economy. New York and London: The Guilford Press. Fücks, Ralf. 2013. Intelligent wachsen: Die grüne Revolution. Munich: Hanser. Gramsci, Antonio. 1977. Quaderni del carcere. Vol. 2. Turin: G. Einaudi. Gramsci, Antonio. 1996. Prison Notebooks. Vol. 2. New York: Columbia University Press. Habermann, Friederike. 2008. Der Homo Oeconomicus und das Andere: Hegemonie, Identität und Emanzipation. Baden-​Baden: Nomos Verlag. Heuwieser, Magdalena. 2015. Grüner Kolonialismus in Honduras: Land Grabbing im Namen des Klimaschutzes und die Verteidigung der Commons. Vienna: Promedia Verlag. Hobson, John M., and Leonard Seabroke. 2009. ‘Everyday International Political Economy’. In Routledge Handbook of International Political Economy (IPE): IPE as a Global Conversation, edited by Mark Blyth, 290–​306. London and New York: Routledge. Hornborg, Alf. 2010. ‘Uneven Development as a Result of the Unequal Exchange of Time and Space: Some Conceptual Issues’. Journal für Entwicklungspolitik 26, no. 4: 43. Jonas, Michael. 2017 . ‘Transition or Transformation? A Plea for the Praxeological Approach of Radical Socio-​Ecological Change’. In Praxeological Political Analysis, edited by Michael Jonas and Beate Littig, 120. London: Routledge. Jonas, Michael, and Beate Littig. 2015. ‘Sustainable Practice’. In International Encyclopedia of the Social and Behavioral Sciences, edited by James D. Wright, 834–​838. Oxford: Elsevier. Kramer, Dieter. 2016. Konsumwelten des Alltags und die Krise der Wachstumsgesellschaft. Marburg: Jonas Verlag. Ludwig, Gundula. 2012. ‘Hegemonie, Diskurs, Geschlecht: Gesellschaftstheorie als Subjekttheorie, Subjekttheorie als Gesellschaftstheorie’. In Diskurs und Hegemonie: Gesellschaftstheoretische Perspektiven, edited by Iris Dzudzek, Caren Kunze, and Joscha Wullweber, 113. Bielefeld: transcript Verlag. Marx, Karl. 1981. Capital: A Critique of Political Economy. Vol. 3. Introduced by Ernest Mandel. London: Penguin Books. McMichael, Philip. 2009. ‘The World Food Crisis in Historical Perspective’. Monthly Review 61, no. 3. Milanovic, Branko. 2016. Global Inequality: A New Approach for the Age of Globalization Cambridge, MA: Harvard University Press. Moore, Jason W., and Raj Patel, 2018. A History of the World in Seven Cheap Things: A Guide to Capitalism, Nature, and the Future of the Planet. Oakland: University of California Press. Newell, Peter, and Matthew Paterson. 2010. Climate Capitalism: Global Warming and the Transformation of the Global Economy. Cambridge: Cambridge University Press. Piketty, Thomas. 2014. Capital in the Twenty-​ First Century. Cambridge, MA: Harvard University Press. Räthzel, Nora. 1991. ‘Rebellierende Selbstunterwerfung: Ein Deutungsversuch über den alltäglichen Rassismus’. links 12: 25. Sonderegger, Ruth. 2010 . ‘Wie emanzipatorisch ist Habitus-​Forschung? Zu Rancieres Kritik an Bourdieus Theorie des Habitus’. LiTheS: Zeitschrift für Literatur-​und Theatersoziologie 3: 18–​39. Wackernagel, Mathis, and Bert Beyers. 2010. Der Ecological Footprint: Die Welt neu vermessen. Hamburg: CEP Europäische Verlagsanstalt.

The Hegemony of the Global Exploitation of Humans and Nature    387 Welzer, Harald. 2013. Selbst denken: Eine Anleitung zum Widerstand. Frankfurt am Main: Fischer. Wissen, Markus, and Ulrich Brand. 2021. ‘Working-​Class Environmentalism and Socio-​ Ecological Transformation: Contradictions of the Imperial Mode of Living’. In The Palgrave Handbook of Environmental Labour Studies, edited by Nora Räthzel, Dimitris Stevis, and David Uzzell, 699–720. Cham: Palgrave Macmillan. Wissenschaftlicher Beirat der Bundesregierung Globale Umweltveränderungen (German Advisory Council on Global Change, WBGU). 2011. World in Transition: A Social Contract for Sustainability. Berlin: WBGU (wbgu.de).

Chapter 22

T he P olitical E c onomy of Milita ri sm Adem Yavuz Elveren

Introduction Militarism can be defined as the material and ideological justifications for domination through hierarchy, obedience, and the use of force in the political, social, and economic domains. Militarization is the embodiment of militarism; that is, the realization of militarism in the society through a large armed force with a disproportionate budget. There are several indicators of national military spending levels. The most used is the share of military expenditures in GDP, also referred to as the military burden. Another indicator is the share of military expenditures in the national budget while the ratio of armed forces to the population and the ratio of military spending to the armed forces may indicate military power. Since the end of the Cold War, global military expenditures have declined, particularly in Europe. Yet, this decline is not universal, as there have been increases in some regions, such as the Middle East and Asia, mainly due to spending by China, India, and Saudi Arabia. It is also worth noting that the United States and Russia have sustained high military spending. The standard neoclassical approach to military spending is to treat it as a public good, whereby the state is a rational actor balancing the opportunity costs and benefits to maximize the ‘national interest’. The traditional Keynesian school considers military spending as part of general government spending that boosts aggregate demand via the multiplier effect, thereby leading to economic growth. This is referred to as military Keynesianism. The military industrial complex (MIC) model explains the long-​term dynamics of military spending from an institutional perspective. However, the most comprehensive understanding of the role of military spending in the economy is provided by Marxist thought. Marxist scholars consider militarism an integral part of the development of capitalism. Originating from Rosa Luxemburg’s The Accumulation of Capital and Lenin’s

390   Adem Yavuz Elveren Imperialism, the Highest Stage of Capitalism, Marxist thought shows that militarization allows economies to extend into new markets, which is a key means for realizing surplus value. In addition to this surplus-​absorbing role that addresses the problems of underconsumption or overproduction, militarization also operates through both class struggle and conflict between capitalist powers by means of the military’s direct coercive power. That is, militarization facilitates and sustains exploitative relations, both within the country and between countries, by reinforcing the social order imposed on the working class and underdeveloped countries. The next section briefly presents the approaches of main economic schools to military expenditures. The third section outlines Marxist approaches to the effect of military spending on the rate of profit. The fourth section overviews empirical studies on the impact of military spending on economic growth, rates of profit, and income inequality. The conclusion highlights the main arguments.

Military Expenditures in the Main Schools of Economic Thought The neoclassical approach considers defence as a public good. The state faces a trade-​ off between civil and military spending in terms of the production possibility frontier. Similarly, from a public economics viewpoint, defence spending may lead to both positive and negative externalities. The state acts as a rational agent maximizing a given ‘national interest’, which is presumably the product of social consensus. Econometric models within the neoclassical tradition treated the military sector as one sector in the economy in a single-​equation model (Feder 1983; Ram 1986; Biswas and Ram 1986), or simply incorporate military expenditures into the Cobb-​Douglas production function. Also, military expenditures are explained in endogenous growth models while game theoretic approaches try to explain interstate behaviour in terms of conflict and the arms race (Coulomb 2004). Overall, neoclassical approaches to military expenditures have been criticized on several grounds (Dunne 2013). The optimization approach is ahistorical, ignores the internal role of the military and military interests (e.g., an unrealistic national consensus presumption), and unrealistically assumes that rational actors have extensive knowledge—​thereby excluding the uncertainty of international relations—​and computational ability in decision making. Keynesian models, on the other hand, take a demand-​side perspective in that military spending is considered as part of general government expenditures. According to the Keynesian approach, military expenditures boost aggregate demand via the multiplier effect, which is the core argument of military Keynesianism. That is, military spending can increase the utilization of resources if the economy is below full employment. The key issue, however, is how military spending is financed, as the extent of crowding out

The Political Economy of Militarism     391 will depend on the type of financing, namely cuts in other public expenditures, increased taxes, borrowing, and expansion of the money supply. Keynesian models have been criticized for focussing solely on demand-​side issues. To address such shortcomings, some scholars incorporate explicit production functions in their Keynesian models (Deger and Smith 1983; Deger 1986). Both neoclassical and Keynesian approaches fail to explain the role of interest groups in the economy. In contrast, the MIC approach explains military power and conflict (Dunne 2013; Elveren 2019). The MIC is a symbiotic coalition between the military services and their associated industries that result in decisions favourable to those in power in the name of ‘national security’. The MIC creates internal pressures to justify increasing military expenditures even when there is no actual threat (Fine 1993; Dunne and Sköns 2011). MIC theory argues that defence spending may have Keynesian economic effects in the short run, but in the long run it channels resources away from civilian industries that are more productive, which reduces the economy’s productive capacity (Melman 1965, 1970, 1974; Galbraith 1969). Therefore, for liberals, such as Melman and Galbraith, the problem is the MIC. However, for Marxist scholars, militarism does not just benefit the arms producers; it is indispensable for capitalism. So, for them, military Keynesianism was expedient due to the limitations of more socially useful Keynesianism (Toporowski 2017). Why is the military sector indispensable for capitalism according to Marxist thought? There are two similar views: Baran and Sweezy’s 1966 underconsumption theory and Michael Kidron’s permanent arms economy approach. The former argues that military spending prevents the realization crisis by absorbing the surplus in the economy, contrary to other types of government expenditure that increase the economy’s productivity capacity. Baran and Sweezy’s argument is in line with Kalecki’s view that ‘the construction of schools, hospitals and even roads is of limited scale’ because they ‘compete with the private sector and reduce the rate of capitalist profits, which obviously has a negative impact on private investment. Therefore, their economic effect ‘will be weaker in the long run, and beside this, will draw immediate political opposition from monopolies damaged (by such competition)’ (Kalecki 1955, 580–​581). Kalecki concludes that ‘[a]‌rmaments play a specific role precisely because they are unproductive’ (580–​ 581). The permanent arms economy approach, on the other hand, suggests that military spending prevents the economy from overheating (Kidron 1970). These latter two views require further discussion, which is what the next section presents.

The Role of Military Expenditures in Capitalist Accumulation Marx discussed war and conflict in general in various writings, such as Manifesto of the Communist Party, co-​authored with Engels (1848), Discourse on Free Trade (1848), and

392   Adem Yavuz Elveren articles (Coulomb, 2004; Coulomb and Bellais 2008).1 Engels examined militarism in Anti-​Dühring (1878) and Can Europe Disarm? (1893). Engels (1878) predicted that militarism destroys itself because it makes states compete and enlarge their military forces. While armies and navies with the most advanced technology can defeat others, they are, as he noted, ‘devilishly expensive‘. Engels continued: ‘[f]‌orce, however, cannot make any money; at most it can take away money that has already been made, . . . money must be provided through the medium of economic production . . . [n]othing is more dependent on economic prerequisites than precisely army and navy’ (Engels 1878). Engels (1893) later restressed the economic harm of military spending due to its financial cost. However, neither Marx nor Engels provide an articulated analysis of the military’s economic effects.

Rosa Luxemburg on Militarism Rosa Luxemburg was one of the early Marxist thinkers who provided a comprehensive framework to analyse the role of the military sector in a capitalist economy. Her contribution to Marxist thought was to show that force and state power were key mechanisms of primitive accumulation in capitalism (Rowthorn 1980; Brewer 2001, 72). She explicitly argued that military spending helps the capitalist system to expand into external markets. That is, capitalism needs non-​capitalist systems to expand, and this is a key means for realizing surplus value. In The Accumulation of Capital (1913), for example, she asserted that militarism ‘plays a decisive part in the first stages of European capitalism, in the period of the so-​called primitive accumulation, as a means of conquering the New World and the spice-​producing countries of India’ (454). In addition to this direct role in the primitive accumulation of capital, military spending also ‘destroys the social organisations of primitive societies so that their means of production may be appropriated, forcibly to introduce commodity trade in countries where the social structure had been unfavourable to it’ to build a hegemony in the colonies (454). Luxemburg also notes that military spending may help in the accumulation of capital because it creates a new and growing sector for capitalists while also exploiting and suppressing the working class even more deeply. According to Luxemburg, militarism, ‘[f]‌rom the purely economic view of point’ is ‘a pre-​eminent means for the realisation of surplus value; it is in itself a province of accumulation’ (454). Luxemburg also underscores a distinction between military spending and other state spending. For example, in The Militia and Militarism (1899), she notes, ‘The State’s demand is distinguished by the fact that it is certain, that it orders in enormous quantities, and that its pricing is favourable to the supplier . . . which makes the State the most desirable customer and makes supplying it the most alluring business for capitalism.’ She continues, But what makes supplying the military in particular essentially more profitable than, for example, State expenditures on cultural ends (schools, roads, etc.), is the incessant technical innovations of the military and the incessant increase in its expenditures. Militarism thus represents an inexhaustible, and indeed increasingly

The Political Economy of Militarism     393 lucrative, source of capitalist gain, and raises capital to a social power of the magnitude confronting the worker in, for example, the enterprises of Krupp and Stumm. Militarism—​which to society as a whole represents a completely absurd economic waste of enormous productive forces—​and which for the working class means a lowering of its standard of living with the objective of enslaving it socially—​is for the capitalist class economically the most alluring, irreplaceable kind of investment and politically and socially the best support for their class rule. (Luxemburg 1899)

Thus, Luxemburg’s views on the military sector’s effects on the economy include both the short-​term problems of Keynesian effective demand—​as interpreted by Dobb ([1955] 2012), Sweezy (1942), Robinson (1951), and Kalecki (1971)—​and the long-​term dynamics of capital accumulation (Rowthorn 1980). She argues that social capital can remain stable if taxes on the working class are used to pay government officials and army personnel, resulting in a constant level of demand and profit rates. If, however, taxes are used to pay for weapons production, this can increase the average profit rate, as the indirect tax on the working class reduces wages. Because Luxemburg’s reasoning implies that workers in civil sectors do not create surplus value, her analysis has been criticized as being unable to distinguish between use-​value and value, and between surplus product and surplus value, and as mistakenly treating workers who create constant and variable capital and aggregate surplus separately (Rowthorn 1980; Cypher 1985). Joan Robinson, in her introduction to the 1951 English translation of Luxemburg’s book, considers the taxation of workers as the main source of finance. She argues that the most important economic significance of militarism is its ability to ‘provide an outlet for the investment of surplus (over and above any contribution there may be from forced saving out of wages), which, unlike other kinds of investment, creates no further problem by increasing productive capacity’. She then notes that ‘the huge new investment opportunities created by reconstruction after the capitalist nations have turned their weapons against each other’ (Robinson 1951, 27–​28). Overall, Rowthorn (1980) argues that, although Luxemburg’s mathematical approach has some defects, the core of her argument—​that militarism helps to redistribute income in favour of capital—​is sound. Some scholars have interpreted Luxemburg’s theory as an ‘underconsumptionist theory’, in which military expenditure helps to absorb the surplus of the capitalist production system without increasing productive capacity. Sweezy and Mandel, for example, considered Luxemburg as ‘underconsumptionist’ (Bleaney 1976). Others view the theory as claiming that such spending boosts technological development while reducing the internal contradictions of capitalist expansion, thereby increasing capital accumulation (Rowthorn 1980).

Paul Baran and Paul Sweezy: Underconsumption Paul Baran and Paul Sweezy’s Monopoly Capital, published in 1966, is a major contribution to Marxist thought. For them, a chronic lack of aggregate demand, or

394   Adem Yavuz Elveren underconsumption, is a key feature of capitalism because capitalism leads to a few enormous companies accumulating much of the capital. Through their efforts to increase their own profits, such companies limit output, investment, and the purchasing power of workers. In turn, the latter reduces demand, which causes stagnation. In short, through their ability to maximize their own profits, these giant companies impose a powerful, systematic trend of rising surplus value. However, this ‘success’ creates the new problem of how to absorb that excess surplus. Baran and Sweezy consider how the consumption, investment, and sales efforts of capitalists, alongside government spending and militarism, all help to absorb this surplus. They conclude that neither capitalist investment nor government expenditure help since each either raises wages or capital, which decreases profit rates or expands the surplus over the longer term. They also disagree with Lenin, who had claimed that exporting capital to underdeveloped countries could absorb the surplus. On the contrary, they argue the United States actually gained more capital from underdeveloped countries than it had exported to them (Howard and King 1992, 118). Given this, they focus on the roles played by sales efforts, militarism, and imperialism to argue that capitalism is both vulnerable to stagnation and forced into wasting more resources on irrational expenditure. According to the underconsumptionist theory of military expenditures (Baran and Sweezy, 1966), military expenditures enables capitalists to raise their profit rates and reduce competition thereby reducing surplus in the economy. This makes military expenditures, including military aid to allies, an important element within the monopolistic postwar capitalist system because it boosts aggregate demand while absorbing the surplus. In contrast to other forms of state spending, military spending can absorb the surplus without damaging the interests of any powerful ruling class fraction while also not increasing wages or capital. In Monopoly Capitalism, they explain how militarism can absorb the surplus. This then shows why ‘the United States oligarchy need and maintain such a huge military machine’ (Baran and Sweezy 1966, 178). They suggest that the United States enjoyed unquestioned world dominance through high military expenditure while its growing military was justified by the ‘threat’ of the rival socialist system during the Cold War. In other words, the military facilitates or sustains exploitative relations between countries in capitalism’s hierarchical international system. The military also serves to ‘dispossess, repress, and otherwise control the domestic labor’, although they acknowledge that this was not a major function of the military in the case of the United States (179). On the other hand, they also note that military expenditures are not so effective because of the key characteristics of arms production. More specifically, military spending gradually becomes less able to create jobs because military production requires fewer but more highly skilled workers. Moreover, these new production techniques encouraged by massive military spending may even cause unemployment since ‘military research and development are also applicable to civilian production, where they are quite likely to have the effect of raising productivity and reducing the demand for labor’ (Baran and Sweezy, 1966, 215).

The Political Economy of Militarism     395 Baran and Sweezy also assert that military expenditure can harm economic activity because, as arms production becomes more capital intensive, it becomes more difficult to prevent a decline in the profit rate because high levels of military expenditure result in increased taxation, which dampens economic activity. Conversely, a tax cut due to lower military expenditure can cause a crisis of overproduction. There have been various critiques of Baran and Sweezy’s arguments (Georgiou 1983; Howard and King 1992). The most fundamental criticism is that Baran and Sweezy’s claim that contemporary capitalism was uncompetitive is incorrect. Second, critics disagree with Baran and Sweezy’s assumption of a passive working class, although the extent of the economic surplus depends on the class struggle context. Third, they reject several fundamental components of traditional Marxian economics, particularly the theory of the falling rate of profit. Fourth, they do not specify how military expenditure is financed although this can affect how it impacts profit rates. Fifth, according to Cypher (1985), they ignore the role of technology. Finally, several critics argue that their definition of economic surplus is more general than the Marxist definition, which is not specific to capitalism. That is, they assume that all state spending is unproductive or surplus-​absorbing while ignoring the productive necessity of state functions2 (O’Connor 1973; Stanfield 1974; Cypher 1985; Howard and King 1992, 122).

The Theory of the Permanent Arms Economy Kidron’s theory of the permanent arms economy is a major revisit of Baran and Sweezy’s analysis (Kidron 1970). The theory contends that militarism stabilizes the capitalist system by counteracting the ‘permanent threat of overproduction’. Kidron argues that military spending does this more effectively than other forms of government spending because it is not a productive investment. This prevents the rise of the organic composition of capital in civil activities, thereby counteracting the fall in the profit rate (Kidron 1970, 55–​56). He argues that military production—​as opposed to civilian production—​‘has a “domino effect”: starting in one country, it proliferates inexorably through the system, compelling the other major economies to enter a competitive arms race, and so pulling them into the stabilizer’s sphere of operations’ (56). Kidron argues that, since arms are a ‘luxury’ in the sense that they are neither instruments of production nor means of subsistence, ‘arms production is the key, and seemingly permanent, offset to the “tendency of the rate of profit to fall” ’(56). However, he also notes that eventually ‘military technology is becoming so specialist as to lose some of its economically stabilizing features’ (64). Finally, military research and development benefits the civil sector through technological spin offs. For example, ‘[m]‌ilitary research has been crucial in developing civilian products like air navigation systems, transport aircraft, computers, drugs, diesel locomotives (from submarine diesels), reinforced glass and so on’ (Kidron 1970, 52). Initially, the state finances research and development in the military sector; these new technologies and products then spread through the civilian

396   Adem Yavuz Elveren sector, which helps to reinforce profit rates in competitive civilian markets. This spin-​off effect is discussed further by Mandel (1978). Ernest Mandel argues that the military sector is isolated from competition, which allows capitalists to enjoy more than the general rate of profit (Mandel 1962, cited in Coulomb and Bellais 2008). He claims that, so long as the costs of military production are shouldered by the working class, military expenditures can indirectly increase the exploitation of the working class, thereby preventing the rate of profit from falling. Mandel (1978) also asserts that arms spending is economically unproductive since armaments are neither production nor consumption goods. Military spending can therefore be used to reduce excess capital and prevent the decline in the rate of profit by eliminating unproductive capital. Additionally, defence firms can obtain a higher profit rate because prices and profits are negotiated between the state and the industry. Finally, military expenditure is neither dependent on peoples’ purchasing power nor economic fluctuations (Mandel 1978). Critics have challenged the permanent arms economy approach empirically and theoretically (Smith 1977; Kaldor 1977; Mandel 1978; Cypher 1985; Howard and King 1992). According to Kaldor (1977), for instance, because military expenditures are unproductive, military expenditures as a percentage of GNP and capital investment as a share of GNP are inversely related. In addition, she notes that countries with lower military research and development expenditure spend more on civil R&D. Purdy (1973) criticizes the approach as theoretically ahistorical, as with Baran and Sweezy (cited in Smith 1977). Mandel also points out the harmful effects of arms production that contradict the permanent arms economy theory (Mandel 1978; Cypher 1985; Coulomb and Bellais 2008). For instance, Mandel (1978) claims that allowing capitalists to bear the burden of arms production does not stop profit rates from falling. Furthermore, if the organic composition of capital due to military production increases then the fall in the rate of profit accelerates. In the longer term, this destabilizes the economy (Coulomb 2004). Finally, Cypher (1985) identifies some contradictions in Kidron’s arguments, particularly the idea that military spending can permanently prevent overaccumulation while simultaneously promoting technological innovation. As Cypher puts it, ‘[a]‌t best Kidron refers to anecdotes from the literature on arms production, but no data is presented, either macro or micro, to buttress his aprioristic statements, assertions, and insights’ (278, emphasis in original). Empirically, scholars also question the validity of Baran and Sweezy’s theory in particular and the role of military expenditures on the economy in general (Elveren 2019). These debates include Sweezy versus Szymanski (Sweezy 1973; Szymanski 1973a, 1973b, 1974; Friedman 1974; Stevenson 1974; Zeitlin 1974); Smith versus Hartley and McLean, and Chester (Smith 1977, 1978; Hartley and McLean 1978; Chester 1978); Gottheil versus Riddell and Cypher (Gottheil 1986a, 1986b; Riddell 1986; Cypher 1987–​1988); and Dunne and Smith versus Pivetti (Pivetti 1992, 1994; Dunne 1990; Smith and Dunne 1994).

The Political Economy of Militarism     397

The Impact of Military Expenditures on Economic Growth, Rates of Profit, and Income Inequality: Empirical Studies The Impact of Military Spending on Economic Growth There are three groups of econometric studies examining the relationship between military spending and economic growth. The first group shows that military expenditures have a positive impact on economic growth because they lead to fiscal expansion and higher aggregate demand. Thereby, they increase employment and output if there is spare capacity. Military expenditures also benefit the civilian sector through the spillover effect of R&D. The second group contends that higher military expenditures reduce economic growth due to misallocation of resources. In other words, unproductive military spending crowds out public and private investment in education and health, which are considered productive outlays. In addition, military spending by arms importers can also upset that country’s balance of payments, which in turn may discourage capital inflows that could have increased growth (Sandler and Hartley 1995, 202). The third group argues that there is no causal relationship between military spending and economic growth. Since the seminal work of Benoit (1973, 1978), who showed that military spending has a positive impact on economic growth, researchers have adopted different econometric models to further analyse this relationship. These include the Feder-​Ram model (Feder 1983; Biswas and Ram 1986), the Deger-​type model (Deger and Smith 1983; Deger 1986), the endogenous growth model (Barro 1990), the augmented Solow growth model (Mankiw, Romer, and Weil 1992), and the new macroeconomic model (Romer 2000; Taylor 2000). Literature surveys show that most early studies argued for a positive relationship, whereas later studies using Keynesian, neoclassical, and structuralist models offer inconclusive evidence on the issue for different sets of countries (Sandler and Hartley 1995; Deger and Sen 1995; Ram 1995; Dunne 1996; Smith 2000; Dunne and Uye 2010; Alptekin and Levin 2012; Churchill and Yew 2018; Yesilyurt and Yesilyurt 2019). For example, from their review of 102 studies, Dunne and Uye (2010) conclude that military spending has a harmful effect in 39% of cross-​country and 35% of case studies, a positive effect in 20% of these studies, and ambiguous effects in 40%. Dunne and Tian (2013) later reviewed 168 studies taken from a wider set of countries. They find that military spending reduces economic growth in almost 44% of cross-​country studies and 31% of case studies, compared to a positive effect in 20% of cross-​country studies and 25% of case studies. They also report that a negative impact of military spending is more likely for recent periods. More specifically, a negative effect is seen in 53% of post–​Cold

398   Adem Yavuz Elveren War cross-​country studies and 30% of case studies compared to 38% of Cold War cross-​ country studies and 21% of case studies. However, Dunne and Tian also note that, of the seventy-​two reviewed case studies, 63% concern just five countries: Greece, Turkey, India, Pakistan, and the United States. Interestingly, the first four countries—​for which military expenditures are beneficial—​are in conflict with one of the others (Dunne and Tian 2013, 8). For their review of studies into the effect of military spending on economic growth, Alptekin and Levine (2012) used a meta-​analysis. In this statistical method, the findings from empirical studies are analysed systematically through the structural differences in the results from individual studies. Based on thirty-​two empirical studies, they reach two main conclusions. First, overall, these studies suggest that military expenditure boosts economic growth. Second, this beneficial effect is strongest for developing countries, although the results do not suggest that military expenditure reduces economic growth in LDCs. In contrast, Dunne, Smith, and Willenbockel (2005) conclude that the relationship between military spending and economic growth is mostly either insignificant or negative for LDCs. In addition, the relationship is even more negative for developed countries. In their meta-​analysis of forty-​eight studies, Churchill and Yew (2018) mostly confirm Alptekin and Levine (2012), except that the earlier positive relationship between military expenditures and economic growth has been replaced by a generally negative relationship using an extended data set. In their important study, Dunne and Tian (2015) also consider heterogeneities and nonlinearity for a comprehensive data set of 106 countries for 1988–​2010. They conclude that military expenditures significantly suppress economic growth in both the short and longer term. More specifically, this negative effect is still significant after breaking the data set down by development/​income status (low, medium, high), apart from the insignificant long-​run effect of military spending in developed countries. In another major study, my colleagues and I analysed the relationship for eighty-​two countries for 1988–​ 2008 in an augmented Solow growth model with special attention to inequality (Töngür and Elveren 2017). Overall, we found that military spending reduces economic growth for different country groups (e.g., development level, arms trade, or fuel dependency). Why are there such contradictory results regarding the effect of military expenditures on economic growth? One key reason is model specification. This determines the functional form of the analysis and defines how to measure military spending (e.g., share in GDP, growth rate, level or logarithm). The model also defines which control variables to use, which significantly influences the estimation outcomes. One commonly ignored variable is changing security threats. This affects both military spending and economic growth (Smith 2000). A second reason for the inconsistent findings is simultaneity in that output and military expenditure have a bidirectional relationship: output changes demand for military expenditure while military expenditure simultaneously changes aggregate demand and supply (Smith 2019). Third, the findings of these studies critically depend on which time period is involved (especially between the Cold War and post–​Cold War eras) through the chosen time-​series, cross-​section, or panel data. In addition, the choice of countries, particularly their development level, critically affects

The Political Economy of Militarism     399 the findings. Finally, non-​linearity must be considered because comparing countries with different income levels or income levels within the same country can influence the findings.

The Impact of Military Spending on the Rates of Profit As discussed in the previous section, military expenditures affect the profit rate via capital productivity and the organic composition of capital. Military expenditures may remove capital from the non-​military sector, thereby reducing the increase in the organic composition of capital in that area while cheapening constant capital in the military sector. Also, military spending may ideologically alter the class structure, allowing capitalists to exploit workers even more, thereby increasing their profit rates (Smith 1977, 1983). There are a few empirical studies of the impact of military spending on the rates of profit. Examining the United Kingdom, United States, and the former West Germany for 1958–​1987, Georgiou (1992) finds that military expenditure only has a positive significant effect for the United States. For Greece between 1962 and 1994, Kollias and Maniatis (2003) report a positive effect on the profit rate in the short run but negative in the long run. For the United States between 1959 and 2000, Dunne et al. (2013) conclude that the positive long-​run relationship between military spending and the profit rate is consistent with a Luxemburg-​type story, but unemployment has only weakly significant effect on the rate of profit. Again for the United States, Ansari (2018) reports a positive impact for 1973–​2015. In another study on the United States, I modify the circuit of capital model proposed in Foley (1982) by incorporating the military sector (Elveren 2020). The paper provides some empirical evidence for 1968–​2008 for the main proposition of the theoretical model in that a larger military sector is associated with a higher rate of profit due to due to shorter realization lags for military production. For Turkey for 1950–​ 2008, my colleague and I find that military expenditure decreases profit rates during turbulent years and increases them in more tranquil years (Elveren and Özgür 2018). Finally, in a comprehensive study of thirty-​one major countries, I show that military spending increases the rate of profit in Australia, Brazil, Israel, Italy, and New Zealand but decreases it in Argentina, Austria, Canada, Finland, France, Germany, Ireland, and Norway (Elveren 2019). For South Korea and Portugal, the effects are ambiguous, being both positive and negative depending on the profit rates. Overall, however, the effect of military expenditures on the rate of profit tend to be negative rather than positive effect, but more likely to have a negative effect for arms-​importing countries. In addition to these time series studies, there are a few panel data studies providing a comprehensive evidence on the effect of military spending on profit rates. Elveren and Hsu (2016, 2018) and Elveren (2019) suggest two major conclusions from studies of twenty-​four OECD countries and thirty-​two major countries during 1963–​2008 and 1963–​2016. First, overall, military expenditure increases profit rates. However, the effect is negative in the post-​1980 era specifically. Second, while military expenditure weakly

400   Adem Yavuz Elveren increases profit rates in arms-​exporting countries, it depresses them in non-​arms-​exporting countries. Similarly, Ali Cevat Taşıran and I conducted the first analysis of the relationships between military spending, inequality, and profits for twenty-​one countries during 1988–​ 2008 (Taşıran and Elveren 2021). First, military spending reduces the rate of profit more strongly in the context of higher overall profit rates. Second, military spending increases profits if military expenditure is lower. Third, higher military expenditures decrease profits if there is low inequality and vice versa. Taken together, these findings support the Marxist argument that military expenditure helps to overcome the fall in profit rates in arms-​exporting countries.

The Impact of Military Spending on Income Inequality Several studies have examined the effect of military spending on income inequality. This relationship can be explained from four different perspectives (Lin and Ali 2009; Elveren 2012). First, traditional Keynesian theory argues that higher military spending boosts aggregate demand, which increases employment in the economy. Since the unemployed poor particularly benefit, income inequality falls. Second, microeconomic theory suggests that intersector inequality rises with increased military spending because military-​related industries pay higher wages than other sectors (Ali 2007). Third, military spending provides wages both for lower skilled workers and highly skilled R&D personnel. Consequently, pay inequality may depend on their relative shares (Lin and Ali 2009). Finally, the welfare-​defence trade-​off implies that countries that spend more on military expenditures have less available to spend on social expenditures, including health, education, or social transfers. Abell (1994) was the first to examine the possible relationship between these two variables. He finds that military expenditures increased income inequality in the United States during 1972–​1991. Using global panel data for 1987–​1997, Ali (2007) shows that an increase in military spending leads to higher income inequality. Similarly, for different time periods, Kentor et al. (2012) for eighty-​two countries, Biscione and Caruso (2021) for twenty-​six transition economies, and Graham and Mueller (2019) for OECD countries confirm this positive relationship. However, Ali (2012) for MENA countries for 1987–​2005 and Michael and Stelios (2020) for fourteen NATO countries for 1977–​2007 find that higher military spending reduces income inequality. Another strand of the literature has investigated whether there is a trade-​off between military spending and civilian expenditures, such as health and education. The findings are inconclusive. For example, Lin, Ali, and Yu-​Lung (2015) for twenty-​nine OECD countries during 1988–​2005 report that education and health expenditures increase as military spending increases. They argue that this is a result of the advanced welfare regimes in most of these countries. Similarly, Zhang et al. (2017), for BRICS and G7 countries during 1998–​2011 and 1993–​2007, report a positive relationship between military spending and social expenditures, although the relationship is ambiguous

The Political Economy of Militarism     401 in emerging economies. Different welfare regimes may partly explain the inconclusive results of suggested by these studies. In fact, covering thirty-​seven countries over 1988–​2003, my colleague and I found a significant negative relationship between social democratic welfare regimes and military spending and income inequality (Töngür and Elveren 2015).

Conclusion Because the driving force of capitalism is profit, arms production has a crucial advantage over civilian goods: first, it strengthens economic and political hegemony; second, arms are either used quickly or simply become obsolete, which ensures endless demand to help absorb surplus. Against this background, this chapter examined the role of militarism in capitalism and the impact of military spending on three key macroeconomic variables, namely economic growth, profit rates, and income inequality. The neoclassical, Keynesian, and Marxist schools have all analysed the effect of military spending on the economy. The neoclassical approach treats the state as a rational actor trying to maximize the national interest through a cost-​benefit analysis. Specifically, it must decide whether military expenditure for increased security, social welfare spending to improve health and education, or lower taxation to encourage greater private consumption are optimal. However, by only focusing on the supply-​side, this ahistorical analysis ignores the role of the institutions. The MIC provides a sound institutional approach to military expenditures. The MIC is a coalition of vested interests spanning the bureaucracy, the armed forces, and large arms-​producing firms. According to the theory, the main long-​term determinant of military expenditures is this autonomous structure within the state, promoting and lobbying for higher military spending. Traditional Keynesian and Marxist thought share similar views regarding the economic effects of military spending, but with a key twist. While military expenditure is an optional policy tool for Keynesians, it is indispensable for capitalism according to Marxists. Military Keynesianism argues that high military spending addresses the need for an active government to maintain aggregate demand to prevent slumps and generate sustained economic growth. As Marxists emphasize, the capitalist mode of production is prone to economic crises due to a chronic lack of aggregate demand. Against this background, Baran and Sweezy (1966) suggest an underconsumptionist theory of military spending, arguing that military expenditure enables capitalists to increase their profit rates and minimize competition, thereby reducing the economic surplus. Military spending functions better than other forms of state spending because it absorbs the surplus while simultaneously avoiding any harm to the interests of any powerful ruling class fraction or increase in wages or capital. In other words, Marxist scholars examine the role of military spending from a comprehensive perspective, including its strategic role in capital accumulation, which originated from Luxemburg’s analysis of military spending.

402   Adem Yavuz Elveren In their analysis of the links between military expenditure and the profit rate, Marxist scholars emphasize capital productivity and the organic composition of capital. That is, they argue that military spending can create a surplus to realize as profit. Alternatively, military spending can shift capital away from the non-​military sector. This prevents the organic composition of capital increasing in that area while simultaneously making constant capital in the military sector cheaper. An empirical strand of this literature shows that while there is a positive linkage between military expenditure and profit rates for arms-​exporting countries overall, the linkage is negative for non-​arms-​exporting countries. The empirical literature in defence economics examines the effect of military expenditures on economic growth. While the overall evidence is inconclusive, more recent studies increasingly suggest that military spending reduces economic growth. Finally, research in another strand of defence and peace economics shows that military spending increases income inequality while there is a trade-​off between military spending and civilian expenditures, such as health and education.

Notes 1. This section heavily relies on Elveren (2019). 2. O’Connor (1973) and Gough (1979) also claim that non-​military government spending has a productive effect through state welfare state expenditure, which increases profitability in two ways: first, employers do not need to spend as much to have healthy, skilled workers; second, government infrastructure spending subsidizes and promotes R&D. This structuralist view of the state’s role implies that some military expenditure, including R&D, procurement, and arms exports, plays a role in capital accumulation. Other military expenditure assists in legitimization, such as non-​strategic military bases, veteran benefits, and other payments to military personnel (Cypher 1985, 276).

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PA RT T H R E E

WOR L D R E G ION S

Chapter 23

S ou t h Asian Ec onomi e s i n T wo Imperiali st Re g i me s b et ween 1950 a nd 2 02 0 Vamsi Vakulabharanam

Introduction South Asia1 experienced a steep economic decline during the period, 1750–​1950. This was primarily due to British colonial rule that transformed this region from a vibrant production hub to a source of raw materials and tribute, and a market for British manufactured goods (Patnaik 2006). During 1950–​1980, the newly independent nations of South Asia implemented import substitution industrialization (ISI) policies aimed at reducing their dependence on imperialist powers. They started experiencing economic growth after a long hiatus, although at a slower pace than the rest of the world. While they were able to develop an expanded industrial base and an educated workforce, their dependence on imperialist nations continued in key areas like technology and food, and in balancing their external payments. During this period, the region’s share in the global economy declined (see ‘Performance of South Asian Economies after 1950’). During 1980–​2020, as the imperialist countries moved from a regulated economic order to a more laissez-​faire one, many South Asian economies were restructured towards becoming more open, private, and market-​ oriented. The workforce that was educated during 1950–​1980 became a source of cheap labour power for global corporations. South Asian economies have continued to be suppliers of agricultural commodities for imperialist countries (Patnaik and Patnaik 2016) as well as emerging economic powerhouses like China, while also adding to their export portfolio, manufactured goods and high-​end software and business services. South Asian economies also served as final markets for finished products from the developed world. During this period, the South Asian share in global GDP increased. This chapter contrasts the

412   Vamsi Vakulabharanam two imperialist phases after 1950 and shows how relations of dependence of South Asian economies with imperialist countries have been perpetuated differently. This chapter aims to make sense of the complex trajectories of South Asian economies by focussing on the triad of dominant classes, states, and imperialist regimes. In the coming together of this triad, two ideas become salient: (1) ‘imperialist fix’,2 that was useful for South Asian elites to stave off any radical/​progressive economic restructuring in the wake of any crisis; and (2) ‘spatial fix’ that helped the imperialist countries entrench themselves in the region either to protect their own geopolitical interests or to prevent the region from evolving away from capitalism. This latter objective was often achieved through the help of multilateral agencies like International Monetary Fund (IMF) and World Bank that would provide loans and impose conditionalities on these economies in moving forward. A section of bureaucrats, economists, and political leaders (particularly in India) did favour an equitable and self-​reliant path free of imperialist pressures, but they did not prevail during crises. The rest of this chapter is organized as follows. The second section presents a brief discussion of the framework used, along with an overview of the two imperialist orders that prevailed during 1950–​2020. The third section presents key features of the major South Asian economies (and the overall region) during 1950–​2020. The fourth section makes sense of this evolution through the triad of dominant classes, states, and imperialist interventions in this region. The fifth section concludes.

Two Imperialist Orders since 1950s In this section, I briefly outline the framework of imperialism that I use from a broadly Marxian perspective. Imperialism is the control of a nation or a region by a nation or a consortium of nations (and the capitalist classes within them) in order to extract surplus value and/​or other economic benefits, and to exercise political and cultural dominance. I focus on the economic and political aspects in this chapter. The economic aspects of imperialism arise from the capitalist classes in the imperialist nations trying to maximize the extraction of surplus value (accumulation imperative) or garner other economic benefits. This imperative can lead to various imperialist practices, a few of which I list here. First, it can help extract raw materials from the dominated territories that are also used as markets for finished products. Second, it can lead to an export of capital from the imperialist countries to the dominated countries so that it can access cheaper labour power at destination and extract higher surplus. Third, it can lead to a process of primitive accumulation, whereby the peasant/​state/​collective properties can be annexed or controlled by imperialist capital or its agents in the dominated territories. Fourth, it can also lead to a direct transfer of tribute (like in colonial rule) from the dominated territories to imperialist countries. Fifth, it can lead to a process of unequal international exchange that is unfavourable to producers from the dominated territories. One or more of these strategies can arise out of crises (as a ‘spatial

South Asian Economies in Two Imperialist Regimes    413 fix’) arising in the imperialist countries, or simply as a way of extracting higher surplus value even during ‘normal’ times (Harvey 1982). The strategies for political imperialism (includes territorial logic) range from a direct coercive control by force, or by offering protection from other powers or through the incorporation of nations/​countries into a strategic network through the use of various kinds of aid—​economic and military. In the case of South Asia, both these aspects (and cultural dominance) have been at play throughout the colonial and postcolonial periods.

The Two Imperialist Phases since 1950 The world order that emerged after World War II was a contested one between the US-​ led capitalist bloc and the Soviet-​led communist order. This overarching order lasted until the Soviet system broke down in the early 1990s. The capitalist order transformed itself by 1980, due to its own deep profitability crisis, thereby creating two imperialist post–​World War II orders from the capitalist world—​during 1950–​1980 and post-​1980. During the first period, imperialist countries (capitalist order) had an interest in continuing with their dominance of their erstwhile colonies, albeit under the broad hegemony of the United States. The dominance had both political and economic dimensions. In the economic domain, these newly independent countries continued to be sources of cheap raw materials. On the political front, there was an interest in keeping these newly independent regions (including South Asia) from being influenced by the Soviet-​bloc or newly communist China. In this process, economic aid (food, intermediate goods, and technology) and military aid was used by the United States and other imperialist countries to keep such transformations under check. In their domestic policies, the imperialist countries adopted Keynesian policy regimes and a strategy of mass consumption, with reduced capital-​labour conflict (post–​World War II). The economic focus of imperialist countries was turned inward during this period, and the main motivation to dominate the South Asian countries was political (Alavi 1964), although securing cheap raw materials was always part of the agenda. By early 1970s, the earlier stable capitalist economic order (especially in the United States) became crisis-​prone. Inequalities began to decline between 1945 and 1970s as productivity gains were distributed between capital and labour. But the continued flourishing of both capital and labour was premised on rising productivity levels in the US economy. As productivity growth began to slow down by the late 1960s, even as wages continued to rise, profitability began to decline (Boddy and Crotty 1975). Along with oil price increases by OPEC countries, this also led to severe inflationary pressures. Countries that the US rescued through Marshall plan such as Germany and Japan began to become more competitive and this also had an impact on profitability in the United States. At the same time, the United States was unable to stick to gold-​parity of its currency. All of this led to two phenomena over the decade of the 1970s. First, the

414   Vamsi Vakulabharanam re-​emergence of footloose financial capital (that had been constrained by Glass-​Steagall and subsequent legislation) that sought entry into all parts of the globe. Second, there was a strong push to liberalize economies (internally and externally), thereby, among other consequences, eroding the victories that workers had won over previous decades. At the same time, US productive capital that was facing a profitability crisis also needed a ‘spatial fix’ beyond their own economies in terms of finding entry into those countries that possessed cheaper labour power. The threat of outsourcing production to the Global South helped weaken the bargaining power of workers in the imperialist core (Patnaik and Patnaik 2016). The response to the profitability crisis of 1970s then established a new regime of imperialism. In this, capital from the developed world (both financial and productive) wished to enter hitherto unexplored spaces in the less developed world (including South Asia), to access labour power that had been available only to the national capitals of this region, to more easily extract resources, and serve as markets for finished products in the developed world. Since South Asian regimes were still somewhat inward-​ looking when this new regime (neoliberalism) emerged, the entry was secured by exploiting the continuing dependence of these regimes to secure loans or precious foreign exchange. The agents/​instruments through which this was secured were multilateral agencies like World Bank or International Monetary Fund (IMF) and in the decade of 1990s, the World Trade Organization (WTO). During 1980s and early 1990s, South Asian economies were brought under this new imperialist regime (Bhaduri and Nayyar 1996).

Performance of South Asian Economies after 1950 After independence, South Asia can be shown to have two phases: (1) 1950–​1980, when economic output turned from stagnation/​decline of the previous two centuries to positive growth; and (2) 1980–​2020, when economic growth accelerated. Figure 23.1 shows that while South Asia’s share in the world economy declined slightly in the first period, it rose in the second period.

Inward Looking and State-​Dominated Era: 1950–​1980 While there is significant heterogeneity among South Asian economies during this period, all governments were keen on implementing ISI policies with a strong public sector presence (with five-​year plans), while not discouraging a private sector. I discuss the performance of these economies in terms of key economic indicators like output, growth, inequality, poverty, and economic and employment structure for the evolution

South Asian Economies in Two Imperialist Regimes    415 4.50 4.00 3.50 Percentage

3.00 2.50 2.00 1.50 1.00 0.00

1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

0.50

Years

Figure 23.1  South Asian GDP as % of world GDP. Source: World Bank Development Indicators.

of domestic economies and then the changes in exports, imports, foreign direct investment (FDI), reserves, remittances, and so forth in order to track the external economies. In terms of output, these economies witnessed moderate growth during this period (see Table 23.1). In comparison to the growth of the entire world, South Asia lagged behind as they attempted to build their infrastructure and industrial base after a destructive period of colonial rule. The shares of different countries reveal that about 80% of South Asia’s output is produced in India and this ratio has risen a bit during 1980–​2020, while the four major economies (India, Pakistan, Bangladesh, and Sri Lanka) constitute almost 98% of the total South Asian output throughout the period, 1950–​1980 (and even the second period). A third key observation from Tables 23.2 and 23.3 is that South Asian economies had low per capita income and lower growth compared to the rest of the world. From Table 23.4, in terms of the sectoral composition of output/​GDP, by the end of this period, South Asia as a whole derived roughly 30% from agriculture, 30% from manufacturing, and the rest from services (the last two lagging far behind the world proportions). Agriculture grew quite slowly in the first half of the period, improving after 1965, when Green Revolution was introduced (more in ‘The Triad of Class Structure, State and Imperialism in South Asia’). From Table 23.5, the salient feature across the region is that the agricultural sector was the main provider of employment. More than 50% of the workforce (in India, it was close to 70%) was still in agriculture by 1980. Since the proportion of agricultural sector in overall GDP was much lower, what this immediately implies is that South Asian countries had become deeply unequal in a structural-​macro way in their early evolution, while also failing to create employment in the faster growing sectors of manufacturing and services.

Table 23.1 GDP of South Asia and World since 1960* GDP at 2010 Constant US $ in Billions

India

Sri Lanka

World

Share of Top Four Economies in South Asia GDP

190.13

11355.94

97.91%

288.19

19167.47

98.01%

43.13 (11.10)

388.35

27870.57

98.11%

79.33 (11.98)

662.06

37905.34

98.17%

Year

Bangladesh**

Pakistan

1960

17.86 (9.40)

148.77 (78.25)

5.92*** (3.11)

13.59 (7.14))

1970

26.41 (9.16)

219.86 (76.30)

8.89 (3.08)

27.29 (9.47))

1980

28.63 (7.37)

295.59 (76.12)

13.67 (3.52)

1990

42.42 (6.41)

507.57 (76.67)

20.61 (3.11)

South Asia

2000

67.01 (6.03)

873.36 (78.58)

34.27 (3.08)

116.75 (10.50)

1111.47

49940.90

98.19%

2010

115.28 (5.59)

1675.62 (81.31)

56.73 (2.73)

177.17 (8.60)

2060.78

66113.12

98.25%

2019

209.97 (5.88)

2963.95 (82.99)

87.47 (2.45)

256.73 (7.19)

3571.27

84944.41

98.51%

* Reliable data are available from 1960 in the World Bank database. ** Until 1972 Bangladesh refers to East Pakistan. *** The series starts from 1961. This is the 1961 figure. The share of the individual economy in the South Asian output is presented in parentheses. Source: World Bank Development Indicators.

South Asian Economies in Two Imperialist Regimes    417 Table 23.2 GDP Per Capita in South Asia (1960–​2019) GDP Per Capita at Constant 2010 US $ Year

Bangladesh**

India

Sri Lanka

Pakistan

South Asia

World

1960

372.03

330.21

585.91*

302.09

331.90

3746.06

1970

411.18

396.01

711.84

469.44

403.79

5204.43

1980

359.46

422.90

909.32

552.62

431.20

6287.17

1990

411.16

581.22

1189.66

736.95

584.08

7178.94

2010

781.15

1357.56

2799.65

987.41

1257.50

9551.34

2019

1287.82

2169.14

4011.68

1185.46

1945.37

11069.79

*1961 GDP ** Until 1972 Bangladesh refers to East Pakistan Source: Author’s calculation from World Bank Development Indicators.

Table 23.3 Compound Annual Growth of GDP and Per Capita—​South Asian Economies Compound Annual Growth Rate—​GDP Period

Bangladesh

India

Sri Lanka*

Pakistan

South Asia

World

1960–​1980

2.39% (-​0.17)*

3.49% (1.24)

4.50% (2.22)

(3.07) 5.94%

3.64% (1.32)

4.59% (2.62)

1960–​2019

4.27% (3.33)

5.20% 4.28)

4.75% (3.88)

5.11% (1.98)

5.10% (3.94)

3.47% (1.46)

1980–​2019

5.24% (1.95)

6.09% (2.26)

4.87% (2.08)

4.68% (0.81)

5.85% (2.06)

2.90% (0.74)

* Per capita growth in parentheses. Source: Author’s calculation from World Bank Development Indicators.

Table 23.6 presents GDP decomposition into demand components. By 1980, consumption (mainly private but also government) dominated overall GDP (close to 80% in the big South Asian economies). Investment came in a distant second (Table 23.7 presents a comparison with savings rates for India and Pakistan), and net exports were invariably negative for all countries, although the proportion and significance of exports varied quite significantly across the countries. Low savings rates and a very modest influx of foreign capital, loans and aid could explain the low rates of investment in South Asia.

418   Vamsi Vakulabharanam Table 23.4 Sectoral Decomposition of GDP (South Asia and World) Sectoral Decomposition of GDP South Asia

World

YEAR

Agriculture

Industry

Services

Agriculture

Industry

Services

1970

40

23

37

9

37

53

1980

29 (-​0.23%)

29 (5.44%)

43 (4.59%)

7 (1.24%)

38 (4.09%)

55 (5.77%)

1990

27 (4.73%)

30 (5.84%)

43 (5.48%)

5 (-​0.29%)

32 (1.37%)

62 (5.07%)

2000

22 (3.18%)

30 (5.32%)

48 (6.48%)

3 (-​2.32%)

29 (1.79%)

68 (4.08%)

2010

16 (3.03%)

34 (7.71%)

50 (6.80%)

4 (5.85%)

29 (2.84%)

67 (2.64%)

2018

16 (6.48%)

29 (4.39%)

55 (7.76%)

4 (2.87%)

28 (2.42%)

67 (3.57%)

Note: In parentheses we have sectoral growth rates Source: UNCTAD and World Bank Development Indicators.

For distribution, I discuss two indicators in Tables 23.8 and 23.9—​headcount ratio (absolute poverty) and Gini coefficient (inequality), respectively. With the notable exception of Sri Lanka, all major South Asian nations had extremely high levels of poverty in 1980, with India and Pakistan having over 50% population below poverty line while Bangladesh had around 40%. Sri Lanka had a solid welfare system in place by the time of its independence. Although Sri Lanka’s growth performance was moderate (similar to other South Asian nations), their welfare system worked well to take care of its population (including education and health) until neoliberal economic reforms were introduced during the 1970s. The story of inequality (income/​consumption) is more complicated. This period (for those countries like India for which reliable data are available) witnessed a trend of moderately declining inequality in urban and rural areas and a complex rural-​urban gap that exhibits fluctuations. While radical redistribution policies were not implemented, feeble land reforms and creation of public sector employment played a mitigating role. For the most part, it was the upward mobility among the middle deciles of the population and the reduced distance between the top and middle deciles that resulted in inequality reduction rather than the improvement of people at the bottom (discussed in Vakulabharanam forthcoming). In the external domain, I discuss trade, FDI, external assistance, and foreign exchange reserves in what follows. In the domain of trade, from Figure 23.2, we can observe that for South Asia as a whole, the trade/​GDP ratio fluctuated between 10% and 20%. Among large South Asian nations, only Sri Lanka that was heavily exporting plantation output (like tea and rubber) had a high trade/​GDP ratio and the rest of the countries are similar to the overall South Asian regional average. India is the most inward-​looking country during this period. All the major countries maintained consistent trade and current

Table 23.5 Employment Shares of Different Sectors in South Asian Countries (1950–​2019) Sectoral Shares of Employment Bangladesh Year

India

Agriculture Industry

Service

1951–​60 1961–​70

Pakistan

Agriculture Industry

Service

72

11

17

Sri Lanka

Agriculture Industry

Service

Agriculture Industry

Service

73

11

15

59

17

24

53

10

37

1971–​80

79

5

16

74

11

15

55

18

27

55

12

34

1981–​90

59

11

30

68

14

18

54

19

27

51

20

29

1991–​00

51

13

36

57

18

26

48

18

34

36

24

40

2001–​10

48

15

37

58

18

23

43

21

36

30

26

43

2011–​20

41

20

39

44

25

31

38

25

37

25

28

47

Note: For India 1951–​60 refers to the year, 1951, 1961–​70 to 1961, 1971–​80 to 1973, 1981–​90 to 1983, 1991–​00 to 1994, 2000–​10 to 2005, and 2011–​20 to 2017. For Bangladesh 1971–​80 to 1975, 1981–​90 to 1985, 1991–​00 to 1991, 2000–​10 to 2005, and 2011–​20 to 2017 For Pakistan 1961–​70 refers to 1965, 1971–​80 to 1975, 1981–​90 to 1985, 1991–​00 to 1991, 2000–​10 to 2005, and 2011–​20 to 2017. For India 1961–​70 refers to 1963, 1971–​80 to 1973, 1981–​90 to 1981, 1991–​00 to 1995, 2000–​10 to 2005, and 2011–​20 to 2019. Sources: Statistical Year Book of Bangladesh (Various Years), NSSO Employment and Unemployment Survey (Various Years), Statistical Year Book of Pakistan (various years) and 50 Years of Pakistan : Volume II (1947–​1997), Sri Lanka Labor Force Annual Survey Report (various years).

Table 23.6 GDP Decomposition (Demand-​Based), 1950–​2018 Share of Components in GDP Bangladesh Year 1950–​51 1960–​61 1970 1980 1990 2000 2010 2018

Consumption

India Government

98 86 85 78 74 71

1 4 5 5 5 6

Investment

6 22 18 23 26 31

Exports

6 5 6 14 16 15

Imports

Consumption

Government

Investment

Exports

Imports

9 15 14 19 22 23

90 89 80 78 67 64 55 59

6 7 9 10 11 12 11 11

11 14 16 21 28 26 40 31

7 4 4 6 7 13 22 20

7 7 4 9 8 14 27 24

Pakistan

Sri Lanka

Year

Consumption

Government

Investment

Exports

Imports

Consumption

Government

Investment

Exports

Imports

1960–​61 1970 1980 1990 2000 2010 2018

92 80 87 75 78 80 82

8 8 11 8 10 12

23 15 17 18 15 16 16

10 6 10 11 12 14 9

26 8 18 15 14 19 19

76 83 79 74 68 70

6 5 7 7 8 9

21 36 23 28 30 29

21 27 26 33 20 23

23 45 33 42 27 30

South Asia

World

Year

Consumption

Government

Investment

Exports

Imports

Consumption

Government

Investment

Exports

Imports

1970 1980 1990 2000 2010 2018

79 74 69 64 56 60

9 12 11 11 11 11

18 28 27 26 37 31

6 9 9 15 22 19

7 16 13 16 25 24

57 57 58 60 57 57

16 17 17 16 17 16

28 28 25 24 25 26

11 18 19 24 29 29

11 19 19 24 28 29

Source: UNCTAD, 50 Years of Pakistan : Volume I (1947–​1997) and National Account Back Series 2007 (1950–​1951 to 1999–​2000), India.

South Asian Economies in Two Imperialist Regimes    421 Table 23.7 Savings and Investment Rates for India and Pakistan (1950–​2017) India

Pakistan

Year

Savings Rate

Investment Rate

Savings Rate

Investment Rate

1950–​51

9.50%

9.30%

1960–​61

11.59%

14.27%

6%

10.53%

1970–​71 1980–​81

14.32%

15.14%

14%

14.31%

17.77%

19.17%

13.69%

17.66%

1990–​91

22.93%

26.03%

14.20%

17.93%

2000–​01

23.68%

24.26%

15.68%

17.22%

2010–​11

33.68%

36.50%

13.63%

16.36%

2016–​17

30.00%

30.06%

12.00%

16.20%

Source: Author’s calculation from National Accounts Statistics (various issues), India; Handbook of Statistics, Pakistan, 2015; and Statistical Supplement 2019–​20, Pakistan.

account deficits (Figure 23.3). Exports from all major countries were largely primary goods, and low-​grade manufacturing goods. As is well known, these goods suffered from unfavourable terms of trade vis-​à-​vis goods produced in the developed world. At the same time, in order to reduce import dependence, countries needed to produce industrial goods that required imported technology. The aforementioned deficits primarily arose from the dependence these countries had in obtaining these technological inputs, oil, and food. The trade deficits would have to be balanced primarily by transfers, foreign assistance, and loans (aid). We turn to this later. From Figure 23.4, we can see that FDI inflows for the region as a whole hovered below 0.5% of GDP by the end of this period. Only for Pakistan (Figure 23.5) is this figure marginally higher. For Sri Lanka, as it opened its economy in 1977, FDI inflows increased somewhat by the end of this period. From Table 23.10, we can look at the picture of external assistance. While both India and Pakistan received external assistance (mainly from the capitalist West), Pakistan received much higher assistance relative to its GDP. However, assistance, loans from multilateral agencies like IMF and World Bank, and the paltry FDI flows were the channels through which South Asian countries paid their current account deficits. Assistance also came in the form of food or military aid, the former becoming necessary to fight off near famines, especially in India during the 1960s. As we can see from Figure 23.6, the forex reserve situation during the 1950–​1980 period was precarious. This, then, sets up the dependency of these countries on the developed world. Despite the efforts made to develop ISIs, South Asian countries, at the end of this period in 1980, remained quite dependent on wealthy countries (mainly, but also in part, on Soviet Union). There were unsolved structural issues of employment, high poverty,

Table 23.8 Poverty (Headcount Ratio) in South Asian Countries (1950—​2019) Poverty Rate in Selected Countries Year

India*

Year

1951

46

1961

48

1970

52

1973

1983

53

1983

1993

35

2000

25

2011

11

Bangladesh**

Year

Sri Lanka***

Year

Pakistan****

1963

47

1963

40

50

1973

18

1970

47

40

1982

34

1979

31

1995

35

1991

26

1990

22

2005

25

2002

23

2001

35

2010

19

2010

 9

2010

15

2016

 4

*Poverty Line (monetary equivalents for India and other countries)—​Rural: Equivalent of 2400 cal/​ person: Urban: 2100 cal/​person. These calorie counts have been altered after 2005 and are subject to debate and controversy (see Motiram and Vakulabharanam, 2015). ** 2122 calories/​person +​non-​food allowances *** LKR 1423 monthly per capita expenditure, 2002 (adjusted for other years). **** 2350 calories/​person. Source : Datt et al. (2016), Hossain (2014), and Household Income and Expenditure Survey, Sri Lanka 2016, and Cheema and Sial (2014).

Table 23.9 Inequality in South Asian Countries (1950–​2016) Inequality (Gini Coefficient) in Selected Countries Year

India

Year

Pakistan

Year

Bangladesh

1950–​51

0.37

1959–​60

Year

Sri Lanka

0.39

1963–​64

0.39

1973

0.36

1963

0.51

1973

0.41

1970–​71

0.31

1969–​70

0.34

1985

1983–​84

0.33

1984–​85

0.37

1995

0.38

1985

0.46

0.43

1990

0.43

1993–​94

0.33

1993–​94

0.4

2004–​05

0.36

2004–​05

0.3

2005

0.47

1995

0.46

2010

0.46

2002

0.47

2009–​10

0.37 2015

0.34

2009

0.49

2016

0.48

2016

0.45

Source: Vakulabharanam (forthcoming), Asad and Ahmad (2011), and World Bank Development Indicators, Chowdhury and Hossain (2019), Household Income and Expenditure Survey, Sri Lanka 2016.

100 90 80

Percentage

70 60 50 40 30 20 10 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

0 Years Sri Lanka

India

Pakistan

Bangladesh

Figure 23.2  Trade as a % of GDP for major South Asian countries (1960–​2018). Source: World Bank Development Indicators.

Pakistan

Sri Lanka 5

10

Percentage

–5

1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019

Percentage

0

–10 –15

–5

Year 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018

0

5

–10 –15 –20

Years

Years

Bangladesh 4

0 –2

1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019

Percentage

2

1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019

Percentage

India 3 2 1 0 –1 –2 –3 –4 –5 –6

–4 –6 Years

Pakistan

Years

Sri Lanka

India

Bangladesh

Figure 23.3 Current account balance as a % of GDP of major South Asian economies (1951–​2018). Source: World Bank Development Indicators, Washington, DC: The World Bank, Handbook of Statistics on the Indian Economy, Mumbai: Reserve Bank of India, Annual Report, Colombo: Central Bank of Sri Lanka, Handbook of Statistics on Pakistan Economy, Karachi: State Bank of Pakistan.

424   Vamsi Vakulabharanam 4.5 4 3.5 Percentage

3 2.5 2 1.5 1 0.5 2018

2016

2014

2010

2012

2008

2006

2002

2004

2000

1998

1996

1994

1992

1990

1986

1988

1984

1982

1980

1978

1976

1974

1970

-0.5

1972

0 Years World

South Asia

Figure 23.4  FDI net inflows for South Asia and world (1970–​2018). Source: World Bank Development Indicators.

4 3.5 3

Percentage

2.5 2 1.5 1 0.5 2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1970

-0.5

1972

0

Years Bangladesh

India

Pakistan

Sri Lanka

Figure 23.5  FDI net inflows for major South Asian economies (1970–​2018). Source: World Bank Development Indicators.

and extreme external dependence in South Asia by 1980. Structurally, their populations were mainly dependent on agriculture, even as agriculture was shrinking rapidly as a proportion of the overall economy. The policies that were implemented to stave off dependency did not fully solve the problem (due to continued food, forex, and technological dependence), although some import-​substituting industrialization took deep root and created a strong industrial base as well as a viable private sector.

South Asian Economies in Two Imperialist Regimes    425 Table 23.10 Net Official Development Assistance for Major South Asian Economies (1960–​2018) Net Official Development Assistance for Selected Countries (Decadal Aggregates in 2015 Constant US$ Year

Bangladesh

India

Sri Lanka

Pakistan

South Asia

1960–​70 1971–​80

NA

71078.22

2036.30

28372.14

105045.26

21200.24

43049.33

5082.31

20905.67

94548.72

1981–​90

24804.71

35350.44

8942.58

15993.34

91386.37

1991–​00

14887.21

22275.06

4854.17

9460.55

59796.30

2001–​10

14310.46

18798.09

5905.26

20483.01

102996.09

2011–​18

19723.10

20648.06

2660.29

21105.98

112338.98

Source: Author’s calculation from World Bank data.

25

Percentage

20 15 10

0

1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

5

Years Bangladesh

India

Pakistan

Sri Lanka

Figure 23.6  Foreign exchange reserves in South Asia (1960–​2018). Source: World Bank Development Indicators.

The Liberalizing and Globalizing Era: 1980–​2020 Across South Asia, there was a move towards liberalizing economies after 1980 (encouraging private business interests, deregulation, and export orientation), although the market-​oriented path (away from planning) was more formally adopted during the late 1980s and early 1990s. A more private sector–​oriented capitalism replaced the public sector–​centred economy of the earlier period. The internal pressure for this change was exerted by private capitalist classes and urban professionals.

426   Vamsi Vakulabharanam In contrast to the previous period, this period witnessed much stronger growth for South Asian economies, outstripping the growth of the world economy for the first time after their independence (see Figure 23.1). The Indian economy, in particular, grew much more rapidly during this period. The same result holds even for growth of per capita income (see Tables 23.1, 23.2, and 23.3). In terms of sectoral composition of GDP (Table 23.4), agriculture further diminishes in proportion in all economies (less than 20% in most), while services take off as the main growth sector. Manufacturing is stagnant in its share of output in most of these economies. Agriculture grew impressively in the 1980s, begins to decline during the later decades, although there are patches of high growth (such as in the 2005–​2012 period, for the Indian economy). In terms of employment (Table 23.5), agriculture still caters to about 40% of total employment. Service sector has absorbed much of the employment that agriculture has shed. Manufacturing has absorbed employment at a much slower pace. The structural mismatch between sectoral output share and employment share has persisted into the present. In terms of a demand-​based GDP decomposition (Tables 23.6 and 23.7), the major change from the previous period is that consumption declines drastically as a proportion of GDP (it hovers in the 60%–​70% range) and investment picks up. Along with investment, exports (and imports) rise quite significantly. This period then witnesses a higher-​investment and export-​driven growth. In terms of poverty and inequality (Tables 23.8 and 23.9), trends of the previous period reverse. Although fiercely debated, official poverty figures show a sharp decline in all countries, while inequality rises sharply. Poverty reduction during the 1980s is widely acknowledged by all parties to the debate, especially in India. Improvement in agricultural growth and rise in rural wages are considered to be the most proximate causes. Post-​1990, poverty numbers are hotly contested—​this period produces inequality-​ inducing rapid economic growth. In the external sector, the trade account witnessed a huge boost during 1980–​2020, as these economies globalized more and got interconnected with the rest of the world. For the region as a whole, trade/​GDP ratio rises from 20% in 1980 to around 40% by 2019, peaking at 53% in 2012. Both exports and imports rose from about 10% in 1980 to about 20% in 2020. One major spurt this period witnesses is in remittances (Table 23.11). Personal remittances rise steadily from 2.3% to about 4% for the region as a whole. Bangladesh, Sri Lanka, and Pakistan register a steeper rise, showing the extent of outmigration from these countries to the Middle East and Western countries. External assistance declines in absolute numbers (Table 23.10) as inflows of foreign capital register a significant increase. For the region as a whole, foreign capital inflows increase from close to nothing in 1980 to about 1.5% of GDP by the end of this period (Figures 23.4 and 23.5). This ratio peaks before the global crisis of 2007–​2008 and then declines slightly during 2010–​ 2019. The greatest increases are observable in India, especially before 2008, when the ratio increases to about 3.5% and then declines to about 1.5% by the end of the period. A

South Asian Economies in Two Imperialist Regimes    427 Table 23.11 Personal Remittances to South Asia (1975–​2019) Personal Remittances, Received as % of GDP Year

Bangladesh

1975

India

Sri Lanka

Pakistan

South Asia

0.44

0.23

1980

1.87

1.48

3.77

8.66

0.43 2.28

1985

2.26

1.06

4.88

8.15

1.99

1990

2.46

0.74

4.99

5.01

1.39

2000

3.69

2.75

7.07

1.31

2.75

2010

9.41

3.19

7.27

5.47

3.98

2019

6.07

2.90

8.03

8.00

3.89

Source: Author’s calculation from world bank data.

1.8 1.6

Percentage

1.4 1.2 1 0.8 0.6 0.4

2018

2016

2014

2010

2012

2008

2006

2002

2004

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1970

0 –0.2

1972

0.2

Years Bangladesh

India

Pakistan

Sri Lanka

Figure 23.7  FDI net outflows as a % of GDP from South Asian countries. Source: World Bank Development Indicators.

significant chunk of this increase during 2002–​2008 is that of portfolio capital that tends to be more volatile than FDI, which has also increased in resource extraction industries (e.g., coal, aluminium, and iron) after 2000. The Indian economy also began to witness FDI outflows during this period (about 1.6% just before the global crisis), which is an interesting phenomenon in itself (Figure 23.7). Foreign exchange reserves increased substantially for the region as a whole during this period, while Indian economy registered the highest increase (Figure 23.6). To sum up, this period saw South Asia being integrated with the world economy to a much greater extent than during 1950–​1980. However, vast increases in intra-​country inequalities and instability of the world economy since 2007 makes this integration

428   Vamsi Vakulabharanam deeply problematic. On the one hand, South Asian elites have found a way to make gains for themselves in South Asia and elsewhere, while a vast majority of working people reel under an increasingly unequal regime that excludes them. On the other hand, a volatile world economy directly impacts South Asian economies making them much more vulnerable.

The Triad of Class Structure, State, and Imperialism in South Asia In this section, I explain the role of imperialism in the evolution of South Asian economies using the triad of imperialism, class structures, and states. In all South Asian countries, from their independence until now, there has been a deep intermeshing of dominant class agendas and state policies with imperialist agendas (Ahmed 1972; Bhambhri 1985; Mannan 1990; Nuruzzaman 2004; and Kelegama 2000). While countries have taken different paths, the following similarities can be observed. First, elites and states were quite keen on preventing radical social transformation. To the extent that progressive policies have been implemented, these have largely been in response to popular movements. Second, while imperialist countries had an uneven engagement across South Asia (given their political and economic motivations), they always abetted the prevention of radical transformation. Third, South Asia was part of the ‘spatial fix’ for crises or strategic endeavours in the metropolitan region, whereas for South Asian elites, there was always an ‘imperialist fix’ for domestic crises that would have required progressive restructuring. It is this symbiotic relationship that helps us understand the evolution of South Asian economies. How did these three processes come together in the selected countries—​India, Pakistan, Sri Lanka, and Bangladesh? In India, dominant classes at the time of independence were the powerful landed classes/​rich peasants, emerging private sector capitalists, and the Western-​educated state bureaucrats/​civil servants. The landed interests were able to successfully prevent the state from undertaking any large-​scale land reform process during the 1950s and in the later period. The emerging private sector capitalists ensured that the state provided various kinds of support to their endeavours, while ensuring that tendencies towards a socialist reorganization were always kept under check. The bureaucrats kept the Indian state oriented towards the imperialist West and ensured partly that ties to the Soviet bloc were under check (even when they formed). India, right after independence, professed a policy of non-​alignment and led the movement to begin with. But it was never able to steer clear of either imperialist West or Soviet bloc and was always conflicted between these two forces—​economic aid largely came from the West, while military aid came from the Soviet bloc. The elite classes ensured that they always had adequate representation in national and subnational legislative bodies to prevent radical policies.

South Asian Economies in Two Imperialist Regimes    429 In Pakistan, through this whole period, the state has been more powerful in comparison to civil society (Alavi 1973). An early alignment of the state with the United States (by the early 1950s) that continued into the post-​1980 period for the strategic interests of the latter (in the middle-​east) meant that the military wing of the state remained strong relative to civil society elites. This also served the national security imperative in Pakistan vis-​à-​vis its larger (economy, population) neighbour, India. Bureaucrats in Pakistan resembled their Indian counterparts. The state in Pakistan definitely served the interests of landed-​classes, military, state functionaries, and regional interests of the province of Punjab. Other regions (e.g., East Pakistan before the formation of Bangladesh, Baluchistan, Federally Administered Tribal Areas, Pakistan-​controlled Kashmir and Gilgit-​Baltistan) have never been adequately represented in its post-​independence history. There has also been a private sector capitalist class that has grown stronger over time with significant support from the state. The military is the largest landowner (also with a real estate portfolio) and has an industrial conglomerate maintaining a vast empire under the title of Army Welfare Trust. Pakistan has also flip-​ flopped between dictatorship and democracy, arising out of domestic crises and imperialist imperatives. There has also always been a strong rightwing Islamic group (Mullahs) which has typically gained from state patronage, despite apparent differences (Akhtar, Amirali, and Raza 2006). The case of Sri Lanka is a little different from the above cases. The dominant classes were similar at the time of independence—​ landed interests, capitalists (plantation sector), and western-​educated bureaucrats and politicians—​but there were key differences. Sri Lanka used its plantation revenues to set up a broad-​based welfare state that was very unique in comparison to its neighbours. In addition, until 1970s, there was enormous contestation within the elite between one group committed to private sector capitalism and another pushing for egalitarian policies. The latter group won power in early 1970s, nationalized the plantation sector and attempted land reforms that were not as successful. After 1977, when Sri Lanka embarked on market-​oriented liberalization policies ahead of its South Asian neighbours, there was a rapid emergence of a dependent private-​capitalist class that has grown dominant in the subsequent decades. Especially after liberalization, Sri Lanka relied heavily on aid, assistance, and inflows of capital from the imperialist countries in order to achieve economic growth (Kelegama 2000). Since independence, there has also been deep contestation between the Sinhala elite and Tamil elites and workers. This contest turned bitter during 1980s to late 2000s due to multiple factors like the growth of Tamil Nationalism in the previous decades, India’s backing of Tamil militance after 1977 and the erosion of the welfare state under neoliberal reforms that adversely affected the Sinhala middle classes. This is the period when the Tamil separatist groups were brutally suppressed. Bangladesh emerged as an independent country in 1971 after waging a war with Pakistan primarily due to uneven development and siphoning of resources from East to West Pakistan to benefit both the capitalist classes and military (located in West Pakistan). Just before its formation, Bangladesh witnessed deep contestations between leftist forces (a range of communist parties and National Awami Party) that represented

430   Vamsi Vakulabharanam peasants and urban working poor and a deeply contested coalition of landed interests, middle-​class bureaucrats and other middle classes along with peasants, and workers and their representatives (represented by Awami League). In the war for independence (supported by India), state power was handed over to the latter group, which resulted in a deep internal contestation regarding policies towards radical redistribution (Alavi 1973; Ahmed 1972) and severe repression of radical activists. From early 1975 onwards, a strong authoritarian tendency began to emerge and consolidate under the new reign of the founding president of Bangladesh, Sheikh Mujibur Rehman (Mujib), who had declared that the only legal political party would be the Bangladeshi Krishak Sramik Awami League (BaKSAL). This led to a violent suppression of the opposition within the erstwhile Awami League that led to the creation of major breakaway factions like the Jatiyo Samajtantrik Dal (JSD) and repression of other political parties like National Awami Party. This, was followed by the assassination of Mujib himself in August 1975 and also severe repression of progressive activists, including the assassination of Colonel Abu Taher, in 1976, who represented the JSD (Lifschulz 1979). Bangladesh continued for more than a decade under authoritarian rule thereafter. Over time, Bangladesh has developed its own private capitalist class that caters to domestic needs and has been vibrant in the export sector (especially garments). Since the early 1980s, Bangladesh has been liberalizing and opening its economy as well, integrating itself with the post-​1980 imperialist order. There has also been a flow of external aid and assistance into Bangladesh that plays an important role in setting the priorities of the state (Mannan 1990).

Evolution of South Asian Economies Using the Class-​State-​Imperialism Triad during 1950–​2020 There was widespread agreement in the early development discourse that newly independent countries have to develop their own manufacturing base and pursue ISI policies to escape the dynamic inefficiencies associated with unfavourable movement in terms of trade for primary goods (Bruton 1989). South Asian economies followed this prescription. Since these countries were coming out of broad-​based, progressive independence struggles, there were also demands from below for egalitarian redistribution of land and other resources. The elites, with the help of the state, were able to thwart these demands. In the domain of education, the elites pushed for greater investments in secondary and tertiary education, which served their interests while leaving a large population without access to basic literacy and primary education (except Sri Lanka). These had consequences. Land reforms would have promoted equality while boosting agricultural productivity. Since this was stymied early on in most of these economies, there was a genuine problem with self-​sufficiency in food. This led to the first axis of imperialist dependence. Several of these countries relied on the United States and other countries to obtain food aid in the 1950s and 1960s. As food aid became difficult to obtain by the mid-​1960s, these

South Asian Economies in Two Imperialist Regimes    431 economies moved to implement ‘Green’ Revolution technologies (hybrid seeds, chemical fertilizers, tube well irrigation, and pesticides) (Griffin 1979). Much of the technical knowhow for the Green Revolution was obtained from the United States and corporate philanthropic foundations (e.g., Ford or Rockefeller). Failure in implementing radical redistribution policies led elites to implement an ‘imperialist fix’. Rural areas, where much of the poverty of these countries was concentrated, could not witness major poverty reduction during this period—​the region had more than 50% in absolute poverty (as noted in ‘Performance of South Asian Economies after 1950’). In the industrial sector, all South Asian countries aimed to develop a strong public sector that would produce a range of commodities (heavy industry to light consumer goods). They relied primarily on the US-​led imperialist West to obtain technical knowhow. Given the savings constraints and limited foreign exchange, this led to two other kinds of dependency. First, it pushed these countries to seek loans, assistance and aid mainly from the imperialist West, although a small portion of aid (especially to India) came from the Soviets. Clubs in the United States and other imperialist nations played the role of generating aid for particular South Asian economies. Loans were also obtained from multilateral agencies like IMF and World Bank, and typically these loans always came with conditionalities. For instance, India was asked to devalue its currency vis-​à-​vis the US dollar in 1966. Second, after an initial resistance to foreign capital (especially in India), by the late 1950s, foreign capital was allowed to form partnerships with domestic capital and transfer technology as part of arrangements to their subsidiaries (Weisskopf 1973). A fourth axis of dependency developed due to military aid that these countries sought from either the imperialist West or the Soviet bloc. This led to a significant expenditure of precious resources for the sake of national security (away from the development imperative) and perpetuated dependence. The professed strategy of non-​alignment that countries like India actively promoted stood defeated. By the end of the first imperialist order (1950–​80), while South Asian countries had achieved moderate GDP growth and very low per-​capita GDP growth (as discussed in ‘Performance of South Asian Economies after 1950’), they were already deeply rooted in a relationship of dependency. The creation of a public sector generated some employment during this period, and the middle-​income deciles in urban areas witnessed improvement, thereby reducing urban inequality for the whole period. The solution to low per capita growth and high poverty levels could have been a deeper appreciation for the need for internal transformation—​a focus on labour intensive industrialization, and progressive land reforms. However, the entrenched elites went for the ‘imperialist fix’ by globalizing and liberalizing their economies (Bhaduri and Nayyar 1996). Through the 1980s, all these economies began to realign themselves with the second imperialist order that promoted privatization, greater openness (trade and capital flows) and market orientation. Any vulnerability in their balance of payments also meant that IMF and World Bank could impose conditionalities that would promote privatization of domestic economies, and trade and capital account liberalization in the external sector. As discussed earlier, the imperialist countries aimed to find a spatial fix for the

432   Vamsi Vakulabharanam profitability crisis that their capitalist classes were facing and they found it in the developing economies, including South Asia (with its labour reserves). In South Asia, the elites had grown richer, more educated, and more determined to strengthen their position by the end of the first period. Liberalizing a moderately growing economy seemed like the right strategy for these classes. The second period ushered in faster growth for South Asia, as discussed in ‘Performance of South Asian Economies after 1950’. The external situation improved in terms of a rapid rise in exports, reserves and foreign capital inflows relative to the first period. Absolute poverty has declined (although the numbers are hotly contested; Patnaik 2007; Subramanian 2011). One may conclude that the neoliberal or globalizing period was much more successful than the first period. In reality, the second period has been extremely successful for the elite classes. Their incomes and wealth began to rise sharply during the period of economic globalization. However, the deep contradiction of this period is that this rise in prosperity has been accompanied by sharp increases in inequality along the lines of a widening urban-​rural gap, within-​urban class-​based inequalities and a rising gap between formal and informal workers. This period has also witnessed a sharp increase in primitive accumulation processes, whereby collective, state-​owned and petty property (peasant lands) have been increasingly appropriated by elite classes, both domestic and foreign (Vakulabharanam 2010). South Asian economies have become sharply polarized with a small (largely city-​centred) elite at one end, being beneficiaries of globalization and at the other end, vast majorities suffering from extreme forms of disenfranchisement (Pasha 2000). As shown in ‘Performance of South Asian Economies after 1950’, segments of South Asian capitalist classes are now investing in global ventures, as is visible in the higher FDI outflows from South Asia. In sharp contrast, formal employment has been largely stagnant in these economies through this period. There has been a deepening of agrarian distress in several of these countries with India witnessing a spate of more than 300,000 farmer suicides (Vakulabharanam and Motiram 2011). The distress-​induced migration to urban areas has pushed a lot of these rural workers into low-​paying, inequality-​inducing urban informal markets. Overall, this period has brought about a highly inequitable South Asia.

Conclusion The current juncture in South Asia is characterized by three intersecting phenomena. First, the region as a whole has witnessed significant slowdown in growth over the post-​2014 period, and this also coincides with the overall slowdown of the global economy. Individual countries now face a significant demand constraint, since they have become more unequal while becoming more open at the same time. Greater openness was supposed to be the demand provider, and this would have worked in a

South Asian Economies in Two Imperialist Regimes    433 rapidly growing global economy, but this has not been the case after the global crisis of 2008. There is a greater need in these economies to implement progressive redistribution, also in part to boost demand. However, South Asian elites might thrive on globalizing themselves (as witnessed from the increases in FDI outflows and export of skilled labour), and therefore, necessary changes may not be forthcoming without major popular struggles. The second major phenomenon is that elites (especially in India and Sri Lanka, but also in other countries) have chosen to back authoritarian religious/​ethnic nationalisms and populist leaders in order to foster growth and promote a stronger nationhood. It is not clear if this model would work well even for the elites in the medium term since what it has actually done is to divert attention away from failing economies, while focusing political mobilization towards divisive identity issues instead of resurrecting economic dynamism. In terms of the changing world order, especially in the South Asian context, there is a third key phenomenon that is reshaping the region. The US–​Pakistan imperialist connection has slowly begun to unravel and is being replaced by China–​Pakistan proximity. China has also expanded its economic presence in the region—​it has invested in the China Pakistan Economic Corridor (as part of its Belt and Road initiative) in Pakistan, and in ports and other infrastructural facilities in Sri Lanka. At the same time, Indian state and elites have moved closer to the United States and show a deeper hostility towards China. As a multipolar world order emerges, Pakistan and India have once again realigned themselves to be on the opposite sides of this order. These three intersecting phenomena will shape South Asian economies quite significantly in the coming years. At this time, there is no imminent and deep imperative in these realignments for a progressive restructuring of these economies or intraregional relations.

Acknowledgement I thank Jim Boyce, Sripad Motiram, Smriti Rao, Ahilan Kadirgamar, Jayati Ghosh, Ishan Anand and Danish Khan for their comments on an earlier draft. I thank Kishorekumar Suryaprakash for providing research assistance.

Notes 1. South Asia consists of India, Pakistan, Sri Lanka, Bangladesh, Nepal, Afghanistan, Bhutan, and Maldives. This chapter engages with India, Pakistan, Sri Lanka, and Bangladesh, which contribute about 98% of output. 2. By ‘imperialist fix’ in this chapter, I mean the following—​the state and the ruling elites when they faced a situation where the current economic/​political order could be thrown into deep crisis would rush to the imperialist countries for aid or technological or military

434   Vamsi Vakulabharanam assistance in the Global North in order to solve the impending crisis. Further nuances of the imperialist fix could be developed (e.g., pertaining to economic, political, national/​external security) but for this chapter, the previous broad definition would work.

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Chapter 24

P ower C ompet i t i on and Expl oitat i on i n Sou theast Asia Johannes Dragsbaek Schmidt

The Commonalties and Modalities of Competing Imperialisms It is important to understand collective intellectual expression as well as situating other options available for future social change in terms of patterns that can be discerned in the historical past. ‘Conceptual clarification is the most constant need, and as life goes on and new experiences occur, we learn if we are wise, to reject and reformulate the partial truths of our predecessors, and to unmask the ideological obscurantism of the self-​interested upholders of encrusted privilege’ (Wallerstein 1981, 268). The interpretation of the history of conquest and imperialist atrocities deliberately slipped into the maelstrom of the past. The hijacking of history has been one of the hallmarks of Eurocentric hegemony in knowledge production and ‘The supposition that capitalist imperialism was/​is a benevolent philanthropic model and pattern of political economic relations conducive to the establishment of a harmonious commonality deserves to be questioned and rejected as not consistent with past or present experience and reality’ (Schmidt and Hersh 2019, 121). In the spirit of these observations and in contrast to the liberal view of imperialism, which represents a benevolent perspective of conquest and quite innocently claim that the British had ‘conquered and peopled half of the world in a fit of absence of mind’ (Seeley 1883), it may be time to endorse an alternative version. The collective amnesia of the colonial powers is paramount. The usurpation by violence of the process of development of the dominated societies (Cabral 1979) became the heresy of developmentalism in the Third World. However, informal, and formal empires are still with us and

438   Johannes Dragsbaek Schmidt determine our relationship to history. In fact, empire is still a resurgent phenomenon, carving a new economic, cultural, and political globalized order as well as inspiring oppositional forces to it. The motives of European and Anglo-​Saxon imperialism in the colonized countries were not only extraction of profits and exploitation in economic sense. The ideology and policies of imperialism also rested on racism, hierarchy, and supremacy. Whether it was brute imperialist force or pure exploitation endorsed and implemented by conservatives, liberals, or labor governments, the leitmotif behind was Eurocentrism. France’s mission civilisatrice or la valise ou le cercueil or, in the British version, welfare state imperialism, and Roosevelt’s ‘Speak softly and carry a big stick, you will go far’ were dictums serving as ideological cover for imperialist occupation and, when necessary, violence. The notion of ‘neoliberal globalization’, which altered and replaced the term ‘imperialism’, basically incorporates the same understanding of the relationship between North and South and rests on global apartheid seen from the perspective of the postcolonial countries. It is not surprising, then, that resistance to the West became ‘closely linked to anti-​imperialism and claims a more generalized movement against Western cultural and ideological dominance, in addition to political challenges to the structures of imperial power’ (Bush 2006, 39). The modality of economic extraction and ideology of white supremacy especially of ‘settler colonialism’ led to ‘the deadly interplay of racism, genocide, and radical denial at the heart of American white society has been reproduced in that society’s military, and it has been especially evident in America’s Asian wars’ (Bello 2020). This epiphany of the construction of institutionalized racial inequality was facilitated by the ideology of Eurocentric Social Darwinism and the language of race relations becoming exclusively a political exercise. Resistance to the imperialist model of exploitation in the colonies was not only impacted by the extraction of the economic surplus from the periphery but had to take into consideration the question of economic absorption in the core societies as well. This dichotomy influenced the labor movement’s travails with anti-​capitalism. While the socialist perspective of ‘social democracy’ accepted the exploitation of colonies as necessary to its project, Marxists were split at the strategic level. In this context, the Russian revolutionary Vladimir Lenin was not blind to the question of inequality, racism, and the ‘civilizing view’ of colonialism and imperialism. With respect to the concept of labor aristocracy, he insisted that ‘a privileged upper stratum of the proletariat in the imperialist countries lives partly at the expense of hundreds of millions in the [so-​called] uncivilized nations’ (Lenin 1964, 107). Note here that while distinguishing between civilized and uncivilized nations, Lenin put scare quotes around the former and treated it as euphemism for ‘capitalism’ (Foster 2019). He stressed the growth of monopoly and financial capital, division of the world among the international trusts, ‘capital export, the race for energy and raw materials, class struggle, geopolitical rivalry in the struggle for economic territory and spheres of influence, the emergence

Power Competition and Exploitation in Southeast Asia    439 of a labor aristocracy in the capitalist core, and the contest for global and regional hegemony’ (Lenin 1977, 89). It is interesting to note that with the expansion of exploitation, and imposition of trade and tariff measures favouring export industries and purchasing power in the metropole, workers were given a stake in the successes of their respective ruling classes. As Cope mentions, ‘It was this common interest of capitalists and workers in the metropolitan countries established on the basis of imperialism that best explains the wealth of (some) nations’ disdain shown by Socialist parties for the workers of ‘backward’ countries and led them to support their own governments as they waged imperialist war’ (2019, 179–​180). As late as 1949, the then-​future British Labor Prime Minister Harold Wilson said that ‘no party can or should claim for itself the exclusive use of the title Imperialist, in the best sense of the word’ (Furedi 1994, 80). The concept of ‘imperialism’ is treated as if it is anachronistic, no longer useful to explain the situation in our world. Furthermore, as Lenin noted labor and other parties on the Left had placed loyalty to national capital above transnational class solidarity. The role of organized labor was already illuminated by Karl Marx who noted that, ‘Capital is dead labor which, vampire-​like, lives only by sucking living labor, and lives the more, the more labor it sucks’ (Marx 1867, 163). The connection is obvious, since organized labour supported imperialism nationally to create employment but missed the opportunity to create a transnational anti-​imperialist front. As Rosa Luxemburg mentioned: ‘Imperialism grows in lawlessness and violence, both in aggression against the non-​capitalist world and in ever more serious conflicts among the competing capitalist countries. The mere tendency toward imperialism by itself takes forms that make the final phase of capitalism a period of catastrophe’ (1964; Kirby 2010). It was the lack of commitment of the workers of the imperialist powers to support the anti-​imperialist struggle that led to the collapse of ‘proletarian internationalism’ (Emmanuel 1972; Caldwell 1977, 92). These imperatives showed the official alliance between labour and the bourgeoisie and the postcolonial wealth would continue to be siphoned off to multinational firms. Neocolonialism ‘means power without responsibility and for those who suffer it, it means exploitation without redress’ (Nkrumah 1965). This formula remains intact today and illuminate what Fanon called ‘the glare of history’s floodlights’ (1967, 28) in the sense that it has thrown new light on old inequalities. The imperialist powers divided the world according to the power relations between them and between the seventeenth century and the end of World War II, many of the weaker countries were colonized and forced to implement policies that were in the interest of the colonizers and detrimental for their own development. Examining the imperialist phenomenon from this wide-​ ranging perspective reveals imperialism as driven by rivalry and conflict. It also later facilitated the emergence of nationalist and anti-​imperialist struggles. Imperialism display elements in common yet differ according to the territory in which it operates and contextual social struggles. The main issue to be highlighted here is the manifest alliance between labor and socialist governments and the US two-​party system embracing both formal and informal imperialism.

440   Johannes Dragsbaek Schmidt Racism has been and still is the core of what other conceptualizations of Western militarized imperialism could help us understand as one of the reasons why the inherent North–​South divide is incrementally linked to both the private and public sector external debt of developing countries. A debt that over the past decades, has reached over $11 trillion. This figure may be seen in comparison to the extraction of profits from the former colonies in real money terms. As Utsa Patnaik has calculated, the present value of the ‘drain’ of surplus from India to Britain from 1765 to 1938 amounts ‘on a highly underestimated basis’ to £9.2 trillion, compared to a £2.1 trillion gross domestic product (GDP) for the United Kingdom in 2018 (Suwandi, Jonna and Foster 2019). This amount was not only the direct pecuniary aspect of Eurocentric hegemony that relied more specifically on the ‘abysmal history of looting and pillage, policy-​driven famines, brutal crushing of rebellion, torture, concentration camps, aerial policing, and everyday racism and humiliation’ (Satia 2020, 3). These aspects were not coincidental since ‘imperialism is the way of life of capitalism’ (Magdoff 1978, 260–​261). This was also demonstrated in what later became Southeast Asia. Imperialism in the region was characterized by competition and commonalities between the Dutch, British, French, and American penetration subplanting the early colonialism by Spain and Portugal.

Affinities of Colonialism and Different Structures of Exploitation In the period up to World War II, Southeast Asia was termed ‘Further India’ by Great Britain or seen from China’s interest sphere as the ‘Southern Seas’ or ‘Nanyang’. The concept ‘Southeast Asia’ was invented by Lord Louis Mountbatten during World War II against the Japanese invasion of what may be referred as the second Great Asian War. Interestingly, ‘the naming clearly was a response to the fact that for the first time in history a single power—​that of Hiroshito’s armies—​effectively controlled the entire stretch between British Burma and the Hispano-​American Philippines’ (Anderson 1998, 3). These geopolitical denominators show the geostrategic importance of the region’s location as a trade hub situated between India and China. The imperialist countries, and for a brief interregnum Japanese occupation, established competing colonial empires. About a century, from the mid-​nineteenth century to around 1946, the region came under foreign domination and exploitation by rival European, US (and Japanese) powers. Among the island economies, the Philippines was colonized by Spain in the sixteenth century and its economy was subsequently transformed into large feudal-​type estates producing export crops. The societal result was a highly polarized structure. This led to indebtedness among peasants. Following the Spanish-​American war in 1898, the United States colonized the Philippines and was met with republican and nationalist resistance with more than

Power Competition and Exploitation in Southeast Asia    441 100,000 troops and an estimated 36,000 Filipinos killed. The American colonial penetration of Southeast Asia was no less violent than those of Britain, France, and Holland. In fact, the fighting against the independence movement led by the nationalist hero Aguinaldo had parallels and similarities with the US invasion and lost war in Vietnam some 60–​70 years later. The enemy of the Americans, as during the Vietnam War, was the entire civilian population fighting from their homes and fields against the brutal American occupation. Villages, crops, and livestock were destroyed, and entire populations were relocated and incarcerated or massacred (Zevin 1972, 330). The anti-​ imperialist author Mark Twain noted with sarcasm: ‘And as for a flag for the Philippine Province, it is easily managed. We can have a special one—​our states do it: We can have just our usual flag, with the white stripes painted black and the stars replaced by the skull and crossbones’ (Lind 2017). However, it may be argued that the aim of US imperialism in the Philippines and the Asia-​Pacific in general was the projection of strategic power. As Bello mentions, ‘US trade followed the flag more frequently than the flag followed trade’ (1998, 357). This is illuminated by Theodore Roosevelt’s observations regarding the later phases of capitalist expansion: Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed must be battered down. Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused. (Alstyne 1960, 201)

Almost two centuries after the Spanish defeat, American capital needed territorial control and access to ‘virgin’ land, in order to compete with the European imperialist occupiers in the region. Officially, American land policy was directed securing the position of the small landowner, in practice it generally facilitated their removal and the establishment of large commercial estates (Dixon 1991, 105). Indonesia was colonized in the eighteenth century by the Dutch, who established an exploitative economic structure where rural labour on Java was forced to set aside one-​ third of their land for export crops sold to the metropole at fixed prices. Therefore, peasants were left with small land plots and an adverse ratio of land to population. Most accounts say that the system virtually converted Java into one vast state plantation. In 1870, the Agrarian Law organizing long-​term land leases resulted in a rapid expansion of European-​owned plantations on Sumatra, mainly growing tobacco, rubber, and oil palm. Similar changes affected parts of Borneo and Sulawesi. In all colonial territories, the development of capitalist production was heavily dependent on the state apparatus, legal frameworks, land, and labor market policies. Large-​scale agricultural enterprises operated along exploitative capitalist lines, hiring in labour and selling the profitable output to global markets. These companies were almost exclusively owned by shareholders in the colonial metropole. Securing long-​ term use rights to land was essential and colonial administrations implemented land

442   Johannes Dragsbaek Schmidt legislation facilitating the acquisition of large tracts of land for export crops. As large estate companies expanded their operations from the mid-​nineteenth century onwards, especially in Indonesia, British Malaya, and the Philippines, they used their influence with both colonial administrations and home governments to get access to large tracts of land on long leases or freehold tenure (Booth 2019, 52). However, the fundamental objective of colonial land polices was to provide economic incentives for large-​scale metropolitan concessionary companies and to attract a settler population or what was termed the coolies—​labour imported from China and India. The denial of human rights for the coolies and outright racism can be found in announcements from newspapers promising a bounty for runaway coolies. ‘The uncle Tom association was impossible to miss.’ Advertisements that were scattered throughout newspapers offered coolies and cattle for sale in the same breath (Breman 2020, 467). Tropical madness was found everywhere among young men from the colonial powers who lived in a tropical environment amid colonized people. The symptoms pertained to males who enacted unrestrained behaviour: ‘all acts of bestiality, sexual excesses, physical tortures and murders, plus bursts of delusions of grandeur’ (Breman 2020, 475). The penetration of Western imperialism was closely connected with the changing production patterns from mercantilism to monopoly in capitalist industrial production. The doctrine of ‘free trade’ was imposed by British interests through informal imperial rule with territorial expansion and full annexation materializing in the last quarter of the nineteenth century. During the early part of the nineteenth century Britain had already emerged as the leading global and imperial power at a time of history when imperialism was characterized by rivalry but also collaboration between the colonial powers. A vast majority of the colonies increasingly specialized in a few primary products, were forced to reduce their production of manufactures and imported them in exchange. The periphery imported industrial goods, especially textiles, and by the export of opium and cotton from British India to China. Singapore, founded in 1819 by the British, established as a free port and supplanted Bangkok as the collection centre for Southeast Asian produce destined for the Chinese market. British expansionism also led to Brunei becoming a protectorate in 1888. Burma was annexed in 1852 and required more than 40,000 British troops to overcome the fierce resistance. British interests were attracted by exploitation of teak, minerals, and gold. Burma was ruled until 1937 as part of the British empire in India. While Thailand officially remained independent the country was forced to sign humiliating and unequal treaties with Britain under threat of occupation. These treaties deprived the Thai government of its ability to set its own tariffs and the Bowring Treaty from 1855 established extra-​territoriality, free trade, and fixed export duties. ‘Effectively, Thailand surrendered control over customs duties and thereby over a large proportion of state revenue. Thailand became in effect an informal British colony. In many respects the Kingdom became an extension of the British colonial economies of the Malay Peninsula and Burma’ (Dixon 1991, 81). With gunboats in the vicinity, the Thai king, Mongkut, also had to cede substantial areas of the kingdom to France (Lao and Siem Reap in 1893) and Britain (the northern Malay states in 1909). Tarling euphemistically

Power Competition and Exploitation in Southeast Asia    443 mentions, these were the kinds of stipulations Britain made with ‘imperfectly civilized’ states such as China (2017, 72). Thailand, Burma, and Vietnam entered a period where their forced dependency on rice production and rice exports was the culmination of the organized design of the imperialist powers to extract more economic surplus from their colonies. The colonial powers created extremely lopsided economies with highly developed mining and plantation sectors, a neglected indigenous sector, and an industrial sector of minor proportions. Colonial tariff structures largely eliminated indigenous manufacturing and severely limited the possibilities for the development of a modern manufacturing sector (Dixon 1991, 114). The same consequences could be observed in what later became Indochina. Between 1862 and 1908 Cambodia, Laos, and Vietnam came under direct French control after the Vietnamese emperor became embroiled in restricting Christian missionary activities and persecution of Christian converts. The exercise of increasingly anti-​Western attitudes by the elite in Hanoi led to direct French intervention in Vietnam, but was met with resistance and rebellion. The French annexation of the kingdom of Cambodia was more peaceful but had to be negotiated with Thailand. There were important differences between the various forms of dependencies because of annexation and imperial strategies and the forms of resistance against imperialism also varied. These commonalities of imperialism led to a varied picture of French and Dutch direct rule or an extension of the ‘motherland’. Indochina was ‘la France d’Outremer’ and the Netherlands East Indies (NEI) ‘Tropical Holland’ (Dixon 1991, 84), in this sense a continuation of earlier Spanish colonialism in the region.

Decolonization and the Cold War The heritage of colonialism and imperialism in Southeast Asia was not a beautiful sight. The period under Dutch colonial rule left Indonesia with a literacy rate of less than 10% in 1950. Even a decade later, the income accruing to the Indonesian state was not much higher than that of a large American university. The Philippine economy had been trampled to rubble, by warring Japanese and American armed forces. There was no national language and English American was spoken by only a quarter of the population. The Burmese economy had been completely destroyed. Malaya’s colonial tin-​and-​rubber economy was prostrate, and the country became a battlefield where imperial British armed forces fought against a powerful, audacious, communist insurgency (Anderson 1998, 299–​300). The resistance to imperialist control of Southeast Asia had comparatively speaking been advanced. Historically, the anti-​imperialist mobilization started in the aftermath of the October Revolution, when Lenin had urged the peoples of the East to overthrow the imperialist ‘robbers and enslavers’. The Bolsheviks proclaimed a ‘holy war against British imperialism’, and a ‘fraternal alliance of the peoples of the East with the Communist

444   Johannes Dragsbaek Schmidt International’ (d’Encausse and Schram 1969, 173). Japan’s victory over Russia and the growth of the Kuomintang and later Maoism in China had an immense effect on Indochina, where nationalist and anti-​colonial movements began to be formed. In the beginning, students were trained in Japan and revolutionary agitation to throw France out of Indochina began to take shape (Panikkar 1959, 167–​169). The first Great Asian war was also a game changer, since this was the first time an Asian power had won a war over Russia—​regarded as a Western major power. These events encouraged revolutionary and nationalist movements to become an irrevocable force across the region. It transformed emergent Asian nationalisms, metamorphosing what were sporadic and uncoordinated peasant uprisings, externally supported communist movements, and ad hoc armed actions into coherent political movements. The shared experience of colonialism, imperialism, and exploitation contributed to making Southeast Asia a region of political turmoil. It may equally be argued that Japanese imperial ambitions to create a Pan-​Asian empire based on Asian values got momentum as early as Japan’s declaration of the Greater East Asia Co-​Prosperity Sphere in 1940 (Aydin 2008). The legacy of imperialism and colonialism had consequences for the political, economic, and moral crises of these societies and became central to the relations of power, dependency, and war by further exacerbating social inequalities and struggles for social justice. Many grievances were the product of international economic and political structures external to the region. By supplying raw materials, markets for imports, and multinational manufacturing through foreign direct invest, these processes have been ‘sequential, reflecting the evolution of imperialism, the progressive incorporation of the region into the world-​economy and the accompanying development of capitalist relations of production’ (Dixon 1991, 1). It should also be pointed out that in the aftermath of the World War II, the United States attempted to establish its supremacy over the capitalist world system by favouring formal decolonization. In this context, Britain tried to hold on to its territories in India, Burma, and Malaya, but also it witnessed Britain attempting to become a ‘proxy’ for the French in Vietnam and for the Dutch in Indonesia. Nevertheless, between 1946 and 1958, these nations would declare independence. Anti-​imperialists and nationalists fighting for independence shared the view that the colonizers had been siphoning the economic surplus out of the region. The imperial powers had been extracting profits through the exploitation of the abundance of agricultural and mineral resources. ‘Development’ and economic growth had not benefitted the local populations nor improved education, health, industry, or infrastructure. As a matter of fact, in much of Southeast Asia a ‘three-​tiered system developed in which the upper level of business was dominated by Europeans and the middle by Chinese [immigrants], while the indigenous population was restricted to the margins of petty trade’ (McVey 1992, 19). At the same time, the ‘absence of entrepreneurial activity by native elites was a product of colonial rule’ (McVey 1992, 23) although it is also true that amounts of trade, investment, and production took place outside of direct colonial/​Western control. Largely, but not entirely in the hands of the Chinese. That is, some capacity for internal growth was left in place at independence—​and could (and did)

Power Competition and Exploitation in Southeast Asia    445 replace departing colonial activity. It is also the case that the 1914–​1918 war, the interwar recession, and the Japanese occupation did provide opportunities for indigenous economic activity to develop—​while 1941–​1945 did displace much colonial economic activity that was not fully replaced. Among the colonial legacies in Southeast Asia, there was minimal communications between the countries; no regional integration had taken place; the problems with imported labour from China and India and minority people created internal conflicts and, in the case of Burma, armed conflict. During colonialism, minimal local industry had been developed and there was never any real break with colonial ownership structures with such interventionist policies as land reform, trade protections, and subsidies, nationalization of natural resources, and cooperatively run workplaces (Klein 2007, 171). The surplus transfer from Southeast Asian countries to the imperialist powers has been debated among scholars. Some estimates show that there was a persistent excess of exports over imports, continuing down to independence and displaying clearly enough the predatory nature of the system. During the 1920s alone it totaled about £800 million. In the interwar years Indonesia had an average trade surplus of about $350 million, and its excess exports to the US from 1921 to 1941 rather more than balanced Holland’s heavy trade deficit on trade with the US. (Kiernan 1995, 46)

These exploitative mechanisms laid the groundwork for the transfer of economic surplus to the metropole. Furthermore, often colonial governments had either neglected the welfare of smallholders or actively tried to prevent them from diversifying into different types of agricultural activity. Increasingly, many million households were cultivating only small parcels of land, or none, and were forced to depend on income from non-​ agricultural activities and wage labour (Booth 2019, 59, 62). One of the outcomes of colonial policies was large gaps opened in life expectancy and literacy between ethnic groups within the various colonies, and with the main metropolitan powers, Britain, France, the Netherlands, and the United States (Booth 2019, 102). Williamson argue that inequality in income and wealth increased in many parts of Southeast Asia in the century from 1840 to 1940 (Williamson 2015, 35–​37). Consequently, the income per capita gap between core and periphery widened sharply. On average, Southeast Asian GDP per capita was 47% that of western Europe in 1820 (Maddison 2008; Williamson 2015, 32). In 1870, the figure had fallen to 29%, and to 22% in 1913. Rising mineral rents, land rents, and tax revenues from commodity-​boom-​ generated incomes, all favoured the colonialists, their bureaucracy, the financial condition of the colonial system, and their policies (Williamson 2015, 35). It was probably these levels of exploitation which led Ruth McVey to write: The rural and traditional character which until now seemed to characterize the region has been to an important extent a fiction, masking great social and economic

446   Johannes Dragsbaek Schmidt shifts resulting from increasing involvement in a world market system. What is really at stake is whether Southeast Asians will continue, as under (semi-​or neo-​) colonialism, to experience this transformation largely as victims or whether they will attain a capitalist stake of their own. (1992, 18)

These questions were important because the aftermath of decolonization had not been peaceful. In Malaya, for instance, after 1903 rubber production was the dominant industry due to spectacular investment: ‘The high price of rubber during the first decade of the twentieth century, and the comparatively low cost of land, made plantation investment extremely profitable’ (Dixon 1991, 103). Decolonization was on a standstill and the corporate plantation system was in the hands of companies, registered in London, with British capital (70%) owning almost all, and in 1930 rubber accounted for nearly 70% of the cultivated area in peninsular Malay. In 1948, to protect the profits, the British Labour government launched a massive counterinsurgency operation against the communist-​ led independence movement. One British Lord envisaged Malaya as the ‘greatest material prize in South-​East Asia,’ mainly due to its rubber and tin. These resources were ‘very fortunate’ for Britain, and another Lord bluntly admitted, ‘they have very largely supported the standard of living of the people of this country and the sterling area ever since the war ended.’ ‘What we should do without Malaya, and its earnings in tin and rubber, I do not know.’ The insurgency threatened control over this ‘material prize.’ Therefore, ‘the repression of Malaya’s communist movement by the British Army resulted in thousands of Malayan deaths from the use of fragmentation bombs, chemical warfare and massive forced resettlement programs’ (Cope 2019, 199). Lessons learned from the British colonial regime in the Malayan emergency involving the forced deportation of half a million people to ‘New Villages’ were also applied by the United States in South Vietnam’s strategic hamlet program. Between 1961 and 1963, more than eight million people were relocated to such hamlets (Hansson, Hewison, and Glassman 2020, 496). American involvement in Indochina was prompted not only by the strategy of deflecting Japan from the temptation of recovering of its traditional market in China but also by the anti-​communist domino theory based on containing the Soviet Union and China. Furthering these geostrategic calculations, the United States offered Tokyo new markets in Southeast Asia. Gabriel Kolko in his magisterial book about the Vietnam War notes, ‘[t]‌he American obsession with the successful application of power—​‘credibility’—​is the inevitable overhead charge of its foreign policy after 1945 with its ambition to integrate a US-​led international political and economic order’ (Kolko 1985, 111–​112; Callinicos 2009, 181–​182). The first Indochina war broke out in late 1946, one year after Ho Chi Minh had announced Vietnamese independence from France, this movement spread to Laos and later into Cambodia. The United States replaced France and waged a war in Vietnam, Laos, and Cambodia that lasted almost two decades. It is estimated that 1.5 to three million were killed between 1954 and 1975 with the United States losing about 64,000 soldiers. It is said that the United States lost the war on the battleground to the Viet Cong, but in addition it lost because on the home front public opinion in America turned against the conflict.

Power Competition and Exploitation in Southeast Asia    447 Relatedly, Harry Magdoff mentioned, ‘Centrifugal and centripetal forces have always coexisted at the core of the capitalist process, with sometimes one and sometimes the other predominating. As a result, periods of peace and harmony have alternated with periods of discord and violence. Generally, the mechanism of this alternation involves both economic and military forms of struggle, with the strongest power emerging victorious and enforcing acquiescence on the losers. But uneven development soon takes over, and a period of renewed struggle for hegemony emerges’ (Magdoff 1960, 4–​5). This theoretical description of the process of imperialistic transformation within the world-​system fit the realities following World War II: Postwar decolonization, the onset of the Cold War, and the United States replacing Japan (and Britain, Holland, and France) as the leading hegemon in the region. Japanese imperial conquest had erased European colonial power from the region under the banner of ‘Asianness’ and tried to arm nationalist forces urging them to fight French, Dutch, British, and later American imperialism. The result was a humiliating and abrupt collapse of European imperialism in the region from 1942–​1945. It was not possible for the Europeans to make an effective comeback except for Britain’s onslaught in Malaya and later the US imperialist war in Vietnam. This implied armed struggle with bitter success for independence and in 1947 the leftwing prime minister of Siam, Pridi Phanomyong, suggested an abortive South Asian League, to build regional networks against imperialism (Anderson 1998, 6). Indigenously created, armed, communist-​led movements contested the legitimacy of the Western-​imposed postwar regional order. In Burma, in 1949, two competing communist parties in alliance with ethnic rebels left U Nu’s government in control of little more than Rangoon. In the Philippines, a communist-​led guerrilla movement based on the anti-​Japanese Hukbalahap forces contested the American comprador regime in Manila. It later evolved into a Maoist guerrilla, the People’s Army, fighting the US-​ backed Marcos regime. In the Indonesian case, two factors determined US policy: first, the gratitude of Washington to Suharto for wiping out the largest communist party outside the Soviet bloc. After an orgy of mass murder in 1965–​1966 of hundreds of thousands of Indonesian communists, the nationalist Indonesian leader Sukarno was ousted, and the pro-​US General Suharto was installed in a coup supported by the CIA and the Indonesian military. Second, US-​imposed economic policies threw open resource-​rich Indonesia to foreign investment and trade. This led to Suharto’s secret offer to allow American nuclear submarines to pass through Indonesian waters, without surfacing for Soviet satellite monitoring (Anderson 1998, 133). Later, between 1977 and 1979, ‘about one-​third of the entire East Timorese population died because of famine, and the brutal fighting between Suharto’s army and the Fretilin—​the Timorese Liberation Movement. Although US Secretary of State Henry Kissinger had advised to ‘do it quickly’—​this ‘death toll was proportionately much higher than in Pol Pot’s contemporary Cambodia’ years later (Anderson 1998, 133–​134). Southeast Asia in the 1950s through the 1970s served to demonstrate the ways in which both insurgencies and counterinsurgencies enabled the establishment, extension, and normalization of politics. The insurgencies in the immediate aftermath of nationhood

448   Johannes Dragsbaek Schmidt or during the creation of postcolonial states constituted ‘alternative civilizing projects’ or ‘social revolutions’ but in the name of anti-​communism and the Cold War they were crushed by Washington-​and Pentagon-​backed regimes. In the end most of the former colonies in Southeast Asia became proxies of the United States’ informal and formal empire. Some economies did experience high economic growth, but inequality was also rampant. The exception was Vietnam, where a relative delinking strategy and later Doi Moi enacted a gradual opening of the economy benefitting a larger share of the population and creating a socialist market economy. The rapid growth of Singapore as a regional hub for the management of various kinds of production speaks to the relatively autonomous and post–​Cold War oriented evolution of a capitalist developmental state; but the Cold War origins of this state have remained evident in phenomena such as the limits on Singaporean democracy and the highly subordinated position of Singaporean labor (Hansson, Hewison, and Glassman 2020, 499). The other developed country in the region, Brunei signed an agreement in 1979 with the United Kingdom, which granted independence to the sultanate in 1984. US imperialism was always a child of its own origins as a country fighting British colonialism. In a strange way, anti-​colonialism and democracy coexisted in tension. The double-​speak of various US governments were always clear since the empire-​building agenda led to the expansion of its strategic power projection and installed more than 800 US military bases, among which many were located in the Asia-​Pacific region. The establishment of these bases was the outcome of the strategic goals of Pentagon like ‘Forward Defense’ and ‘Containment of Communism’, but the imperative was strategic extension of US geostrategic power (Bello 1998). The impact of the new form of imperialism—​whether informal or formal—​in much of the Southern Hemisphere, including Southeast Asia was that, ‘neo-​liberalism is frequently spoken of as ‘the second colonial pillage’: in the first pillage, the riches were seized from the land, and in the second they were stripped from the state’ (Klein 2007, 294). The United States has made it perfectly clear that it will not tolerate any challenge to its global domination. ‘Preventive wars’ and sometimes ‘humanitarian intervention’ eliminated those who might threaten its global ambitions. The global system has been unipolar but now its dominance is being challenged by new adversaries, particularly Russia, China, and Iran. In this context, the Pentagon and Washington are determined to contain what they regard as strategic challenges either through a continuation of neoliberal globalization or decoupling from China and other adversaries. Under neoliberal globalization the state acts as the colonial frontier, which incorporate conquistadors pillage with the same ruthless determination and energy as their predecessors showed (Klein 2007, 291). This way, informal imperialism can exist without colonialism, but colonialism cannot exist without imperialism (Bush 2006, 46). Since World War II the United States has been successful in creating an ‘informal empire’ that effectively subordinates the other leading capitalist states to American supremacy. Recently, though, American unipolarity has been challenged by China and partly by Russia as the world-​system may be evolving towards a multipolar world system.

Power Competition and Exploitation in Southeast Asia    449 What really changed the political economies in the region again was the impact of geopolitical and geoeconomic factors. The US war in Indochina devasted the economies in Vietnam, Cambodia, and Laos and made recovery extremely difficult. From 1964–​1973, in Laos alone, American bombers dropped over two million tons of cluster bombs—​ more than all the bombs dropped during World War II combined. On the other hand, several countries benefitted from the American wars in Indochina. Some estimates show Singapore and Thailand’s economies booming from late 1970s onwards. British and American colonial and imperial military build-​up and investment in infrastructure was crucial if not the determining factor for the economic ‘success’ of these countries. Even Malaysia joined the United States in the military campaign in Indochina but benefitted less than Singapore and Thailand in economic terms. Another major change came with the Asian financial crisis in 1997 and the rejection of ‘rescue’ from the American dominated IMF which, in reality, meant that the United States threw its East and Southeast Asian allies to the mercy of the IMF—​making it clear that the privileged position that these countries had enjoyed during the Cold War had ended. Originally the IMF tried to force deregulating and deflationary prescriptions. However, South Korea and Thailand broke with the IMF plans and expanded their domestic economies by making low-​interest funds. Even more, in early 1999, Japan deployed a $30 billion initiative to promote economic recovery in Indonesia, South Korea, Malaysia, Thailand, and the Philippines. Japan aggressively reasserted its role in Asia by criticizing the deflationary cost of the IMF reforms (Schmidt 2008). Japan had suggested a regional monetary fund mechanism as the solution—​but this was rejected by the IMF and the United States. While China, by not devaluating the renminbi indirectly, gave significant assistance to the recovery of the hardest hit economies in the region. Again, during the crisis in the United States in 2008, China saved the region. China’s massive domestic stimulation package, equivalent of 14% of its GDP was, according to the World Bank, the single most important factor in the regional recovery. The 1997 Asian financial crisis was a result of excessive corporate debt, and a decade later, the 2008 global financial crisis was triggered by excessive mortgage loans through mortgage-​backed derivatives in the United States. China’s huge investments and acting as regional locomotive of growth dampened the global impact and indeed the impacts in South Asia as well. By its actions during the Asian financial crisis and global financial crisis, China gained considerable credit in the region while the US’ standing was greatly diminished.

Regional Challenge to US hegemony In late 2020, the Southeast Asian region is home to a young and growing population of 650 million, with a $2.8 trillion economy making it the fifth largest in the world. The region’s strategic significance makes it extremely important for both China, Russia,

450   Johannes Dragsbaek Schmidt India, the EU, and the United States. As mentioned, the United States has been trying to tie the region’s elites into its hegemonic orbit, but with mixed results. Two countries are on par with developed nations in the EU and the United States—​ Singapore and Brunei—​ while several others have seen relatively high economic growth rates during the past three to four decades. However, this scenario has been characterized by creating ‘growth without welfare’ (Schmidt 1996, 1997, 2010). Inequality and uneven development in the region have been hallmarks and apart from Cambodia, Laos, and Burma, the region as a whole has been expanding their economie. One of the reasons has been the role of the state in constraining the role of labour, NGOs, and sometimes elements of capital; state competitiveness and trade policies; and assisting corporate conglomerates in rent-​seeking activities (Robison 1996, 3–​4). The levels of inequality are extreme in the Philippines and Thailand and continue to rise, while in Malaysia and Vietnam inequality is declining. The evidence shows that patterns of inequality can be traced to the kinds of state organization and political institutions that are present in each country. Malaysia and Vietnam—​both countries with strong states and parties—​have been successful in reducing inequality. By contrast, the Philippines and Thailand have fared much worse in terms of inequality, with Thailand taking the cake as the most unequal country in the region (Kuhonta 2011). Relatedly, it is an irony of history that in 1954 SEATO was launched on US initiative to create a bulwark against communism in the region. President Truman’s domino theory led later to the establishment of ASEAN in 1967. ASEAN has evolved into a major player in the region by its exclusive focus on consensus decision-​making, non-​interference, and regionalization of trade, investment, production, and growth. It has played a major role in establishing a geopolitical and geoeconomic platform including China and other regional players in a framework for solving regional problems related to security, trade, and integration. Future historians will perhaps present the evolution of Southeast Asia and Asia-​ Pacific nations not as a possible escape from the Western-​dominated world-​system but as part of the struggle of becoming an equal partner. These projections are based on the signature of the world’s biggest free trade agreement which, as an irony of history, was signed in Hanoi in November 2020, and did not include the United States or the European Union. The deal known as the ‘Regional Comprehensive Economic Partnership’ (RCEP) includes the ten member states of the ASEAN-​bloc plus traditional US allies Japan, Australia, and New Zealand as well as US competitor China. This new economic bloc will represent about one-​third of the world’s gross domestic product and population. It will be the first free trade pact to include China, Japan, and South Korea—​that is, Asia’s economic powerhouses. India, which was invited to participate, preferred to maintain close ties to the outgoing President Donald Trump. During the 2020 election campaign in the United States, the Democratic candidate Joe Biden signalled an anti-​Chinese line by calling president Xi Jinping a ‘thug’! Whether there is a US–​China détente or not, the region is once again a key battleground for influence of the major powers aspiring for hegemony.

Power Competition and Exploitation in Southeast Asia    451

Acknowledgement The author thanks Professor Chris Dixon and Professor Jacques Hersh for helpful ideas and comments.

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452   Johannes Dragsbaek Schmidt Kuhonta, Erik Martinez. 2001. The Institutional Imperative: The Politics of Equitable Development in Southeast Asia. Stanford: Stanford University Press. Lenin, Vladimir I. 1964. Collected Works. Vol. 23. Moscow: Progress. Lenin, Vladimir I. 1977. Imperialism: The Latest Stage of Capitalism. V. I. Lenin, Selected Works in Three Volumes. Moscow: Progress. Lind, Michael. 2017. ‘Teddy Roosevelt, Mark Twain and the Fight over American Imperialism’. New York Times, 27 January. Luxemburg, Rosa. 1964. The Accumulation of Capital. New York: Monthly Review Press. Maddison, Angus. 2008. 03_​PerCapitaGDPLevels,1AD-​2008AD[1]‌ Magdoff, Harry. 1969. The Age of Imperialism. New York: Monthly Review Press. Magdoff, Harry. 1978. Imperialism: From the Colonial Age to the Present. New York: Monthly Review Press. Marx, Karl 1887. Capital: A Critique of Political Economy, Volume I, Book One: The Process of Production of Capital. Moscow: Progress Publishers. https://​www.marxi​sts.org/​arch​ive/​ marx/​works/​downl​oad/​pdf/​Capi​tal-​Vol​ume-​I.pdf. McVey, Ruth. 1992. ‘The Materialization of the Southeast Asian Entrepreneur’. In Southeast Asian Capitalists, edited by Ruth McVey. Cornell Southeast Asia Program. Ithaca: Cornell University Press. Nkrumah, Kwame. 1965. Neo-​Colonialism: The Last Stage of Imperialism. London: Thomas Nelson & Sons. Panikkar, K. M. 1959. Asia and Western Dominance. George Allen & Unwin. Kuala Lumpur: The Other Press. Robison, Richard. 1996. ‘Looking North: Myths and Strategies’. In Pathways to Asia: The Politics of Engagement, edited by Richard Robison. Australia: Allen and Unwin. Satia, Priya. 2020. Time’s Monster: History, Conscience and Britain’s Empire. London: Penguin. Schmidt, Johannes Dragsbaek. 2010. ‘Civil Society and Distributional Conflicts in Southeast Asia’. In The New Political Economy of Southeast Asia, edited by Rajah Rasiah and Johannes Dragsbaek Schmidt. Cheltenham: Edward Elgar. Schmidt, Johannes Dragsbaek. 2008. ‘Finanzkrise. Socialkrise und ungleiche Entwicklung in Südkorea und Thailand’. In Asiankrise: Lektionen gelernt?, edited by Karin Kübbück and Cornelia Staritz. Hamburg: VSA Verlag. Schmidt, Johannes Dragsbaek. 1997. ‘The Challenge from Southeast Asia: Social Forces between Equity and Growth’. In Uneven Development in South East Asia, edited by Chris Dixon and David Drakakis Smith. Aldershot: Ashgate. Schmidt, Johannes Dragsbaek. 1996. ‘Paternalism and Planning in Thailand: Facilitating Growth without Social Benefits’. In Uneven Development in Thailand, edited by Michael J. G. Parnwell. Aldershot: Avebury. Schmidt, Johannes Dragsbaek, and Jacques Hersh. 2019. ‘Eurocentrism and Imperialism’. In The Palgrave Encyclopedia of Imperialism and Anti-​Imperialism, edited by Immanuel Ness and Zak Cope. London: Palgrave. Seeley, J. R. 1883. The Expansion of England. Cambridge: Macmillan. Suwandi, Intan R., Jamil Jonna, and John Bellamy Foster. 2019. ‘Global Commodity Chains and the New Imperialism’. Monthly Review 70, no. 10 (March): 1–​24. Tarling, Nicholas. 2017. Decolonisations Compared: Central America, Southeast Asia, the Caucasus. London: Palgrave Macmillan. Taylor, John G., and Andrew Turton. 1988. Southeast Asia: Sociology of ‘Developing Societies’. New York: Monthly Review Press.

Power Competition and Exploitation in Southeast Asia    453 Wallerstein, Immanuel. 1981. ‘Dependence in an Inter-​ dependent World: The Limited Possibilities of Transformation within the Capitalist World Economy’. In From Dependency to Development: Strategies to Overcome Underdevelopment and Inequality, edited by Heraldo Muñoz. Boulder, CO: Westview Press. Williamson, Jeffrey G. 2015. ‘Trade, Growth, and Distribution in Southeast Asia, 1500–​1940’. In Routledge Handbook of Southeast Asian Economics, edited by I. Coxhead. London: Routledge. Zevin, Robert. 1972. ‘An Interpretation of American Imperialism’. Journal of Economic History 32, no. 1: 316–​360.

Chapter 25

The Capitali st Worl d System and E c onomi c Imperialism in E ast Asia Minqi Li

Historically, East Asia (defined as China, Korea, Japan, and Taiwan) accounted for about one-​third of the world population and economic output. It was not incorporated into the capitalist world system until the mid-​nineteenth century, when British imperialism used opium to open up the Chinese market. Within the capitalist world-​system, economic imperialism is the process through which surplus value is transferred from the periphery to the core through conquest and plunder, investment profits, or unequal exchange. As the East Asian countries responded to the challenges imposed by the British-​led Western capitalism, their economic and geopolitical fortunes diverged. While China, Korea, and Taiwan were peripheralized, Japan became a member of the imperialist club by the early twentieth century. World War II ended with the United States being the predominant imperialist power in the entire world as well as in East Asia. The US-​led geopolitical restructuring created the favourable political conditions for the economic take-​off in Japan, South Korea, Taiwan, and eventually China. As China becomes the world’s largest economy measured by purchasing power parity and makes investments throughout the world, a growing number of scholars and journalists from the non-​Marxist as well as the Marxist tradition now call China a new imperialist power. While China, Hong Kong (China), Japan, South Korea, and Taiwan are important net capital exporters in today’s global economy, profits from overseas investment account for a relatively small fraction of the national income of East Asian economies. Value flows (represented by labour time embodied in export commodities) between China, Japan, South Korea, Hong Kong, and the rest of the world demonstrate that while Japan, South Korea, and Hong Kong clearly benefit from unequal exchange, China continues to transfer more surplus value to the rest of the world than it receives

456   Minqi Li from the rest of the world. China should be best characterized as a non-​imperialist semi-​peripheral country.

Theories of Economic Imperialism The conventional usage of the term ‘imperialism’ refers to the policy or practice of a country to extend power and domination over other countries or areas (Encyclopedia Britannica 2020). In the modern era, imperialism is often related to colonialism. The European colonial expansion from the sixteenth century to the nineteenth century laid down the foundation of the modern capitalist world-​system. Some argued that, without the conquest and plunder of Americas and Asia, capitalism would not have emerged as a global system (Arrighi, Hui, Hung, and Selden 2003; Pomeranz 2000; Stavrianos 1981). The major colonial expansion by western European powers, Russia, Japan, and the United States in the late nineteenth century and the early twentieth century is known as ‘New Imperialism’ (Gilmartin 2009). Hobson argued that, by the late nineteenth century, the rise of monopoly capital in major European capitalist countries had increased capitalist profits but reduced mass consumption. The saturation of domestic markets led to diminishing investment opportunities and the capitalists were compelled to invest their surplus capital abroad to look for higher rates of return. States were then pressured by the capitalist class to annex new territories to open up new investment outlets (Mummery and Hobson 1889). Lenin was influenced by Hobson in the development of his theory of imperialism. Lenin considered imperialism to be a stage of capitalist development based on monopoly capital. For Lenin, export of capital was ‘one of the most essential bases of imperialism’ because it allowed the imperialist countries to ‘live by exploiting the labour of several overseas countries and colonies’ (Lenin [1916] 1999, 101). In the Preface to the French and German Editions of Imperialism: The Highest Stage of Capitalism, Lenin further elaborated: ‘[Capitalism] has now singled out a handful (less than one-​tenth of the inhabitants of the globe; less than one-​fifth at a most “generous” and liberal calculation) of exceptionally rich and powerful states which plunder the whole world simply by “clipping coupons” ’ (Lenin [1916] 1999, 30–​31). Therefore, for Lenin, imperialism is not simply a pollical policy of domination and power extension. Instead, imperialism is also an economic system in which ‘a handful of exceptionally rich and powerful states’ plunder and exploit the rest of the world. Imperialism in the Leninist sense is also economic imperialism that exploits the labor of colonies and underdeveloped countries and brings about ‘super-​profits’ for the imperialist countries. This concept of the division of the world between the exploiting imperialist countries and exploited underdeveloped countries became the starting point for the dependency and the world system theories by the mid-​twentieth century.

The Capitalist World System and Economic Imperialism in East Asia    457 According to the dependency theorists, such as Andre Gunder Frank and Samir Amin, the capitalist world-​system is divided between the centre and the periphery. The centre developed at the expense of the periphery by extracting surplus value from the periphery through investment profits, debt payments, and unequal exchange. The pattern of exploitation is reinforced by the existing capitalist international division of labor through which the peripheral countries are trapped in their dependency on the central countries for market, technology, and supply of capital (Amin 1976; Frank 1978). Unequal exchange is the major mechanism through which the central (core) countries exploited the peripheral countries in the modern capitalist world system. Unequal exchange happens when the central (core) countries export commodities that embody comparatively more labor than the labour embodied in the commodities exported by the periphery (Emmanuel 1972). According to the world-​system theory, the capitalist world system is divided into three structural positions: core, semi-​periphery, and periphery. The core countries specialize in quasi-​monopolistic, high-​profit production processes, and the peripheral countries specialize in highly competitive, low-​profit production processes. Surplus value is transferred from the peripheral producers to the core producers, resulting in unequal exchange and concentration of world wealth in the core. By comparison, semi-​ peripheral countries have ‘a relatively even mix’ of core-​like and periphery-​like production processes (Wallerstein 2007, 23–​41). From the perspectives of dependency and world-​system theories, economic imperialism may be understood as the mechanism through which surplus value (surplus labor embodied in commodities) is extracted from the periphery or semi-​periphery and transferred to the core. The extraction and transfer of surplus value takes place through investment profits in relation to export of capital, unequal exchange, or direct plunder by force.

East Asia and the Capitalist World-​System East Asia is usually defined as the eastern region of Asia that includes China, Mongolia, North and South Korea, Japan, and Taiwan (West and Watson 2018, 111). East Asia’s total land area is 11.8 million square kilometres and its total population is 1.67 billion (as of 2018). For the purpose of this chapter, ‘East Asia’ is defined as China, North and South Korea, Japan, and Taiwan. For many centuries before the rise of capitalism, East Asia was one of the major centres of civilization. In pre-​modern time, it accounted for about one-​third of the world population and economic output. According to the historical statistics compiled by Angus Maddison, in 1500, the combined economic output of China, Japan, and North and South Korea accounted for 30% of the world economic output. In 1820, the total gross domestic product (GDP) of East Asian countries (China, Japan, North and South Korea, and Taiwan) accounted for 37% of the world economic output (Maddison 2010).

458   Minqi Li However, over the following century and a half, much of East Asia was reduced to peripheral areas within the capitalist world-​system. East Asia’s share of world economic output was reduced to 20% in 1870, 12% in 1913, and 8% in 1950 (Maddison 2010). Before the nineteenth century, there had been an extensive trade network developed between China, other East Asian countries, and Southeast Asia. The system is named as the ‘tribute-​trade system’ by Takeshi Hamashita, as the peripheral countries within the system were expected to pay tributes to the Chinese empire in exchange for political recognition and access to the Chinese domestic market (Hamashita 1994). By some measure, both the size and the density of the Chinese domestic market in the seventeenth and eighteenth centuries surpassed those of the contemporary western European markets (Wong 1997). However, neither the development of trade nor the comparatively large size of market led to the rise of capitalism in East Asia. Giovanni Arrighi (1994, 1–​26) defined capitalism as the process to use money capital to acquire more money through the intermediation of commodities, or a process that can be summarized as ‘M–​C–​M’’. For capitalist accumulation to become a self-​sustained process, state support is indispensable. However, in East Asia, the trading system was dominated by China’s overwhelming size of population and territory. There was not sufficient external pressure that could force the Chinese state to support capitalist accumulation. Moreover, from the perspective of the Chinese empire, China’s domestic market was far more important than long-​distance trade. Thus, the empire had little incentive to invest in highly expensive and risky overseas adventures (Arrighi 2009). On the other hand, in the fifteenth century, several nation states of approximately equal size and power emerged in western Europe. These states were engaged in permanent struggle both in times of peace and in times of war. To fight and prepare for wars, the European states were compelled to seek the financial assistance of transnational capitalist groups that had control over the mobile capital. The competition between nation states helped to inflate the power and wealth of capitalist groups. It also provided incentive for states to undertake directly activities of capitalist accumulation (Arrighi et al. 2003, 266–​268). Asian trade was considered to be the most profitable business activity at the time. With the rise of the Ottoman Empire, the traditional trade routes through the Mediterranean and Central Asia were disrupted. By the late fifteenth century, Spain and Portugal led the search for alternative trade routes between Europe and Asia. While the Spanish attempt eventually led to the ‘discovery’ and conquest of Americas, the Portuguese sailed around the Cape Hope in 1497 and arrived in India in 1498. Throughout the sixteenth century, the Portuguese dominated the Indian Ocean trade (Stavrianos 1981, 144–​153). In the seventeenth century, the Dutch overtook the Portuguese to become the dominant player in the Asian trade. In 1624, the Dutch occupied the southern part of Taiwan, only to be defeated and driven away by the forces of Zheng Chenggong in 1662. China at the time was undergoing the transition from the Ming dynasty to the Manchurian Qing dynasty. The Zheng family had emerged as a powerful naval-​merchant capitalist group

The Capitalist World System and Economic Imperialism in East Asia    459 in Southern China and Southeast Asia. However, in 1683, Taiwan was conquered by the Qing dynasty and the Zheng family’s capitalist adventure came to an end (Arrighi et al. 2003, 275–​276). In the eighteenth century, Britain emerged as the new hegemonic power in the rising capitalist world-​system. During the second half of the eighteenth century, the British East India Company conquered much of the Indian subcontinent. India’s enormous population allowed Britain to organize a European-​style colonial army manned by Indian soldiers and funded by Indian money to fight on Britain’s behalf in Asia and Africa (Arrighi et al. 2003, 290). Indian ‘exports’ to Britain were paid by taxes imposed on the Indian people and were effectively tributes to the British Empire. These tributes helped to pay for the British Industrial Revolution and the British Empire’s military expenses during the Napoleonic Wars (Mukherjee 2010). In the eighteenth century, British demand for Chinese tea led to large trade deficits with China. The deficits were not eliminated until the East India Company began smuggling opium into China, which became the only commodity that could make a significant entry into the Chinese market. In effect, opium allowed Britain to pay for the Chinese goods using Indian tributes without spending precious metals (Arrighi et al. 2003, 291–​292). The attempt by the Chinese empire to ban the opium trade led to the Opium War from 1839 to 1842. In the Treaty of Nanjing, in addition to the payment of war indemnity, China agreed to cede Hong Kong to Britain and open up several ports to foreign trade (Stavrianos 1981, 318). China began to be incorporated into the capitalist world-​system.

Japanese Imperialism and East Asia In the 1850s, Japan signed a series of unequal treaties with Western capitalist powers and abandoned the ‘seclusion’ policy (the ban of foreign trade). The end of the seclusion led to economic and political instabilities that compelled a section of the Japanese ruling class to take the initiative to pursue top-​down social reform. After the Meiji Restoration of 1868, Japan began the process of capitalist industrialization (Stavrianos 1981, 354–​356). In the 1870s and 1880s, Japan and China engaged in a race of industrialization and military modernization. While the Chinese effort of military modernization was led by provincial warlords, Japan’s drive towards industrialization was led by a more effective central government. In 1894–​1895, Japan and China fought a war over the Korean peninsula that ended with China’s decisive defeat (Arrighi et al. 2003, 298). According to the Treaty of Shimonoseki, China recognized Korean ‘independence’. ceded Taiwan to Japan, and agreed to pay an enormous war indemnity in the amount of 230 million taels of silver (equivalent to three years of China’s fiscal revenue or one-​third of Japan’s gross domestic product at the time) (Stavrianos 1981, 362).

460   Minqi Li China’s defeat in 1895 marked the collapse of the historical East Asian tribute-​trade system. Taiwan became a part of the Japanese empire. In 1910, Korea was officially annexed by Japan. The massive war indemnity allowed Japan to put its currency on the gold standard and finance the development of heavy industry. In 1905, Japan defeated Russia and brought China’s Southern Manchuria into its sphere of influence. As Japan rose to become a member of the imperialist club, China descended into national disintegration and revolutionary upheavals. By the 1920s, foreign capital dominated China’s modern industries (Stavrianos 1981, 326–​327). From 1985 to 1936, China made a cumulative payment of 800 million taels of silver for war indemnities, 1,200 million taels for debt principals and interests, and 2,500 million taels for repatriated profits on foreign investment. The total transfer amounted to about 40 times China’s annual fiscal revenue in the early twentieth century (Chen 1996). While Japan’s imperialist strategy worked well in the short run, its attempt to conquer China and turn China into its exclusive overseas market led to a general awakening of Chinese nationalism that Japan’s limited military capacity could not overcome. Moreover, Japan’s attempt to dominate East Asia brought it into inevitable conflict with the emerging American hegemony. World War II ended with the US victory and military occupation of Japan.

American Hegemony and East Asia At the end of the Korean War, the geopolitics in East Asia was defined by the strategic confrontation between the new People’s Republic of China on the one hand, and the US hegemony and its vassal states on the other. In the 1950s, Japan, South Korea, and Taiwan were vassal states of the United States in the sense that they were either under the direct military occupation by the United States or depended on the United States for military protection and therefore could not take independent military and diplomatic initiatives (Cumings 1997). The relationship between the United States and its East Asian vassal states had certain similarities with the historical tribute-​trade system centred around China. The East Asian vassal states depended on the United States for military protection and political legitimation. On the other hand, the United States allowed the East Asian states to have access to its enormous domestic market. The political exchange led to a functional division of labour. While the United States specialized in the pursuit of global power, the East Asian states were able to specialize in trade and the pursuit of economic growth. This functional division of labour created the basic geopolitical condition for the economic take-​off of Japan and other East Asian countries (Arrighi et al. 2003, 300–​308). By the 1970s, Japan became a developed capitalist economy and Japanese investment and subcontracting networks helped South Korea and Taiwan to emerge as rapidly growing ‘Asian tigers’.

The Capitalist World System and Economic Imperialism in East Asia    461 In the 1960s, North Korea was one of the most rapidly growing economies in the world. From 1960 to 1970, North Korea’s economy grew at an average annual rate of 9% (Maddison 2010). In the early 1970s, North Korean population’s livings standards and life expectancy at birth were comparable to that in South Korea. However, North Korea’s economic development began to falter in the 1980s. After the disintegration of the Soviet Union, the highly modernized North Korean agriculture lost its external supply of oil and natural gas, leading to collapse of food production and famine (Pfeiffer 2006, 42–​45). The US defeat in Vietnam marked the beginning of the relative decline of the American hegemonic power. It also led to the political imperative for the United States to pursue rapprochement with the People’s Republic of China by re-​admitting China into the capitalist inter-​state system as well as normal commercial relations (Arrighi et al. 2003, 310). In the 1980s, the profit rate crisis in the advanced capitalist economies led to the rise of neoliberalism. To revive the profit rate, it was necessary for the multinational corporations based in the western economies to look for new geographical areas with large supply of cheap labor. The relocation of the Western industrial capital, combined with China’s ‘reform and openness’ policy, turned China into the centre of global manufacturing exports by the beginning of the twenty-​first century (Li 2008, 67–​72).

The Rise of the Chinese Imperialism? Since the global economic crisis of 2008–​2009, China has become the new engine of global economic growth and the world’s largest economy measured by purchasing power parity. In this context, China’s demand for various energy and raw material commodities has surged. In 2016–​2017, China consumed 59% of the world total supply of cement, 47% of aluminium, 56% of nickel, 50% of coal, 50% of copper, 50% of steel, 27% of gold, 14% of oil, 31% of rice, 47% of pork, 23% of corn, and 33% of cotton (Desjardins 2018). A large portion of China’s demand for commodities is supplied by developing countries in Asia, Africa, and Latin America. In this context, Western mainstream media has described China as a new imperialist country exploiting the developing countries. In June 2013, The New Yorker magazine carried an article criticizing the Chinese capitalists in Zambia for exploitation of local copper resources and violation of labor rights (Okeowo 2013). In March 2018, The Week published an opinion article arguing that as China’s overseas investment skyrocketed, Africa had become a key destination of Chinese investment resulting in vicious exploitation of local resources and ecological disasters. The author further argued that, because of the authoritarian nature of the Chinese political system, Chinese imperialism would prove to be considerably worse than Western imperialism (Cooper 2018). The New York Times asked whether China

462   Minqi Li had become a new colonial power. The writer argued that China had used its ‘one belt, one road’ initiative to support corrupt dictators, induce recipients of Chinese investment into debt traps, and promote cultural invasions (Millward 2018). A Financial Times commentator argued that as China pursued the ‘belt and road initiative’ and promoted various economic projects, the investment logic would inevitably turn some developing countries (such as Pakistan) into China’s client states. China is therefore ‘at risk of . . . embarking on its own colonial adventure’ (Anderlini 2018). The National Interest published an article arguing that ‘China is the imperialist power’ in much of Arica today. It contends that what China wants in Africa today is not some form of socialism but to control Africa’s resources, people, and development potential (Dok and Thayer 2019). For Marxist scholars and political groups, the debate about the question of imperialism has been either directly based on or inspired by Lenin’s concept of imperialism. In ­chapter 7 of Imperialism, Lenin defined the five ‘basic features’ of imperialism: ‘(1) the concentration of production and capital has developed to such a high stage that it created monopolies which play a decisive role in economic life; (2) the merging of banking capital with industrial capital, and the creation, on the basis of this “finance capital”, of a financial oligarch; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed’ (Lenin [1916] 1999, 92). World political and economic conditions have changed dramatically since the publication of Lenin’s Imperialism. While some of the ‘basic features’ of imperialism proposed by Lenin remain relevant, the ‘territorial division of the whole world among the biggest capitalist powers’ can no longer be understood in its original sense due to the victory of national liberation movements and decolonization of Asia and Africa in the mid-​twentieth century. Marxist theories of imperialism (or concepts of imperialism inspired by the Marxist tradition) that evolved after the mid-​twentieth century typically defined imperialism as a relationship of economic exploitation leading to unequal distribution of wealth and power on a global scale (Brewer 1980, 21–​23). In the contemporary debate on ‘Chinese imperialism’. Marxist theorists who contend that China has become a ‘capitalist imperialist country’ usually argue that China has become imperialist in the Leninist sense. That is, internally, China has become a monopoly capitalist country, and externally, the monopoly Chinese capital has manifested itself through massive export of capital. For example, Turner argued that both state and private monopoly capital had been established in China and the four largest state-​owned banks controlled the ‘commanding heights’ of the Chinese economy, demonstrating the dominance of finance capital. Turner further argued that China had accumulated enormous overseas assets and become one of the largest capital exporters in the world, exploiting workers and raiding resources in various parts of the world (Turner 2015).

The Capitalist World System and Economic Imperialism in East Asia    463 David Harvey, one of the world’s best-​known Marxist intellectuals, recently argued that China’s holding of large chunks of US government debt and the Chinese capitalist land grabs in Africa and Latin America have made the question whether ‘China is the new imperialist power’ worthy of serious consideration (Harvey 2018).

Economic Imperialism in East Asia: Export of Capital For Lenin, monopoly capital did not simply mean the formation of large capitalist groups but large capitalist enterprises that had sufficient monopoly power to make ‘super-​profits’—​profits that were far above the ‘normal’ rates of return under free competitive conditions. Using available business information at the time, Lenin cited several examples of super-​ profits of monopolist capitalist businesses. The Standard Oil Company paid dividends between 36% and 48% on its capital between 1900 and 1907 (Lenin [1916] 1999, 39). The American Sugar Trust paid 70% dividend on its original investment. French banks were able to sell bonds at 150% of their face values. The average annual profits on German industrial stocks were 36%–​68% between 1895 and 1900 (Lenin [1916] 1999, 63–​64). In ­chapter 8 of Imperialism, Lenin argued that export of capital was ‘one of the most essential bases of imperialism’ because it allowed the imperialist countries to ‘live by exploiting the labour of several overseas countries and colonies’. Imperialism ‘means the partition of the world, and the exploitation of other countries besides China, which means high monopoly profits for a handful of very rich countries, makes it economically possible to bribe the upper strata of the proletariat’ (Lenin [1916] 1999, 101–​104). Thus, for Lenin, capitalist imperialism was not simply associated with the formation of large capitals and export of capital. It inevitably led to and had to be characterized by ‘high monopoly profits’ or ‘super profits’ through the plunder of the whole world. On the eve of World War I, net property income from abroad accounted for 8.6% of the British gross national product (Mitchell 1988, 829). It was by observing such massive super profits that Lenin considered export of capital to be of ‘exceptional importance’ in the era of imperialism. If we apply Lenin’s concept of imperialism to the East Asian economies today, what can we find? With the exception of North Korea (for which no data is available), all East Asian countries have become leading net capital exporters in global capitalist market in recent years. According to data from the International Monetary Fund, at the end of 2019, Japan had a net international investment position (that is, the net balance of a country’s total overseas assets less total overseas liabilities) of 3.45 trillion dollars (67% of Japan’s GDP), China had a net international investment position of 2.12 trillion dollars (15% of China’s GDP), Hong Kong (China) had a net international investment position of 1.56 trillion dollars (419% of Hong Kong’s GDP or 11% of China’s GDP), Taiwan had

464   Minqi Li a net international investment position of 1.34 trillion dollars (229% of Taiwan’s GDP), and South Korea had a net international investment position of 565 billion dollars (31% of South Korea’s GDP). Japan was the world’s largest net creditor in 2019, China was the third largest, Hong Kong (China) was the fourth largest, Taiwan was the fifth largest, and South Korea was the twelfth largest (IMF 2020). Can we therefore conclude that all East Asian economies (other than North Korea) have become economically imperialist countries in today’s world? To answer this question, one needs to consider not only the magnitude of export of capital but also rates of return on overseas assets invested by the East Asian economies and evaluate whether these economies have exploited the rest of the world to appropriate ‘super-​profits’. Figure 25.1 compares the average rates of return on total assets abroad of the East Asian economies from 2010 to 2019. The rates of return in Figure 25.1 are calculated as the ratios of investment income from abroad over total assets abroad owned by a country (economy). During the period 2010–​2019, the average rates of return on the East Asian overseas assets generally fell within the range of 2%–​4%. Hong Kong had the highest rates of return, averaging 3.8% during 2010–​2019. Japan’s rates of return averaged 3.2% during

7% 6% 5% 4% 3% 2% 1% 0%

2010

2011 China

2012

2013

Hong Kong

2014

2015 Taiwan

2016

2017

2018

South Korea

2019

2020

Japan

Figure 25.1  Average rates of return on total assets abroad (East Asian economies, 2010–​2019)/​ Sources: Average rates of return are calculated as ratios of investment income from abroad to total assets abroad. Total assets abroad of China (mainland), Hong Kong (China), South Korea, and Japan are from IMF (2020). Taiwan’s total assets abroad is from CBRC (2020). China’s investment income from abroad is from SAFE (2020). Hong Kong’s investment income from abroad is from CSDHK (2020). Taiwan’s investment income from abroad is from DGBAS (2020). South Korea’s investment income from abroad is from KOSIS (2020). Japan’s investment income from abroad is from SBJ (2016, 2018, 2020).

The Capitalist World System and Economic Imperialism in East Asia    465 2010–​2017, China’s rates of return averaged 3% during 2010–​2019, Taiwan’s rates of return averaged 1.8% during 2011–​2018, and South Korea’s rates of return averaged 2.6% during 2010–​2019. In general, East Asian economies have earned only moderate rates of return on their overseas assets. The East Asian economies are not only large capital exporters but also recipients of large amounts of foreign investment. How do rates of return on foreign investments in East Asian economies compare with the rates of return received by East Asian capital in the rest of world? Figure 25.2 compares the average rates of return on foreign-​invested assets in the East Asian economies from 2010 to 2019. The rates of return in Figure 25.2 are calculated as the ratios of investment income paid abroad over total foreign-​invested assets in a country (economy). For the East Asian economies, the rates of return on foreign-​invested assets differ significantly from the rates of return on their overseas assets. China has paid the highest rates of return on foreign capital. The rates of return received by foreign capital in China averaged 5.7% during 2010–​2019, almost twice as high as the average rates of return received by the Chinese capital in the rest of the world. The rates of return received by

7% 6% 5% 4% 3% 2% 1% 0%

2010

2011 China

2012

2013

Hong Kong

2014

2015 Taiwan

2016

2017

2018

South Korea

2019

2020

Japan

Figure 25.2  Average rates of return on total foreign-​invested assets (East Asian economies, 2010–​2019). Sources: Average rates of return are calculated as ratios of investment income paid abroad to total foreign-​ invested assets. Total foreign-​invested assets in China (mainland), Hong Kong (China), South Korea, and Japan are from IMF (2020). Taiwan’s total foreign-​invested assets is from CBRC (2020). China’s investment income paid abroad is from SAFE (2020). Hong Kong’s investment income paid abroad is from CSDHK (2020). Taiwan’s investment income paid abroad is from DGBAS (2020). South Korea’s investment income paid abroad is from KOSIS (2020). Japan’s investment income paid abroad is from SBJ (2016, 2018, 2020).

466   Minqi Li foreign capital in Hong Kong averaged 4.8% during 2010–​2019. On the other hand, the average rates of return received by foreign capital in Japan, South Korea, and Taiwan were significantly lower. The rates of return received by foreign capital in Japan averaged 1.7% during 2010–​2017, those in South Korea averaged 2.2% during 20102019, and those in Taiwan averaged 1.5% during 2011–​2018. Figure 25.3 compares the net investment income from abroad as ratio of GDP in the East Asian economies from 2010 to 2019. Although China is the world’s third-​largest creditor in terms of net international investment position, because it pays foreign capital much higher rates of return than the Chinese capital receives from the rest of the world, China’s net investment income has been consistently in the negative territory. In 2018, China’s net investment income from abroad was -​85 billion dollars (or 0.6% of China’s GDP). By comparison, Japan has been a recipient of significant amounts of net investment income from abroad. In 2017, Japan’s net investment income from abroad was 177 billion dollars (or 3.6% of Japan’s GDP). In recent years, Hong Kong has emerged as another major beneficiary of profits from capital export. In 2018, Hong Kong’s net investment income from abroad reached 177 billion dollars (or 4.8% of Hong Kong’s GDP). In addition, both Taiwan and South Korea have had positive balances on their investment income accounts.

5% 4% 3% 2% 1% 0% –1% –2% 2010

2011 China

2012

2013

Hong Kong

2014

2015 Taiwan

2016

2017

2018

South Korea

2019

2020

Japan

Figure 25.3  Net investment income from abroad (As % of GDP, 2010–​2018). Sources: Net investment income from abroad is the difference between investment income from abroad and invested income paid abroad. GDP in current US dollars is from World Bank (2020).

The Capitalist World System and Economic Imperialism in East Asia    467

Economic Imperialism in East Asia: Unequal Exchange Lenin considered export of capital to be exceptionally important in the imperialist era. However, data presented in the previous section suggests that net investment income in relation to export of capital accounts for a relatively small fraction of national income of Japan, South Korea, and Taiwan. China has consistently paid more investment income to foreign capital than it receives from the rest of the world. By the mid-​twentieth century, Marxist theorists of imperialism already realized that, in the postcolonial era, exploitation of underdeveloped countries by imperialism mainly took the form of unequal exchange (Amin 1976; Emmanuel 1972). That is, the underdeveloped countries (peripheral countries) typically export commodities that embody comparatively more labor than the labor embodied in commodities exported by developed capitalist countries (core or imperialist countries) (Wallerstein 1979, 71). In the twenty-​first century, global outsourcing by transnational corporations based on the massive wage differentials between workers in imperialist and peripheral countries may be seen as a special form of unequal exchange (Smith 2016, 9–​38, 187–​223, 232–​233). Given the development of globalized capitalist division of labour and complex interactions of international trade and capital flows, it is difficult (if not impossible) to identify any single country (or an economy) in today’s world to be either a ‘100%’ exploiter in its economic relations with the rest of the capitalist world system or ‘100%’ exploited. More likely, a country (economy) may engage in exploiting relations against some countries but in the meantime have been exploited by some other countries. Therefore, to identify a country’s position in the capitalist world-​system, it is important not just to focus on one side of the relations (for example, call China ‘imperialism’ simply because China has exported capital). Instead, it is necessary to consider all trade and investment relations involved by a country (economy) and find out, on balance, whether the country (economy) receives more surplus value from the rest of the world than it transfers to the rest of the world. If a country (economy) receives substantially more surplus value from the rest of the world than it transfers, then it can be argued that the country (economy) has engaged in and benefited from economic imperialism in the sense that the country (economy) is a net exploiter in the capitalist world system. If a country (economy) transfers substantially more surplus value to the imperialist countries than it receives from the transfer of the rest of the world, the country (economy) is likely to be a peripheral country in the capitalist world-​system. On the other hand, the surplus value transferred from a semi-​peripheral country to the rest of the world is likely to be roughly offset by the surplus value extracted. Figure 25.4 compares the average labour terms of trade of East Asian economies. The labor term of trade is defined as the units of foreign labour one unit of domestic labour can exchange for through a trade between exported goods and imported goods of equal market value.

468   Minqi Li 10

8

6

4

2

0

1990

1995

2000

China

Hong Kong

2005

2010

South Korea

2015

2020

Japan

Figure 25.4  Average labour terms of trade (East Asian Economies, 1990–​2018). Sources: World Bank (2020). Average labour term of trade is calculated as the ratio between total labour embodied in an average pool of one million dollars of imported goods and services and the total labour embodied in an average pool of one million dollars of exported goods and services. For details of methodology, see Li (2015, 200–​202).

In the 1990s, Japan was a clear beneficiary of economic imperialism through unequal exchange. In the mid-​1990s, one unit of Japanese labour in average could trade for about eight units of labour from the rest of the world. Since then, Japan’s advantage in labour term of trade has declined but remains substantial. In 2018, one unit of Japanese labour could trade for 2.3 units of labour from the rest of the world. In the 1990s, one unit of Hong Kong labour could trade for 4–​6 units of labor from the rest of the world. Hong Kong’s advantage in unequal exchange declined in the early 2000s. Since 2005, Hong Kong’s average labour term of trade has fluctuated around 2. In 1990, one unit of South Korean labour could trade for 0.9 units of labour from the rest of the world, consistent with a semi-​peripheral position in the capitalist world system. Since then, South Korea has gradually advanced into the core of the capitalist world system. In 2018, one unit of South Korean labour could trade for 2.3 units of labour from the rest of the world. That is, South Korea has caught up with Japan in average labour term of trade. The World Bank does not provide trade information for Taiwan. But given Taiwan’s level of economic development, Taiwan’s labour term of trade is probably similar to that of South Korea.

The Capitalist World System and Economic Imperialism in East Asia    469 In the 1990s, China was clearly a peripheral country in the capitalist world-​system. In the early 1990s, it took about twenty units of Chinese labour to trade for one unit of labour from the rest of the world. Since then, China’s labour term of trade has improved considerably. In 2018, in average, it took 1.7 units of Chinese labour to trade for one unit of foreign labour. To the extent that it still takes more Chinese labour to trade for a certain amount of labour from the rest of the world, China on the whole continues to suffer from exploitation in unequal exchange. This fact as well as the fact that China has a negative balance in international investment income suggest that China is not yet an imperialist country. But is China still a peripheral country in the capitalist world-​system? If one considers the labour terms of trade between China and individual countries and regions, in 2018, it took 4.8 units of Chinese labour to trade for one unit of US labour, 3.4 units of Chinese labour to trade for one unit of Japanese labour, 3.7 units of Chinese labour to trade for one unit of South Korean labour, and 3.8 units of Chinese labour to trade for one unit of labour from other high-​income countries. Therefore, China continues to suffer from unequal exchange in trade with all high-​income countries. On the other hand, in 2018, one unit of Chinese labour could trade for 1.3 units of labour from low-​and middle-​income countries in East Asia and Pacific, 1.1 units of labour from low-​and middle-​income countries in Europe and Central Asia, about 1 unit of labour from Latin America and Caribbean, about 1 unit of labour from low-​and middle-​income countries in Middle East and North Africa, 4.3 units of labour from South Asia, and 2.3 units of labour from Sub-​Saharan Africa. Therefore, while one unit of Chinese labour trades for approximately one unit of labour from middle-​income countries in East Asia, eastern Europe, Latin America, and Middle East, China now enjoys considerable advantage through unequal exchange against Africa, South Asia, and low-​income countries in East Asia. In other words, China by now has developed exploiting trade relations against regions where about one-​half of the world population live. In addition, China’s average labour term of trade is likely to rapidly approach one in the coming years. Taking these facts into account, it is probably best to characterize today’s China as a semi-​peripheral (rather than peripheral) country in the capitalist world-​system. Table 25.1 shows the balances of international labour transfer for various parts of the world in 2018. Japan, South Korea, and Hong Kong (China) clearly benefit from international labour transfer through unequal exchange. In 2018, the labour content embodied in Japanese imports exceeded the labour content embodied in Japanese exports by 11 million worker-​years. South Korea had a net labour gain of 7 million worker-​years and Hong Kong had a net labour gain of about 2 million worker-​years. China is one of the largest providers of labor embodied in exported goods. In 2018, China provided exports that embodied 86 million worker-​years and suffered a net labour transfer of 37 million worker-​years to the rest of the world.

470   Minqi Li Table 25.1 Balances of International Labour Transfer, 2018 (Million Worker-​Years) Labour Embodied in Exports

Labour Embodied in Imports

United States

17

79

62

Japan

9

20

11

South Korea

6

13

7

Hong Kong (China)

2

4

2

Other High-​Income Countries

106

215

109

China

85

48

37

Other East Asia and Pacific

53

26

27

Eastern Europe and Central Asia

40

23

17

Latin America and Caribbean

40

27

13

Middle East and North Africa

16

12

4

South Asia

87

24

63

Sub-​Saharan Africa

31

17

14

Statistical Discrepancies World

Net Labour Loss

–​16 492

492

Net Labour Gain

–​16 175

175

Sources: World Bank (2020). All country groups other than the high-​income countries refer to low-​ and middle-​income countries. For details of methodology, see Li (2015, 200–​202). Re-​exports are subtracted from Hong Kong’s exports and imports.

The Future of East Asia Historically, East Asia accounted for about one-​third of the global economic output. In the nineteenth century, East Asia was incorporated into the capitalist world system and China, Korea, and Taiwan were reduced to peripheral regions within the world system. However, since the mid-​twentieth century, East Asia has experienced a revival in its economic fortune. The combined gross domestic product of China, Hong Kong (China), Japan, and South Korea accounted for 12% of global economic output (measured by purchasing power parity) in 1990, 15% in 2000, 19% in 2010, and 23% in 2018 (World Bank 2020). By the early twenty-​first century, Japan, South Korea, Taiwan, and Hong Kong (China) have become a part of the core of the capitalist world-​system and benefit from economic imperialism through investment profits and unequal exchange; China has advanced into the semi-​periphery; and North Korea is stuck in the periphery.

The Capitalist World System and Economic Imperialism in East Asia    471 However, East Asia’s economic growth has been made possible by massive consumption of fossil fuels and led to intensification of global ecological contradictions. In 2019, the East Asian economies (China, Hong Kong, Taiwan, South Korea, and Japan) together accounted for 31% of the world primary energy consumption and 35% of the world carbon dioxide emissions (BP 2020). The heavy dependence on fossil fuels threatens the long-​term sustainability of the East Asian economies. Moreover, China’s economic growth has been based on the intense exploitation of a large cheap labour force. As China undergoes social transformation, the Chinese working class and urban middle class are demanding not only higher living standards but also a widening range of economic and social rights. It is not clear that China can accommodate the growing demands of the working class and urban middle class without undermining the favourable conditions required for capital accumulation (Li 2015, 23–​41). The future of East Asia depends on how and whether these contradictions will be addressed in the coming decades.

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Chapter 26

Pacific Isl a nd s Sources of Raw Materials Marta Gentilucci

An Anthropological Perspective Defining the ‘Pacific’ is a ‘daunting challenge’—​argued the historian Matt Matsuda—​ because it presents itself to us as ‘a complex set of boundaries, nested temporalities, and geographies’1 and the confluence of multiple sites of ‘trans-​localism’. This geographical space defies our eagerness to understand it in its entirety. Delineating the ‘Pacific’ clearly requires examining its history(ies). In the very opening line of his book Pacific Worlds: A History of Seas, Peoples, and Cultures, Matsuda asked himself: ‘What stories from Asia to Oceania to the Americas make up Pacific history?’.2 The anthropologist Robert Borofsky shared the same dilemma: ‘How does one make sense of the Pacific’s varied pasts?’.3 Even as an area of study—​according to Borofsky4—​the Pacific changes contours as a function of the scholar’s perspective: some historians of the Pacific study its large islands such as New Zealand and New Guinea but overlook the Philippines and Indonesia; for Hawaiians, the Pacific denotes the islands making up Melanesia, Polynesia, and Micronesia, themselves constructed categories;5 for residents of the West Coast of United States, on the other hand, it usually encompasses the Pacific Rim (China, Japan, and Korea). When we approach this ‘sea of islands’, to use the brilliant ‘new and optimistic’ definition coined by Tongan anthropologist Epeli Hau’ofa who prefers address to the Pacific with the term “Oceania”,6 we need to bear in mind that it has often been represented and misrepresented7 by Western scholars using a narrative format that synthesizes multiple pasts into coherent stories. This has had political implications for Islander–​Outlander interaction. Nineteenth-​century imperialism led to the contraction of Oceania, but also

476   Marta Gentilucci to modern imaginaries of the Pacific Islands as tiny, isolated, remote, and vulnerable. For Hau’ofa, this constitutes: an economistic and geographic deterministic view of a very narrow kind, that overlooks culture history, and the contemporary process of what may be called ‘world enlargement’ carried out by tens of thousands of ordinary Pacific islanders right across the ocean from east to west and north to south, under the very noses of academic and consultancy experts, regional and international development agencies, bureaucratic planners and their advisers, and customs and immigration officials, making nonsense of all national and economic boundaries, borders that have been defined only recently, crisscrossing an ocean that had been boundless for ages before Captain Cook’s apotheosis.8

This kind of history telling was also characterized by a polarizing dynamic, as it emphasized the changes wrought by the West on the one hand, and indigenous agency on the other. I-​Kiribati anthropologist Teresia Teaiwa (1968–​2017) argued, ‘the majority of social changes taking place in the Pacific are being analysed as movement from being more Pacific to less Pacific, less European to more European, less modern to more modern, more exotic to more familiar’.9 Beginning in the 1990s, anthropological studies on the Pacific Islands began to critique the classical dichotomies: ‘us’(Westerners) versus -​‘them’, tradition versus modernity, independence versus dependence, capitalism versus local economy. Theories of despondency, according to which ‘natives’ were doomed to imminent disappearance following their ‘fatal impact’ with Westerners, and of dependency that saw underdeveloped countries as dependent on the West, were suddenly refuted by the seeming ability of Pacific peoples to be adaptable and resilient as opposed to passive and vulnerable victims. While indigenous societies were first becoming aware of their place in the global world, anthropologists on their part were revisiting the concept of culture and focussing on the fact that culture is processual. Marshall Sahlins (2000) and James Clifford (2001) were among the richest voices positing a social ‘agency’ with the power to organize and ‘domesticate’ external input. This implied that local communities are not passive victims of broader forces, but rather ‘they actively interrogate, negotiate, strategies, and engage with global forms and processes, and use them to meet local needs and demands’.10 Nonetheless, according to the historian Chappell,11 exaggerating Pacific islanders’ agency risks both disempowering their colonizers and underestimating how colonial legacies still affect the islands. Native Pacific scholars Diaz and Kauannui wrote, ‘(w) hile we reclaim coveted “agency” in our histories, we are keenly aware that we need not lose the specificities of our cultural and political histories in order to appreciate how hegemony and colonial discourse operate through complicity and consent, especially through the production of native identities and cultures’.12 Active agents versus passive victims is thus a problematic paradigm because the two categories are not mutually exclusive. Similarly, small island state scholars have critiqued the vulnerability versus resilience paradigm as ‘an a priori top-​down construction, departing from the

Pacific Islands   477 supposition that isolation, exposure and small size must imply economic difficulties greater than those faced by larger economies’.13 In light of these discussions, the aim of this chapter is to go a step further by taking Pacific islanders to be cosmopolitan, ‘a particular cultural condition, one rarely attributed to native people at all’. We need to start thinking of Pacific societies as contemporary. They do not live in the past or in remote ‘paradisiac’ places, locked into their own customs. Nor are they only ‘ “local” opponents, translators, or recipients of “global” forces, meanings and commodities, emanating largely from the West’.14 Cosmopolitanism is not new to the Pacific Islands, whose inhabitants travelled and traded extensively prior to colonization. Today, cosmopolitanism means not only having the possibility and freedom to cross geographical boundaries but also claiming authority on the international political and economic stage; negotiating with mining companies, development agencies, sovereign states, and NGOs; learning the language of foreign affairs; and ‘riding’ global forces rather than just passively experiencing them. Given the complexity inherent in examining economic imperialism across the entire region (today increasingly referred to as the Asia-​Pacific region), this chapter focusses on the exploitation of mineral resources from the late nineteenth century onwards, identifying transversal themes and providing emblematic examples for each.15 Much of the material is drawn from the Melanesian region, reflecting the author’s own specialist knowledge. Sitting at the intersection of the Pacific and Indo-​Australian plates, Melanesia is geologically rich in localized mineral and petroleum occurrences. Consequently, the mining and extracting industry has become so deeply imbricated in the economies and developmental imaginaries of some Pacific countries that it is difficult to envisage this pattern being reversed. It is therefore crucial to examine how, since the advent of large-​scale mines, local communities have striven to take their place on the global economic stage by deploying tactics designed to re-​appropriate the benefits of mining for themselves. Against this new backdrop, which still bears features of the classical mining enclave, the attempt of independentist Kanaks in New Caledonia (NC; a French dependency) to ‘dis-​enclave’ mining activity prompts reflection on how imperialistic control over strategic commodities might be progressively halted. Looking then at current geopolitical relations in the region, these appear to revolve around maritime space. The Pacific Ocean has become, on the one hand, a conflictual centre of wealth extraction where the interests of the individual states are staged, and on the other a continent of water where native societies see themselves as making up a ‘sea of islands’.

From the Imperialist ‘Mineral Rush’ to Large-​S cale Mining The closing decades of the eighteenth century marked a key turning point in the history of the Pacific,16 while the nineteenth century saw a period of transition from earlier

478   Marta Gentilucci phases of contact and exchange to: confrontation with colonial states and enterprises, the exploitation of natural resources, and consequently the expropriation of lands. In Melanesia, the main European-​led international trade networks revolved around bird-​ of-​paradise feathers,17 copra, logging, palm oil, and mining. The Solomon Islands became so famous for copra that the country was referred to as the ‘Jewel of the Pacific’ and a ‘Planter’s Paradise’.18 Vanuatu and New Guinea also entered the copra market, exporting this by-​product to factories in the United States and Europe. One of the most tangible consequences of the region’s commercial dynamism at this time was the great migration of workers that accompanied it. Planting, harvesting, and processing sugar, coffee, cotton, coconut palms, and rice required more labour than was available locally. As reported by Quanchi, between 1860 and 1904, over 50,000 Solomon Islanders and niVanuatu moved to Queensland to work on sugar plantations on three-​year contracts, while Indian labourers were shipped to Fiji.19 However, the (mis)fortune of Pacific was truly made by the discovery of mineral deposits. The gold rushes in particular ‘very literally put the Pacific on colonial maps, while increasing both the volume and efficiency of trans-​Pacific traffic’.20 More specifically, the eastern Pacific became a point of convergence for workers and entrepreneurs, the site of British, Spanish, Russian, French, and US commercial ventures, and therefore a crossroads for flows of goods and capital.21 The major gold rushes in California (1848) and Australia (1852) opened up an interconnected corridor of migration for ‘gold-​seekers’ who, at the end of the nineteenth century, extended their quest to New Caledonia, Papua New Guinea (PNG), Bougainville, Fiji, and the Solomon Islands. In New Caledonia, shortly after its annexation by France (1853), Jules Garnier discovered a silicate of nickel while seeking gold. The history of NC mining is inextricably intertwined with the era of industrialization or so-​called age of steel. By the end of the 1880s, Caledonian nickel ore represented over 70% of world production.22 Despite further growth in nickel extraction at the turn of the twentieth century thanks to expanding demand for iron-​nickel, it was only in the years running up to World War I that this mineral began to be considered a ‘strategic metal’ for France. The so-​called green gold gave it a significant advantage in the arms race. The strategic status of nickel was the determining factor that reinforced the power and monopoly of the ‘Société Le Nickel’ (SLN)23 in a colony already dominated by the mining economy. The demand for labour in the mines (at that time, the autochthonous Kanaks were confined to special reserves) soon led to an influx of Indo-​Chinese, Javanese, Vietnamese, and niVanuatu who, with the so-​called ‘forced labourers’ or French convicts and prisoners, composed the first pieces of the great multicultural mosaic that is New Caledonia today.24 The extraction of high-​ volume, low-​ grade deposits became feasible only after World War II, as the technology required for large-​scale open pit mining came on stream for the first time. Nonetheless, it was not until the mining boom of the 1980s that controversies over resources came to the fore.25 Despite the fact that the colonial powers—under pressure from the UN Declaration on the Granting of Independence to Colonial Countries and Peoples (14 December 1960)—​were moving to relinquish their colonies, it was often unclear how the newly created states could aspire to economic

Pacific Islands   479 self-​sufficiency.26 Such an agenda is reflected—​for example—​in the fact that the liquefied natural gas (LNG) project in Hela Province is today the main driver of the PNG economy. In this new scenario, the classical triangular model of ‘state-​corporation-​community’ began to be undermined by the arrival on the scene of new stakeholders such as the World Bank, NGOs, brokers, lawyers, financial partners, and consultants. Banks and Ballard have defined this new pole of actors as the ‘fourth estate’27; Filer and Gabriel ‘social corner’28. It is in this now-​rectangular 'negotiating space' that mining companies seek to obtain the so-​called 'social licence to operate' in a given territory. Particularly in settings such as Papua New Guinea, it has become difficult to define where the responsibility of multinationals begins and ends, given that the implementation of ‘good governance’ has been more significantly shaped by ‘corporate governance’ than by ‘state governance’. Clearly, the environmental impact of extracting industries is huge. Papua New Guinea and West Papua previously came under the spotlight in the global debate on the social and environmental responsibilities of mining industries, being the sites of three among the allegedly most ‘irresponsible’ mining projects in the world: ‘Panguna’ (copper), ‘Ok Tedi’ (copper, gold, and silver), and ‘Freeport’ (gold and copper). In a report by the ‘Mining, Minerals and Sustainable Development Project’29 (2002), each of these projects was labelled ‘non-​sustainable’.30 However, even mining conflicts that appear to be predominantly environmental ‘reflect local people’s concerns with their control over resources on their land which are often inseparable from notions of environment, economy, society and indeed personhood and identity’.31

Imperial Debris: Islanders and Their Landscape ‘How do imperial formations persist in their material debris, in ruined landscapes and through the social ruination of people’s lives?’ asked Ana Laura Stoler.32 In responding, she went beyond a postcolonial approach centred on ‘colonial heritage’. As she put it, in the case of imperial formations, a ‘legacy’ comprises both parts that ‘hold’ and parts that are ‘dormant’ and these do not always lend themselves to being identified a priori. We should therefore focus on discovering how imperial ruins are being actively reconfigured in the here and now, as well as on pinning down the processes that currently ‘bring ruin’33 by exerting material and social force in the present. The imperial mineral rush caused massive environmental and social fallout. Nauru (the world’s smallest Republic) and Banaba are among the Pacific islands that have paid the highest price. They are unfortunately famous for having hosted for most of the twentieth-​century, open-​cut phosphate mines previously worked by the British Phosphate Commissioners (jointly owned by the Australian, New Zealand, and British governments) and operated out of centres in Sydney, Melbourne, Auckland, and London. As Teaiwa34 has observed, the impact on the indigenous peoples and lands of Nauru and Banaba was devastating: islands were quite literally consumed, and today both communities rank among the most socially and economically challenged in the region. To add insult to injury, ‘as Banaba was turned into Iremonger’s ‘medieval inferno’,

480   Marta Gentilucci many parts of New Zealand and Australia were turned into green, fertile and productive fields’.35 However, even as Banabans were being relocated from one British colony to another, successive Australian governments along with those of New Zealand and the United Kingdom (all signatories of the Trusteeship Agreement of the Territory of Nauru) acknowledged the need to address the long-​term future of the Nauruans; this likely also represented an attempt on Australia’s part to retain control over the phosphate resource, which was still being extracted.36 Given that reclaiming the mined lands would have been too expensive, the powerful countries proposed resettling the entire population in or close to Australia, a position initially favoured by Nauru’s leaders but later rejected. The Nauru Local Government Council also rejected gradual resettlement in metropolitan areas because it laid claim to lands where the Nauru could exercise sovereignty and preserve their identity as a people. Another reason to stay in Nauru was to secure a fairer share of the phosphate. According to Tabucanon and Opeskin, between 1968 (the year Nauru became independent) and 2001, Nauru’s phosphate exports totalled an estimated AU$3,559 million, which translated into an annual per capita GDP of circa $50,000.37 In this regard, Teaiwa commented, ‘[t]‌he writing on diaspora as a worldwide phenomenon focuses on the movement of bodies, labour, people, ideas and cultural productions, usually as a consequence of colonialism and imperialism, but rarely of land in its physical sense’.38 In this context, she provocatively revisited Hau’ofa’s metaphor of a ‘sea of islands’ by referring to a ‘sea of phosphate’. One of the worst forms of imperial debris is having compromised the islanders’ vital and intimate relationships with their landscapes. A technical term for describing the artistic presentation of a scene, ‘landscape can well be applied to the creative and imaginative ways in which people place themselves within their environments’.39 For many Pacific societies, land is inalienable, intertwined in the fabric of social relations, subject to a plexus and plurality of legal regimes, and of extreme cultural and spiritual importance. Genealogies and cosmologies are inscribed in the landscapes. ‘Genealogy is a form of interconnection in which ancestors (and descendants) are located not just before or behind us but inside and beyond us’.40 Landmarks (e.g., a specific mountain, a natural well, a rock, etc.) can symbolize mythical contacts between the human and the divine. People thus look to the present and future while maintaining a strong bond with the land and with ancestral beings. In its processuality, landscape reflects change and is part of change. Mining and plantations have generated land dispossession and land alienation, forced migrations (e.g., via the well-​known phenomenon of ‘blackbirding’),41 a diaspora of people together with their personal inner landscapes, and serious environmental consequences. These events are reflected in the way people relate to landscapes that no longer appear to be under their control. As Telban has put it, ‘it is when control of their own places is diminished that their whole life-​world is thrown into question’.42 In such cases, people process changes via ritual practices that serve to reinforce their present and future identity. As Banks43 has observed, the incorporation of resource extraction into Melanesian life-​worlds (and specifically in Papua New Guinea, where this author has conducted his fieldwork) is characterized by two main tropes—​both historical prophecies—​which may be interpreted as local attempts to understand and respond

Pacific Islands   481 to modern processes of production and wealth accumulation: one has apocalyptic overtones that emphasizes destruction and the ‘end times’, while the other foretells the arrival of ‘cargo’.44

Local Strategies: Compensation and Royalties Despite processes of economic liberalization, corporations’ access to natural resources is often complicated by the fact that ownership and control over resources are governed by customary law. In the 1970s, rather than appealing to the abstract notion of citizenship, most of the Melanesian peoples secured a place for themselves on the political stage and gained the attention of the state, precisely by laying claim to lands that had been expropriated from them. We must not forget that—​in contrast to what happened in Australia, long taken to be terra nullius—​in the Melanesian region, the colonial authorities established the principle that natives had special title to land and set up dedicated institutions and procedures for administering this. Claims to land were based on the principle that land is a key component of social identity,45 independently of its economic value. Nonetheless, in light of the growing phenomenon of land grabbing, indigenous communities also recognized the potential for land to be a source of income, seeing mining as a means of engaging with development and the international economic system, and resource sovereignty as a driver for claiming the right to self-​determination (this last dynamic was particularly evident in New Caledonia at the time of writing this chapter). Once again, Papua New Guinea provides a representative example. The mining boom of the 1980s was co-​opted by the ideology of ‘landownership’ (‘both a local form of custom and a national form of identity’46), as well as by the nationalist policies of the 1970s. The Land Groups Incorporation Act issued in 1974, on the eve of Papua New Guinea’s independence from Australia (1975), was the first instrument ever used to record the details of the customary lands. From this moment onwards, the inhabitants began to persistently claim and/​or demand compensation for lands expropriated by religious missions, colonial administrators, and private individuals, as well as for the resources exploited by large companies. According to some scholars,47 what might be defined as an ‘ideology of development’ has emerged in Papua New Guinea, whereby the local people do not perceive corporations as channelling away capital at their expense, but rather expect ‘developers’ (such as mining companies) to be a source of rental income and to deliver public goods and services that would not be made available by the government. Today, some of the inhabitants of Bougainville (the referendum held in 2019 which saw 98 percent of voters favor independence from Papua New Guinea doesn't really guarantee independence) are even discussing the idea of reopening the ‘Panguna’ copper mine, as a means of financing the island’s economic independence. This is a delicate subject, given that the armed conflict in 1989 that led to the proclamation of the autonomous government of Bougainville (2000) was led by young people who wanted the closure of the mine.

482   Marta Gentilucci In contrast with the assumptions of mainstream Western environmental discourse, mining is not necessarily perceived by indigenous peoples as an antagonist. For historically marginalized populations, being ‘pro’ or ‘against’ development or mining is not an ideological matter; often the dominant imperative is survival, including in the sense of cultural recognition. The struggle of these indigenous peoples is not a conscious or deliberate battle against the demons of mineral imperialism, but an internal struggle which threatens the fabric of their state and has the accidental or unintended effect of creating an increasingly problematic investment climate for the mining companies. The problem here is not the contemporary fact of capitalist exploitation, but the very limited scale of cooperation which has always been characteristic of Melanesian society, and which Papua New Guineans nowadays refer to with the one word ‘politics’.48

It is no wonder then that environmental conservation programmes are often perceived by the population as obstructive to their interests. For example, Kabutaulaka observed that for many customary landowners in the Solomon Islands, resource rents from logging meant having enough money to cover the cost of their basic needs. ‘It is easy—​he remarked—​to sit in an air-​conditioned office, enjoy all the trappings of the global market economy, and tell people who struggle daily to find money to pay for basic needs that they should not sell their forests’.49 According to John Cox,50 who has conducted ethnographic research across Papua New Guinea and the Solomon Islands, the fact that Melanesians avail of a range of strategies to earn fast money reflects their awareness of their marginalized position within the global economy. Melanesian states, he has argued, are as yet unable to enjoy wealth, even as they see foreign wealth flowing through their economies.51 Despite growing community engagement with mining issues, in Papua New Guinea—​as in most parts of the world—​the classical mechanisms of the mining enclave are still at work, insofar as there is a clear division between the private sector and the local community. The ethnographic case analysed in the next section concerns the inclusion of the Kanaks in the NC mining sector and may suggest a possible escape route from economic imperialism. Three strategies are being deployed in New Caledonia in pursuit of the ‘dis-​enclavization’ of mining: channelling earnings from mining into a long-​term development project, thus contributing to the diversification of the economy; involving the local community at all stages of the mineral project; and seeking the convergence of corporate governance with local policy requirements.

Kanaks and the Attempt to ‘Dis-​Enclavize’ Mining In 2018, New Caledonia was the fourth producer of nickel in the world, after the Philippines, Vietnam, and Russia (World Mineral Production, British Geological Survey, 2020).52 According to the USGS (United States Geological Survey), New

Pacific Islands   483 Caledonia with 7% of the world nickel reserves (in 2018: 95 million tonnes) is the fifth-​ richest nation in this resource, following Indonesia (22%), Australia (20%), Brazil (12%), and Russia (8%).53 In 2017, 91% of the value of Caledonian exports (just over 15% of GDP) was derived from the metallurgical and mining industries;54 in 2018, this figure went up to 95%, due to a buoyant nickel market and the boom in commodity prices driven by strong Chinese demand for industrial metals.55 Unlike Papua New Guinea, and despite its economic dependence on mineral resources, New Caledonia is a relatively rich country; however, wealth distribution is spectacularly uneven, with most of the wealth concentrated in the hands of a small number of ‘white’ inhabitants of the capital Nouméa. Ever since New Caledonia was annexed by the French, the Kanaks have been marginalized and have ended up a minority in their own country.56 The ‘régime de l’indigenat’, established in New Caledonia in 1887, prohibited Kanaks from leaving their tribes without the gendarmerie’s permission, obliged them to pay taxes, and imposed fines for the practices of nudity and witchcraft. In force until 1946, this strict code was one of the legal measures put in place by the colonial government that left the deepest impression on the memory of the colonized. Between 1946 to 1998, New Caledonia changed its political statutes ten times, making it a ‘sui generis’ or unique French overseas territory. To attain full independence, the transfer of five further sovereign powers would be required (defence, most aspects of foreign affairs, finance and currency, justice, and public order). The first (of three) self-​determination referenda, held in 2018, saw 43.6% of voters in favour of independence, a proportion that in the second and most recent referendum (4 October 2020) went up to 46.74%. The final referendum is scheduled by the end of the 2021. Regardless of the final outcome, the growing power of independence parties has historically posed a challenge to France. From the 1980s to the present day, sovereignty over natural resources, essentially nickel, has been the pivot on which Kanak negotiations with la Métropole and loyalists have revolved. The Front de Libération Kanak Nationale et Socialiste (FLNKS), the alliance of NC independence parties, understood that it could not achieve political independence via armed conflict. It therefore decided to undermine the workings of the colonial system from within, primarily by undoing the French monopoly on nickel. Mining began to be perceived as an escape route from colonization and, at the same time, as a weapon (albeit weak) that could be deployed to lead the Kanak people into the global world and also to put pressure on France during the decolonization process. Beginning in the 2000s, the Société Minière du Sud Pacifique (SMSP)—​a local mining company that is 87%-​owned by the North Province of New Caledonia (via its development arm, SOFINOR),57 a political institution administered by independentists—​has signed three partnerships: namely, with Falconbridge (now Glencore-​Xstrata), the well-​known steel manufacturer POSCO, and the Chinese group Yangzhou Jichuan. The outcome of these agreements is that the SMPS is the majority shareholder (51%) of three nickel industries, which are respectively located: one on-​shore in New Caledonia (Koniambo Nickel SAS, KNS) and two off-​ shore in South Korea and China.

484   Marta Gentilucci In New Caledonia, mining and nickel processing are now concentrated in three main large-​scale projects and three companies that operate more or less independently of one another. However, Koniambo58 is the only one of the three whose main shareholder is a local body. The World Bank has created a key role for itself in the mining and metal extraction sector by persuading mining companies and national governments to form new public-​ private partnerships—​ termed ‘win-​ win’ arrangements—​ with a view to addressing the social and environmental impacts of large-​scale projects on local communities and redistributing their benefits. For some scholars, this novel approach is but a new form of imperialism, insofar as the mining company remains the only big winner. Mining projects need to be contextualized and historicized however. For example, in the case examined here, it is not the state but a local body (indirectly the North Province) that has entered into the partnership and this cannot be dismissed as an insignificant step, given its potential to generate alternative strategies to the imperialist model. We can identify three processes, namely the ‘ritualization’, ‘territorialization’, and ‘socialization’ of the Koniambo plant, via which coexistence has been negotiated at different levels, including between the spirits of the massif and the mining activity itself. The industrial complex has been culturally rooted and incorporated into the landscape. Traditional Kanak authorities have mediated between the ancestral spirits and political and economic needs, thus accommodating and accompanying change. Koniambo is designed to be a ‘usine pays’, a factory that is both ‘in’ and ‘for’ the local NC area. This vision is part of the broader independentist policy of leveraging and decolonizing nickel. In opposition to the phenomenon of land-​grabbing, SMSP focuses on maximizing the value of natural resources by demanding a majority share in the mining company’s capital. By giving a new lease on life to certain mines that would otherwise have been shut down, and selling the ore only to companies in which it holds a majority stake, SMSP’s strategy is to maximize returns from the area’s mineral resources, while extending the lifespan of the nickel industry and protecting the ore from speculative capitalist exportation. Rather than paying royalties to customary authorities with particular rights over lands (cfr. Papua New Guinea), the aim of the North Province has been to involve all the most impacted tribes in the mining project, while offering them a sort of apprenticeship in economic development. The basic idea has been to form a federation of existing businesses and create a parallel trading company with the capability to participate in KNS tenders, thus preventing the arrival of large foreign companies. A parallel goal has been to recognize the position of traditional authorities, who can act as bridging figures between the world of business and tribal life. Another issue addressed has been how to help or incentivize Kanaks living in the tribes to set up businesses or even simply buy trucks, given that the banks would not be willing to extend them a line of credit. To this end, a popular ‘Kanak-​style’ shareholding structure has been developed, in which market mechanisms intertwine with the complex patterns of Kanak social organization. How should we interpret the readiness of a significant proportion of the Kanak population, whose social and cultural values are based on attachment to the land, to engage in mining capitalism? A somewhat fashionable narrative, even among scholars, reads

Pacific Islands   485 the behaviour of indigenous people who do not oppose mining and extraction projects, but rather attempt to benefit from them, as an effect of the pervasiveness and power of capitalism. By this account, exposure to capitalism turns ‘ecologically noble’ natives into stingy individualists. The indigenous mining project just described is an exception to observe and reflect on, but—​even in this case—​a reading that equates colonialism and non-​colonialism with French-​owned mining companies and non-​French-​owned mines, respectively, risks being over-​simplistic. There is not just one way of participating in the global market and capitalism is not a totally uniforming steamroller. In the space in-​between subjugation and resistance, Kanak independentists can re-​appropriate and rethink nickel, following a model that departs from the traditional enclave where mining is separate from the local economy. The Kanaks’ socioeconomic experience is not put forward as an alternative to the capitalist paradigm, but rather places itself in a dialectical relationship with capitalism, while negotiating its own cultural specifics. The capitalism of the mining and extraction industries is thus rethought and socialized based on the human–​environment relationship. The market as a purely economic, amoral, and self-​subsistent institution is a wholly abstract construction. The sociologist Zelizer proposes viewing the market, in all its multiplicity, as a space where economic, cultural, and sociostructural factors co-​exist and interact, and where the people involved negotiate the values and meanings of economic transactions.59 The economic policies of SMSP and North Province succeed in putting their own mark on capitalist practices that would normally be alien to the local culture: rather than capitulating totally to the privatization of mineral resources and the quest for personal profit, they have raised nickel to the status of a common good; they have flanked the orthodox economic value of profit maximization with cultural and political values that redeem the Kanak people from a history of exploitation; in contrast with a free market policy of indiscriminately selling off raw minerals and in opposition to land grabbing, they have chosen to protect the local territory’s natural capital, which they perceive to be at the same time also economic, cultural, and symbolic capital. By decolonizing nickel, Kanak independentists are attempting to shake off their colonial history, although they know that they are still prisoners of this legacy to some degree. They have entered the global market themselves, and in so doing have signed up for its risky economic game. It is too soon to know whether they will become dependent on the market, but in any case, through their efforts to ritualize, socialize, and territorialize mining, these independentists are striving to renegotiate their presence in New Caledonia, the Asia-​Pacific region and the global economic system, proving themselves to be social agents with a forward-​looking perspective.

The Shift from Land to Sea If we look instead at geopolitics in the region, the Pacific Ocean is clearly a contested maritime space where big powers position themselves in order to continue expanding and competing on the world stage. This in itself is not a novelty. However, the

486   Marta Gentilucci jurisdictional structure of maritime space is becoming the new ‘politically correct’ battleground of economic imperialism. In the Pacific island region, most countries are small in terms of land area but have huge maritime exclusive economic zones (EEZ) that shape international affairs. To give just one example, the Republic of Kiribati has a land area of only 726 km2 but an EEZ area of 3,550,000 km2.60 According to Article 47 of the United Nations Convention on the Law of the Sea (UNCLOS 1982), ‘the coastal State exercises over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources’61 (‘continental shelf ’ is used here as a legal term). For a few decades now, states have been allowed to submit requests to the Commission on the Limits of the Continental Shelf (CLCS, 1997) to extend the outer limit of their continental shelf beyond 200 nautical miles. Twenty-​one commissioners who are expert in geology, geophysics, or hydrography have responsibility for examining the scientific and technical data submitted and making recommendations on the applicant country’s outer limits, following the criteria set out in Article 76 of UNCLOS. Extending their continental shelves bears huge economic and geopolitical consequences for states, because it means expanding their capacity to explore for and exploit hydrocarbons and deep-​sea mineral deposits. France, Tonga, the Cook Islands, Palau, Kiribati, and the Federate States of Micronesia have all applied to the CLCS to extend the limits of their continental shelves. Notably for our purposes here, in 2009, the CLCS approved France’s application to extend the continental shelf of New Caledonia. The Commission agrees that the area enclosed by the French 200 M limit and the maritime treaty boundary between France and Australia constitutes the continental shelf beyond 200 M in the Western Area of the submission made by France with respect to the New Caledonia Region on 22 May 2007. The Commission recommends that France proceeds to establish the outer limits of the continental shelf accordingly.62

French and Australian scientists appear to have discovered large offshore reserves of hydrocarbons and natural gas between the continental shelves of New Caledonia and Australia.63 The EEZs of French Polynesia are also thought to be potential locations for the profitable exploitation of cobalt crusts.64 Controlling and exploiting the resources of its seabed is part of France’s geopolitical strategy in the Pacific. Prospecting and even exploitation companies are multiplying. The challenge for our territories in the Pacific is obviously how to protect their resources—​I am thinking of fishery and mineral resources—​but above all how to develop them, and how to better integrate these economies into a zone that has become the centre of gravity of the world economy.65

France is not the only nation tempted by the riches of the seabed. In 2011, the PNG government granted Nautilus Minerals its first mining licence and purchased a 30%

Pacific Islands   487 stake in its venture to mine ‘seafloor massive sulphide’ deposits in its EEZ beneath the Bismarck and Solomon seas (this decision was strongly opposed by the Alliance of Solwara Warriors). Recently, this project failed because the company went bankrupt and Papua New Guinea lost $120 million. Although the CLCS has refused the Cook Islands’ request to extend its continental shelf area, this state is preparing to be the leading site of a new gold rush.66 The CLCS has also rejected a similar request from the state of Tonga, which, however, in the guise of ‘sponsoring state’, is supporting Tonga Offshore Mining Limited’s (TOML) explorations in the Clarion-​Clipperton Fracture Zone (CCZ). Rising global demand for minerals and metals and the global shift in growth from land to sea has been pushing coastal states to extend their jurisdiction over ever larger areas of sea. These same factors, as we shall see next, have also led to increased pressure on international waters. The International Seabed Authority (ISA, 1994)—​the body (167 member states and the European Union) with jurisdiction over the seabed and ocean floor and the subsoil thereof, beyond the limits of national jurisdiction, known as the ‘Area’—​has already issued twenty-​five 15-​year contracts for exploration in the Pacific Ocean, seventeen of which are for the CCZ. The contractors interested in the CCZ include: Nauru Ocean Resources Inc. and Tonga Offshore Mining Limited (both subsidiaries of Canada’s DeepGreen Metals), Cook Islands Investment Corporation, and Marawa Research and Exploration Ltd (Kiribati),67 all sponsored by small Pacific Island countries. According to Part XI of UNCLOS, the ‘Area’ and its resources are part of the shared patrimony of humankind (Article 136) and must be administered with a view to benefitting humanity as a whole (Article 140). The Convention of 1982 also established an equitable system for sharing financial revenues (from activities in the Area and the payments and contributions made pursuant to article 82) among member states, in order to safeguard the interests of developing countries lacking the technology and financial resources required to exploit minerals in the ‘Area’ (Article 160, f,i). However, in light of firm opposition from the industrialized States, this regime was modified by the Implementation Agreement (1994) which significantly undermined the hopes of developing States, precisely by creating a system of ‘sponsorship’.68 The main opposition to deep mining comes from international and Pacific region civil society groups (women’s associations, churches, NGOs, fisheries, tourism operators, scientists, etc.) concerned about the loss of biodiversity, which is of key importance to the entire ecosystem. Consequently, in January 2018, the European Parliament adopted a resolution in which it called on states to stop sponsoring deep sea mining exploration in international waters and to support a moratorium. At the 50th Pacific Island Forum (PIF)69 held in Tuvalu (2019), Fijian Prime Minister Frank Bainimarama called on leaders to support a ten-​year moratorium (2020–​2030) on seabed mining to allow a decade of scientific research. The prime minister of Papua New Guinea, together with Vanuatu, indicated support for this motion, in light of the failure of Papua New Guinea’s deep-​sea mining project.70 In contrast, the governments of Nauru, the Cook Islands, Kiribati and Tonga wish to continue pursuing opportunities for deep-​sea mining

488   Marta Gentilucci because they see in it a concrete economic benefit to strengthen their resilience in the face of the threat of rising sea levels. Striking words from Kiribati President Anote Tong: ‘faced with the inevitable loss of our home islands and with inadequate resources to build climate resilience, I believe that the small island nations for which deep-​sea mining is an option will have no option but to proceed with it. For any leader who must choose between saving their country and people or collecting potato-​sized rocks lying loose on a small patch of ocean bottom representing less than 1% of the total seafloor, the choice is clear. However, if this pathway is not open to us because the values of the global north are being projected upon us, then I believe that Pacific island nations must be duly compensated for not mining’71. The current mineral rush appears to clash with the closing statements of the 48th PIF, at which member states were called to act together as one ‘Blue Continent’. 6. Leaders endorsed The Blue Pacific identity as the core driver of collective action [ . . . ] Leaders recognised The Blue Pacific as a new narrative that calls for inspired. [ . . . ] 7. The Blue Pacific is the catalyst for deeper Pacific regionalism. [ . . . ] 8. Leaders called for the commencement of the negotiations in the UN for a new Implementing Agreement on the Conservation and Sustainable Use of Biodiversity on Areas Beyond National Jurisdiction.72

‘The Blue Pacific’ reflects a pan-​ Pacific perspective and echoes the ‘Pacific Way’ (the cultural renaissance of the 1970s linked to decolonization). In practical terms, it translates into the need for responsible action to protect our oceans in the Anthropocene. Climate change, maritime security, fisheries, and ocean biodiversity are also among the priorities of the similarly labelled ‘Blue Economy’. Nonetheless, it remains to be seen whether the interests of individual member states truly overlap enough to facilitate agreement on a sustainable vision for the ocean.

Further Analysis One of the main concerns shared by Pacific historians and anthropologists is: ‘To what degree is the ‘post’ (in postcolonial) an appropriate label for the Pacific’s present policies?’.73 In 2016, the French dependencies New Caledonia and French Polynesia became members of the PIF. This represented a ‘momentous change’, considering the historical hostility of the other member countries towards French colonial policies74 and the Forum’s agenda of encouraging the decolonization of the remaining colonies. However, it was also a highly strategic move for New Zealand and Australia, who view France’s evolving role in the region as a source of stability. France is obviously committed to maintaining its presence in the Pacific; the sum of its EEZs make it the second largest maritime nation in the world after the United States, as Emmanuel Macron repeatedly emphasized during his visit to New Caledonia in 2018. Following Brexit,

Pacific Islands   489 France is the only European Union state with territories in the Pacific Ocean (and in any case the United Kingdom’s presence is restricted to the Pitcairn Islands); nevertheless, it is only ‘one of many more players in the region’.75 Not surprisingly, Macron is favourable towards the so-​called Indo-​Pacific axis—​a geopolitical partnership among the states of the Indo-​Pacific Oceans—​as a means of countering the expansion of China and securing France’s status in the Pacific. According to Wesley, China is an increasingly important donor and lender to Pacific Island countries, having contributed nearly US$1.8 billion to the region over the decade 2006–​2016.76 The so-​called Belt and Road Initiative, the most significant of China’s recent foreign policy initiatives, reaches into the Pacific Ocean, as part of a geographically amorphous ‘21st Century Maritime Silk Road’.77 Recent news that China has secured exclusive development rights for the entire island of Tulagi and its surroundings (the region is rich in natural resources), shocked its inhabitants and alarmed American officials.78 The key concern here is that China might turn the island into a military base. As a sovereign resident power, France holds a privileged position at regional panels, such as Quadrilateral Defence Meetings with the United States, Australia, and New Zealand. Lawson has complained that while there are a number of important players in the region, including the European Union, the United States, Japan, and more recently China and Taiwan, it is Australia and New Zealand that are most frequently found to be engaging in neocolonial practices.79 Since the late 2000s, some of the island nations have been questioning the role and status of the two developed nations Australia and New Zealand, the main financiers of the Pacific Island Forum, in light of their divergent policy interests. In 2009, the UN founded the Pacific Small Island Developing States (PSIDS), to which the two more developed countries do not belong. PSIDS has become one of the leading Pacific voices at the UN and the key diplomatic vehicle for participating in Global Southern coalitions such as the Alliance of Small Island States (AOSIS) and Group 77. Fry, in contrast with Lawson, has critiqued the rise of a Pacific ‘doomsday’ discourse constructed by Australian scholars, journalists, and policymakers in the 1990s, according to which ‘Australia has the right, or even the duty, to speak for the inhabitants of this region, to represent them to themselves and to others, to lead, and to manage them’80. In light of this observation, the words of the Hon Richard Marles MP, Australian Shadow Minister for Defence, who on 21 November 2017 addressed the Lowy Institute in Sydney on Australia’s approach to the Pacific, are particularly meaningful: In considering our actions in the Pacific often I feel there is an instinct not to act in the manner of an overbearing colonial power; to proceed on the basis of a light touch. This sentiment is well motivated, but it is wrong. And moreover it risks becoming an excuse for inaction.81

It is true, as Lawson pointed out,82 that we also need to pay attention to the island elites who are engaged in framing and representing Pacific islanders in ways that reflect their own positions of power, peculiar constructions of knowledge, and interests in terms of social control. According to Wesley, ‘viewing the Pacific region through the lens of great

490   Marta Gentilucci power competition exacerbates a tendency to see Pacific islands as small and isolated—​ as pawns in a naval “great game” ’.83 And indeed, provincial and national governments in Papua New Guinea, Fiji, and New Caledonia are developing joint ventures with transnational corporations from China and Korea, while Pacific small states are sponsoring and supporting deep-​sea mining. Finally, we should bear in mind that the language of foreign affairs often treats states as though they were well-​defined blocks without internal differences or divisions. When investigating Pacific Island countries, we must necessarily adopt a multiscalar approach that can hold together several scales of analysis. Anything less and we will ultimately fail to grasp the economic, political, social, and cultural complexity of this region.

Notes

1. 2. 3. 4. 5. 6. 7.

Matsuda (2006, 758, 759). Matsuda ( 2012, 9). Borofsky (2000, 1). Borofsky (2000, 1). See Thomas (1997). Hau’ofa (1994, 147). For further background on representations of the Pacific, see Jolly (2007) and Kabutaulaka (2015). 8. Hau’ofa (1994, 151). 9. Teaiwa (2006, 75). 10. Kabutaulaka (2006, 239–​240). 11. Chappell (1995). 12. Diaz and Kauannui ( 2001, 324). 13. Baldacchino and Bertram ( 2009, 146). 14. Thomas ( 2010, 3). 15. This selective focus means that no discussion is offered here of other examples of economic imperialism, such as Japan’s expansionist pressures between the 1920s and 1940s, the American militarization of the Pacific, and the more recent phenomenon of mass tourism. 16. Thomas (2010). 17. Bird-​of-​paradise feathers were used as fashionable ornaments on ladies’ hats. In 2017, Papua New Guinea banned the use of these birds’ body parts for anything other than traditional ceremonies (http://​melane​sia.news/​2017/​06/​papua-​gover​nor-​takes-​birds-​of-​parad​ ise-​off-​the-​mar​ket.thml/​, accessed 30 June 2020). 18. Quanchi (2019). 19. Quanchi (2019). 20. Mar (2016, 34). 21. Igler (2013). 22. Bencivengo ( 2014, 137–​149). 23. SLN is a subsidiary of the Eramet Group, in which the French state is a key shareholder.

Pacific Islands   491 24. New Caledonia was both a penal colony and a populating colony. Between 1864 and 1897, the prisoners sent to New Caledonia comprised 22,524 individuals who had been sentenced to forced labour, 3,928 deportees, and 3,798 transportees (Merle 1993, 76–​97). 25. For a review of the exploitation of minerals and petroleum hydrocarbons in Melanesia, see Banks (2019). 26. Quanchi (2019). 27. Ballard and Banks (2003). 28. Filer and Gabriel (2018). 29. The ‘Mining, Minerals and Sustainable Development Project’ is a research project with a focus on analysing how the mining and quarrying sector can contribute to the global transition to sustainable development (https://​www.iied.org/​min​ing-​miner​als-​sust​aina​ ble-​deve​lopm​ent-​mmsd, last accessed 7 March 2020). 30. Filer, Burton, and Banks (2008). 31. Banks (2019, 507). 32. Stoler (2008, 194). 33. Stoler (2008, 195). 34. Teaiwa (2015). 35. Teaiwa (2015, 386). 36. Tabucanon and Opeskin (2011). 37. Tabucanon and Opeskin (2011). 38. Teaiwa (2005, 177). 39. Stewart and Strathern (2003, 2). 40. Sommerville (2018). 41. Deception or kidnapping were used to recruit Oceanian people as forced labour for mines and plantations. See also: Blackbirding in the Pacific and the Search for Lost Family, RNZ, 11 June 2018 (https://​www.rnz.co.nz/​intern​atio​nal/​pro​gram​mes/​date​line​paci​fic/​audio/​ 201​8648​756/​black​bird​ing-​in-​the-​paci​fic-​and-​the-​sea​rch-​for-​lost-​fam​ily, last accessed 23 July 2020). 42. Telban (2019, 497). 43. Blanks (2019). 44. Cargo cult is a messianic or millenarian movement that appeared among Melanesian societies in 1945, at the end of the Pacific War. As Lamont Lindstrom has outlined, ethnographers suggest that ‘cargo’ often stood for Western goods and money, but could also signify moral salvation, existential respect, or proto-​nationalistic and anti-​colonial desire for political autonomy (see https://​www.ant​hroe​ncyc​lope​dia.com/​entry/​cargo-​ cults, last accessed 22 October 2020). 45. In the case of the Kanaks (New Caledonia), land expropriation has never cancelled the memory of the places occupied before colonization, whose names are still borne by families and clans. 46. Filer (1997, 156). 47. Filer et al. (2017). 48. Filer (1997, 119). 49. Kabutaulaka (2006, 251). 50. Cox (2019). 51. Cox (2019).

492   Marta Gentilucci 52. This section draws upon participant observation, long-​term and repeated fieldwork between 2015 and 2018 in the north of New Caledonia, and a multiscalar and multivocal approach. 53. IEOM (2018), Nouvelle-​Calédonie (2019). 54. IEOM (2017), Nouvelle-​Calédonie (2018). 55. IEOM (2018). 56. In 1998, the French constitution recognized the Kanaks as a people that have been colonized. Today, this group represents only the 40% of the overall multicultural population. Indeed, as outlined earlier in the chapter, New Caledonia was both a penal colony and a settlement colony for French people seeking their fortune. 57. Article 57 of the ‘Loi organique’ (1998) transferred ownership of the subsoil from the French state to New Caledonia. Today, it is the Caledonian Congress that legislates on mining issues, but the three Provinces (North, South, and Loyalty Islands) have the power to decide on and apply mining rights, which do not constitute property rights but concessions to carry out exploration and/​or extraction work. 58. The Koniambo plant is a large industrial complex located to the north-​west of Grande Terre, New Caledonia’s main island, in an area that is mostly rural and underdeveloped compared to the south, and is surrounded by the territories of eighteen tribes (we can freely use the colonial term ‘tribe’, because the Kanaks themselves use it to characterize a distinctive feature of their society). According to SMSP, in 2018 it provided 1,605 direct jobs (30% women and an average employee age of 30 years) as well as indirect employment. 59. Zelizer (2005). 60. marineregions.org (accessed 10 October 2020). 61. https:// ​ w ww.un.org/​ d epts/​ l os/​ c onven​ t ion​ _ ​ agr​ e eme​ nts/​ texts/​ u nc​ l os/​ u nclo​ s _​ e.pdf (accessed 10 October 2020). 62. https://​www.un.org/​Depts/​los/​clcs_​new/​submis​sion​s_​fi​les/​fra07/​COM​_​REC​_​FRA​_​02_​ 09_​2​009_​summ​ary.pdf (accessed 10 October 2020). 63. Nouzé et al. (2009). 64. Miller et al. (2018). 65. Sénat, 17 January 2013, Colloque La France dans le Pacifique: Quelle vision pour le 21e siècle? (http://​www.senat.fr/​rap/​r12-​293/​r12-​293.html, accessed 10 October 2020). 66. Cook Islands News, 5 October 2019 (http://​cook​isla​ndsn​ews.com/​natio​nal/​econ​omy/​ item/​74447-​sea​bed-​min​ing-​i-​see-​us-​a-​tak​ing-​the-​lead, accessed 10 October 2020). 67. A map of CCZ exploration areas is available at isa.org (https://​isa.org.jm/​files/​files/​ docume​nts/​isac​ont-​upd​ate.pdf, accessed 12 October 2020). 68. Jaeckel (2020). 69. The PIF is a regional political institution comprising Australia, New Zealand, New Caledonia, French Polynesia, and fourteen other independent island nations. 70. Fiji, Papua New Guinea, and the Solomon Islands have been among the first nations in the world to issue exploration licenses for seabed mining in their EEZs. 71. Tong, A., 29 January 2021, Opinion: On deep-​sea mining, climate change, and the guidelines needed to ensure ocean sustainability, (https://​www.devex.com/​news/​opin​ion-​on-​deep-​ sea-​min​ing-​clim​ate-​cha​nge-​and-​the-​gui​deli​nes-​nee​ded-​to-​ens​ure-​ocean-​sus​tain​abil​ity-​ 98586?fbc​lid=​IwAR0TvaL_​8P_​PJIX7qJe7TXrM4S8Uhfns​yrQp​Rb5m​QbcD​4rrG​QgHX​ ZHQA​wRQ#, accessed 12 March 2021). 72. Forum Communiqué, 48th PIF, Apia, Samoa, September 2017. 73. Borofsky (2000).

Pacific Islands   493 74. As Maclellan has documented, the other countries were especially concerned about France’s support for the secessionist movement in Santo (1979–​1980), which was intended to hamper the New Hebrides’ progress toward independence; the 1985 Rainbow Warrior affair; France’s militarization of New Caledonia in the mid-​1980s; and French nuclear testing at Moruroa and Fangataufa atolls up to January 1996. Maclellan (2018). 75. Fisher (2015). 76. Wesley (2020). 77. Wesley (2020). 78. New York Times, 16 October 2019 (https://​www.nyti​mes.com/​2019/​10/​16/​world/​austra​lia/​ china-​tul​agi-​solo​mon-​isla​nds-​paci​fic.html, accessed 20 November 2020). 79. Lawson (2010). 80. Fry (1997, 306). 81. https://​www.lowyin​stit​ute.org/​publi​cati​ons/​rich​ard-​mar​les-​austra​lia-​paci​fic (accessed 8 October 2020). 82. Lawson (2010). 83. Wesley (2020, 57).

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494   Marta Gentilucci Filer, C., S. McDonnell, and M. Allen. 2017. ‘Powers of Exclusion in Melanesia’. In Kastom, Property and Ideology: Land Transformation in Melanesia, edited by C. Filer, S. McDonnell, and M. Allen, 1–​56 Canberra: Australian National University Press. Fisher, D. 2015. ‘One among Many: Changing Geostrategic Interest and Challenges for France in the South Pacific’. Les études du CERI, 216. Paris: Centre des recherches internationales. Fry, G. 1997. ‘Framing the Islands: Knowledge and Power in Changing Australian Images of “South Pacific” ’. The Contemporary Pacific 9, no. 2: 305–​344. Hau’ofa, E. 1994. ‘Sea of Islands’. The Contemporary Pacific 6, no. 1: 147–​161. Igler, D. 2013. The Great Ocean. Pacific Worlds from Captain Cook to the Gold Rush. Oxford: Oxford University Press. Jaeckel, A. 2020. ‘Benefitting from the Common Heritage of Humankind: From Expectation to Reality’. International Journal of Marine and Coastal Law 35: 1–​22. Jolly, M., 2007 ‘Imagining Oceania: Indigenous and Foreign Representations of a Sea of Islands’. The Contemporary Pacific 19, no. 2: 508–​545. Kabutaulaka, T. 2006. ‘Global Capital and Local Ownership in Solomon Islands’ Forestry Industry’. In Globalisation and Governance in the Pacific Islands, edited by F. Stewart, 239–​ 258. Canberra: ANU. Kabutaulaka, T. 2015. ‘Re-​Presenting Melanesia: Ignoble Savages and Melanesian Alter-​ Natives’. The Contemporary Pacific 27, no. 1: 110–​146. Lawson, S. 2010. ‘Postcolonialism, Neo-​Colonialism and the ‘Pacific Way’: A Critique of (Un) Critical Approaches’. State, Society and Governance in Melanesia, Discussion Paper 4: 1–​16. Maclellan, N. 2018. ‘France and the Blue Pacific’. Asia and the Pacific Policy Studies 5, no. 3: 426–​441. Mar, T. B. 2016. Decolonisation and the Pacific: Indigenous Globalisation and the Ends of Empire. Cambridge: Cambridge University Press. Matsuda, M. K. 2006. ‘AHR Forum: The Pacific’. American Historical Review 111: 758–​780. Matsuda, M. K. 2012. Pacific Worlds. A History of Seas, Peoples, and Cultures. New York: Cambridge University Press. Merle, I. 1993. ‘Genèse d’une identité coloniale: L’émigration ‘organisée’ vers la Nouvelle-​ Calédonie de la fin du XIXe siècle; La fondation des centres de Koné et Voh, 1880–​1892’. Genèses 13: 76–​97. Miller, A., K. F. Thompson, P. Johnston, and D. Santillo. 2018. ‘An Overview of Seabed Mining Including the Current State of Development, Environmental Impacts, and Knowledge Gaps’. Frontiers in Marine Science 4: 1–​24. Nouzé, H., E. Cosquer, J. Collot, J.P. Foucher, F. Klingelhoefer, Y. Lafoy, and L. Géli, 2009. ‘Geophysical Characterisation of Bottom Simulating Reflectors in the Fairway Basin (off New Caledonia, Southwest Pacific), Based on High-​Resolution Seismic Profiles and Heat Flow Data’. Marine Geology 266: 80–​90. Quanchi, M. 2019. ‘Melanesia: A Region and a History’. In The Melanesian World, edited by E. Hirsch and W. Rollason, 63–​76. London & New York: Routledge. Sommerville, A.T.P. 2018. ‘Inside Us the Unborn: Genealogies, Futures, Metaphors, and the Opposite of Zombies’. In Pacific Futures. Past and Present, edited by W. Anderson, M., Johnson, and B. Brookes, 69–​80. Honolulu: University of Hawai’i Press. Stewart, J., and A. Strathern 2003. ‘Introduction’. In Landscape, Memory and History Anthropological Perspectives, edited by Stewart, J., and A. Strathern, 1–​ 15. London: Pluto Press.

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Chapter 27

Extracti v i sm and Resista nc e i n North Af ri c a Hamza Hamouchene

Introduction Extractivism as a mode of accumulation and appropriation in North Africa1 was structured through colonialism in the nineteenth century to respond to the demands of the metropolitan centres. This accumulation and appropriation pattern is based on the commodification of nature and the privatization of natural resources, which resulted in serious environmental depredation. Accumulation by dispossession has reaffirmed the role of Northern African countries as exporters of nature and as suppliers of natural resources—​such as oil and gas—​and primary commodities heavily dependent on water and land, such as agricultural produce. This role entrenches their subordinate insertion into the global capitalist economy, maintaining relations of imperialist domination and neocolonial hierarchies (Amin 1970). It sees large-​scale oil and gas extraction in Algeria and Tunisia; phosphate mining in Tunisia and Morocco; precious ore mining—​silver, gold, and manganese—​in Morocco; and water-​intensive agribusiness farming paired with tourism in Morocco and Tunisia. This plays an important role in the ecological crisis in North Africa, which finds its clear expression in acute environmental degradation, land exhaustion and loss of soil fertility, water poverty, overexploitation of natural resources, pollution, and disease as well as effects of global warming such as desertification, recurrent heat waves, droughts, and sea level rises (El-​Zein et al 2014; Hamouchene and Minio-​Paluello 2015; Lelieveld 2016).2 Simultaneous to this dynamic of dispossession of land and resources, new forms of dependency and domination are created. The (re)-​primarization of the economy is often accompanied by a loss of food sovereignty as a rentier system reinforces food dependency by relying on food imports, as in the case of Algeria; and/​or as land, water and

498   Hamza Hamouchene other resources get mainly mobilized in the service of an export-​led cash crop agribusiness, like in Tunisia and Morocco. Extractivism finds itself mired in serious tensions, which generates protests and resistance. This chapter documents some of these tensions and struggles by analysing activist grassroots work, including the participation in alternative regional conferences and ‘International Solidarity Caravans’ where representative of grassroots organizations, social movements and peasant communities met and travelled together to sites of socioenvironmental injustices, providing a space to strategize together and offer effective solidarity to their respective struggles. The rural working poor and the unemployed in Northern Africa are the most impacted by the multidimensional crisis. Comprising small-​scale farmers, near landless rural workers, fisherfolk, and the unemployed, the movements emerging in the three case studies presented here are resisting the looting of their subsoil resources, the despoliation of their lands, pervasive environmental destruction, and the loss of livelihoods. The chapter asks the following questions: Should we see these protests, uprisings, and movements as mainly environmental, or are these fundamentally anti-​systemic—​anti-​ capitalist, anti-​imperialist, de-​colonial, and counterhegemonic protests? Are these circumstantial episodes of resistance, or rather do they represent the latest development in the historical trajectory of class struggle against the latest capitalist offensive in North Africa? The chapter presents an assessment of the nature of these movements which grapples with the tensions and contradictions that traverse them.

Extractivism, Primitive Accumulation, and Imperialism Extractivism refers to activities that overexploit natural resources, destined for export to the world markets. As such, it is not limited to minerals and oil: it extends to productive activities which overexploit land, water, and biodiversity, such as agribusiness, intensive forestry, industrial fishing, and mass tourism (Acosta 2013). As for the latter, the luxury golf courses in arid and semi-​arid regions in Morocco prove Fanon’s critique of tourism valid where this neocolonial industry turns the national elites into ‘the organisers of parties’ for their Western counterparts in the midst of overwhelming poverty (Fanon 1967, 123). Alberto Acosta defines extractivism as ‘an activity whose social and environmental costs are not included in the prices of products’’ (Acosta 2013). The environmental economist K. William Kapp goes further by arguing that capitalism itself is ‘an economy of unpaid costs’ (Kapp 1950, 231). For example, In Salah in Algeria is one of the richest gas towns on the African continent, but its infrastructure is very poor. Residents call the one hospital they have the ‘hospital of death’. The oasis of Gabès in Tunisia has been ravaged by a phosphate chemical factory that pollutes and pillages water. These two examples expose the ‘paradox of abundance’: poverty,

Extractivism and Resistance in North Africa    499 unemployment, toxic waste, flares, dumped poisons, and resource pillaging in areas rich in natural resources. Agricultural extractivism in North Africa is particularly damaging to water resources. Export-​led water-​intensive mono-​crop agribusiness in arid regions like the Sahara depletes precious, non-​renewable groundwater and the conversion of arable land for food production into the production of energy (biofuels or agro-​fuels), flowers and produce destined for cosmetic use (or otherwise) in Europe constitute virtual water exports (Allan 2003; Mestour 2017). For instance, Morocco’s 2008 Green Morocco Plan supported by the World Bank and setting out the country’s agricultural plan for the period between 2008 and 2020, aims to quintuple the value of export-​oriented crops by shifting land-​use away from staple cereal crops and promoting private investment in agriculture (Akesbi 2011; Aziki 2014; Hanieh 2014). Similarly, the traditional and small-​ scale fishing sector has been facing an offensive by industrial fishing that threatens biodiversity and fish stocks. This is facilitated by neoliberal plans such as Halieutis and fishing agreements with the EU allowing European big boats to overfish in Moroccan waters at the expense of small fishermen (ATTAC Morocco 2016). Extractivism creates what Naomi Klein calls ‘sacrifice zones’, areas disproportionately ravaged by extraction and processing, inhabited by people whose bodies, health, land, and water are sacrificed in order to maintain the accumulation of capital (Klein 2014, 2016). The three cases presented in this chapter exemplify broader patterns of primitive accumulation (Marx 1976) in the Global South, where accumulation by dispossession (Rodney 1972; Harvey 2003) takes the brutal form of the extraction and pillage of natural resources, the degradation of environments and ecosystems through the privatization and commodification of land and water. This has intensified in the last few decades, following the neoliberal restructuring of the economies and the infiltration of transnational capital, including the extractive type (Aziki 2017; Moustakbal 2017; Belalloufi 2012; Khiari 2003; Chandoul 2018). ‘Accumulation by dispossession’ cannot be dissociated from the pivotal role of imperialism and colonialism in the process of capitalist development. In the regions discussed here, capitalist agriculture was introduced during the nineteenth century, as were the mining industries, such as in the Gafsa mining basin in Tunisia where phosphate was discovered in 1883 and oil operations in Algeria pioneered as early as 1894. The aim of imperialism is ‘access to loot (the extracted resources), land and labour’ (Veltmeyer and Petras 2014, 7). Furthermore, the concept of ‘accumulation by dispossession’ cannot obscure the centre-​periphery structure of imperialism. For Amin, capitalism is intrinsically imperialist and the nations of the Global South, despite being formally independent, were neocolonies as they remained politically and economically subjugated to the former colonial powers (Amin 1990). Raouf,3 an unemployed youth from Gafsa mining basin expressed his outrage at the situation by saying: ‘I think the colonizers were more clement than the Tunisians ruling us’. Sofiane, another unemployed activist from the movement Mafrat in Tamanrasset, Algeria, expressed the same feelings: ‘We are treated like we are colonized, if not worse’. Here

500   Hamza Hamouchene neocolonialism or internal colonialism is facilitated by an extractivist model of development that dispossesses populations and shifts the resulting socioenvironmental costs to them (Al Salhi 2017).

The Political Economy of Extractivism in the Maghreb The Maghreb region plays a geostrategic role when it comes to the extractive sector for its proximity to Europe and the richness of its soil. Algeria is the third-​largest provider of gas to Europe, while Morocco and Tunisia are very important players in the production of phosphates, which are used as agricultural fertilizers, feeding global agrarian capitalism. Moreover, Tunisia and Morocco export considerable amounts of agricultural produce to Europe. This strategic importance is reflected in the North’s attempts to control these resources through political, military, and economic pressure using free trade deals, such as the ongoing negotiations around the Deep and Comprehensive Free Trade Agreements with Tunisia and Morocco (Jouili 2018; Daumas and Aziki 2018). This reliance on and return to primary commodities as the main sources of export revenues as well as the reinforcement of extractivism are hallmarks of the political economy of development in the region and the peripheries in general (Veltmeyer and Petras 2014, 222). The incursion of transnational capital into the extractive sectors in the Maghreb is an undeniable fact. Multinationals are present and heavily involved in all three countries (Algeria, Morocco, and Tunisia), but there are some differences between them. While they have an important presence in the Algerian hydrocarbon sector, the national oil and natural gas company, Sonatrach, dominates owning roughly 80% of all hydrocarbon production. The sector saw a gradual liberalization since the 1990s at a time of a war against civilians, which provided the opportunity to sign lucrative contracts with companies like BP and Total for thirty years (Hamouchene and Rouabah 2016). Since the 1980s, Algeria saw a re-​primarization of its economy, with hydrocarbons constituting around 97% of exports and more than 60% of GDP. By law, Sonatrach is given majority ownership of oil and natural gas projects in Algeria. However several attempts have been made in the last two decades to open up the hydrocarbon sector and liberalize it further by undermining the 51%–​49% ownership rule that simply represents the absolute minimum of resource nationalism (Rebah 2011; Belalloufi 2012). In contrast, in Tunisia, transnational companies can own up to 100% of oil and gas concessions. British Gas–​ Shell, which is the largest gas producer in the country, supplying approximately 60% of Tunisia’s domestic gas production through the Miskar and Hasdrubal operations, holds a 100% interest in the Miskar gas field, the most productive in the country and sells the gas to the State Electricity and Gas Company, at international market values and in hard currency (Hammami 2014).

Extractivism and Resistance in North Africa    501 However, unlike South America, transnational extractive capital plays a marginal role in the mining sector where national capital (private and public) plays a preponderant role. Some of the biggest players are: two public companies controlling the phosphate sector in Tunisia (CPG) and Morocco (OCP), MANAGEM (a subsidiary of the Royal Holding Company SNI that monopolizes the mining sector in Morocco, extracting metals and minerals in Morocco). Moroccan capital (including extractive) has expanded outside the national borders into other African markets. This process of internationalization went through the phases of concentration and centralization of wealth in the hands of big capitalist groups, as a result of neoliberal structuring dictated by the World Bank and IMF following the debt crisis in the 1980s (Azanzar 2017). Managem is developing a few mining projects in Sudan, Gabon, Ethiopia, Democratic Republic of Congo (DRC), and Burkina Faso. In DRC, it entered into a partnership with Chinese group Wanbao Mining for the exploitation of Kalukundi, an important copper concession. Similarly the Moroccan Phosphate giant OCP is conquering the African continent by opening fourteen subsidiaries (Aziki 2017). In the agribusiness side, some industrial groups such as the Algerian Cevital and the Moroccan Sefrioui have participated in land grabs in other African countries (El Watan 2013; Grain 2018). Northern African countries have not been at the forefront of resistance against free market fundamentalism in the way, for example, Venezuela, Bolivia, and Ecuador have. These three countries represent a more statist form of ‘progressive extractivism’ (Gudynas 2010), also understood as post-​neoliberal developmentalism (Infante and Sunkel 2009). However, none of these three governments has been able to escape the development trap of the ‘new extractivism’, which is the serious dependence on foreign direct investments (FDIs), penetration of foreign capital and dealings with the agents of extractive capital. Algeria can be seen as a precursor in this respect as its auto-​centred and inclusive development project in the 1970s was highly dependent on hydrocarbon exports, which facilitated its dismantlement and a halt of its delinking experience when oil prices fell down. In the age of neoliberal hegemony, this paved the way to a predatory form of extractivism where various comprador fractions of the ruling class compete over the oil and gas rent with a greater level of exploitation and the attendant destructive impact on society and the environment (Bennoune 1988; Bellaloufi 2012). Maghreb states facilitate the entry and operations of transnational extractive capital by passing laws favourable to extractive industries. All three countries opened the way to fracking and offshore drilling and offer enticing incentives for private investors. However, while Tunisia and Morocco, more akin to Mexico and Colombia, with a more advanced integration in the global economy, are strictly neoliberal in their approach to extractive capital and national development, there is still an ambiguity about the Algerian case, which can be best described as ‘neoliberalism with state intervention’ on behalf of capital to use the words of Jan Lust about Peru (Lust 2014; Sankey 2014). In Algeria, the state is inclined to serve the interest of transnational extractive capital, through several concessions made to multinationals, but at the same time it commits large state spending in infrastructure and agriculture, albeit with endemic corruption.

502   Hamza Hamouchene

Resistance against Extractivism in North Africa Case 1: Southern Algeria: Energy Colonialism, Environmental Racism, and the Unemployed Movement The uprisings and the social movements that the Saharan regions in southern Algeria witnessed in the last six years are in a way an insurrection by the victims of fossil capitalism, the age of addiction to burning fossil fuels under the imperative of capitalist accumulation (Malm 2016; Angus 2016). Resistance shows that extractivism is not being passively endured by dispossessed communities. While Algeria’s wealth stems mainly from the Saharan oil and gas, the Saharan regions remain the poorest in the country and have suffered decades of underdevelopment. The ruling elites exhibit a corrupt, rentier attitude towards the South, thus perpetuating the pattern of uneven development where northern Algeria is relatively ‘developed’ at the expense of the peripheral South and its people (Belakhdar 2015). Southern Algerians do not accept such a state of affairs, which is often socially mediated as racism against them, mixed with contempt for the rural way of life predominant in the South. Salah, one of the community leaders of the anti-​ fracking uprising in In Salah in 2015 expressed this feeling: ‘You see the dire situation of our town and its infrastructure and now they have the audacity to come and pollute our water. They want to sacrifice us and I say it: This is discrimination and racism and we won’t be silent in face of this injustice’. The ‘unemployed movement’—​under the leadership of the National Coordination for the Defence of Unemployed people’s rights (NCDUR)—​which is an informal network of thousands of unemployed youth from all over the country, especially from the South—​came to public attention in Ouargla in 2013, 85 km away from Hassi Messaoud, one of the wealth oil poles of the country and the first energy town in Algeria (Belakhdar 2015). The movement succeeded in mobilizing tens of thousands of people in important demonstrations, especially the huge protest of 13 March 2013, followed by another seventeen demonstrations between February 2014 and March 2015 and documented in the press (El Watan 2014a, 2014b, 2014c, 2014d; Liberté 2015; Le Soir d’Algérie 2015). Demonstrators demanded decent jobs and protested against economic exclusion, social injustice, the underdevelopment of their region, and the exploitation of shale gas in 2015. As put by Karim one of the movement leaders in Ouargla, a central question posed was ‘Why are we not the beneficiaries of the oil wealth that is lying under our feet?’ While state authorities responded by attempting to crush, discredit, and co-​opt it, the movement has played an important role in bringing an ‘anti-​imperialist’ dimension to the anti-​fracking uprising that started in January 2015. Amine, another leader of the unemployed movement expressed his dismay when they learned that some French companies could be involved in fracking in their home-​country after they were banned

Extractivism and Resistance in North Africa    503 from doing so in France: ‘This is just another form of colonialism and it angers me to see our decision-​makers going down this path’. Displacing the costs of such a destructive industry through space from North to South is one strategy of imperialist capital that is bound up with racial and class hierarchies, where environmental racism is wedded to energy colonialism (Robinson1983). In early 2018, the CEO of Algeria’s state energy firm Sonatrach announced that oil majors Anadarko, Total, ENI, and Statoil have expressed interest in helping Algeria start offshore drilling and on 30 October 2018, Sonatrach signed the first contract with British BP and Norwegian Equinor to exploit unconventional hydrocarbons, including shale gas and oil (Echorouk 2018). This shift to a more destructive form of extractivism can be explained, on one hand by the desire to maintain the flow of foreign exchange into national coffers in order to meet the shortfalls in income levels caused by the decrease in the oil barrel’s price; and in the other by the EU’s aggressive attempts to grab and appropriate more Algerian gas (Hamouchene and Pérez 2016). Moreover, the technological fix, that is, the use of more destructive technologies—​such as fracking and offshore drilling—​to extract natural resources in Algeria is an attempt to relentlessly expand the frontiers of primitive accumulation viewed from the angle of transnational extractive capital, which manifests itself as ‘a qualitative erosion of the conditions of human, never mind extra-​human, well being’. (Moore 2015, 149).

Case 2: Moroccan and Tunisian Hinterlands And Phosphate: Khouribga and Gafsa Tunisia and Morocco are big world producers of phosphate. In 2017, Morocco (including Western Sahara) was the third biggest producer of phosphates in the world (Kay 2018), its reserves amounting to over 70% of global supply. The sector in Morocco is monopolized by the public company Office Chérifien des Phosphates (OCP). Khouribga is the biggest phosphate mine in Morocco and, while phosphate was discovered there in 1923 by the French (Hiribarren 2016), the town is not a wealthy centre. Khouribga town shows a clear division in two sections: the well-​off neighbourhoods where the engineers and rich live, composed by villas and remaining colonial buildings Europeans once owned; and a working class neighbourhood, built against a hilly background of phosphate waste. Khouribga is known for the repeated assault on trade unions and the mushrooming of subcontracting companies, which are symptomatic of the brutal exploitation, precarization, and flexibilization of labour in Morocco (Al Mounadila 2016). Amina, a local activist told me during my visit to Khouribga in January 2016: ‘Not only workers are exploited and their working conditions are becoming very precarious, we also see the youth of Khouribga risking their lives to reach Europe’. The paradox of accumulation and dispossession is further reinforced by the phenomenon of harga (undocumented migration) to Europe where the town has an important immigrant community,

504   Hamza Hamouchene mainly in Italy. Resistance to this state of affairs comes in different forms: children of former mine workers asking to be integrated into OCP, protests against subcontractors who impose very precarious working conditions and demands to be incorporated into OCP, and so forth (Al Mounadila 2016). As for Tunisia, phosphate was first discovered in Gafsa by the French colonialists in 1883. Its exploitation a few years later, the development of industrial towns (Redeyf, Oum Laarayes, Metlaoui, and Mdhilla) and the radical transformation of people’s livelihoods away from subsistence agriculture and nomadism to wage labour, all constituted an act of primitive accumulation (Robert 2015; Laabidi 2017). The communities in these regions suffer from the extractivist model of development that only regenerates itself through resource pillaging, marginalization, and further environmental degradation, especially after the reconversion from underground to open-​pit mining in the late 1990s (Hibou 2015). Local residents are disproportionately affected by quakes caused by dynamite explosions of rocks. The most crucial issue is, however, water grabbing, as Gafsa is a semi-​arid region where water supply is frequently cut for weeks, particularly in the summer, forcing inhabitants to buy water cisterns. Gafsa Phosphate Company (CPG) drains more than three-​ quarters of the exploited capacity of 565 litres per second of the Oum Laarayes-​ Redeyef groundwater table to proceed with the leaching process in order to separate the minerals from the ore (Robert 2017). This results in the discharge of untreated water directly into farms, causing pollution, contamination of water reservoirs and damage to the soil’s fertility in a region with a high agricultural potential (Trigui and Hamouchene 2017). This export-​oriented extractive sector neither creates wealth nor jobs for local residents. In 2008, unemployed people protested over corrupt hiring practices at the mines. Police blockaded the protesting communities in a siege-​like occupation that lasted for six months (Allal 2010; Chouikha and Geisser 2010; Tlili 2012). The events that were violently repressed by Ben Ali’s regime are considered to be the first spark that ignited the 2011 revolution . After the uprising of 2011, several factories and mines in the area have been repeatedly occupied by unemployed youth, halting production. During my research visit in 2016 to the Oum Laarayes and Redeyef mining towns, production was completely brought to a halt by a more than six months–​long occupation by the youth who erected protest tents, not allowing production to proceed (Essahbani 2018). Brahim, one of the young protesters told me: ‘We want jobs but they are not listening to us. We have been in this situation for months now and we are determined to get listened to’. Tewfik the head of Association ‘Bassin Minier pour l’Investissement et le Développe­ ment’ in Oum Laarayes told the people and organizations participating in the international solidarity Caravan that visited their town in April 2017 that: ‘What we realized today six or seven years after the revolution is that social turmoil still takes place as if nothing changed since 2008, as if the question in the mining basin . . . is basically a phosphate train leaving and coming back without development. Today the CPG pollutes the environment without any respect to people’.

Extractivism and Resistance in North Africa    505 All the protests mentioned thus far had a big impact on production. In 2010, Tunisia was the fifth-​largest exporter of phosphates in the world and by 2017; its exports have been halved downgrading its ranking to eleventh because of the recurrent stoppages of production (Waszkewitz 2018). As Ben Khelifa argued when analysing another unemployed youth uprising in the oil rich region of Tataouine in southern Tunisia between April and June 2017, these protests are more effective when they target capital and sources of wealth, either land or natural resources (Ben Khelifa 2017). In May 2017, the Tunisian president Essebsi announced that he would not tolerate any more blockades at economic hubs and would allow the military to intervene. In November 2017, strategic production sites were declared a military area, allowing the military to protect them from social movements and any disturbances through the use of force (Jeune Afrique 2017). The state needed to intervene in order to maintain the unfettered access to resources required by global markets.

Case 3: Imider: Peasant Resistance against Dispossession The fight of Imider agro-​pastoralist communities against the largest silver mine in Africa is an emblematic struggle against extractivism in Morocco and in the Maghreb. On their land sits the Imider mine, which is operated by La Societe Metallurgique d’Imider (SMI) and owned by Societe Nationale d’Investissement (SNI), a private holding company owned by the Moroccan royal family. It is Africa’s most productive silver mine, which placed Morocco among the top twenty biggest silver producers in the world in 2017 (Williams 2018). The mining company has not only failed to generate employment for the local youth, but is also accused of polluting the environment, depleting water sources by digging wells in the communities’ land and thus having a devastating impact on local farming. The mine has had a ravaging effect on Imider’s khettara system, a traditional underground canal network that has provided water to farmers in the desert region since the fourteenth century (Bouhmouch and Bailey 2015). For nearly three decades, the near-​landless peasants/​agro-​pastoralists, the unemployed youth and the migrant workers of Imider have engaged in various means of protest against the mine: marches, sit-​ins and occupations of the mine. The state responded with repression, violence, and imprisonment of activists (Azergui 2012). Since 2011, some youth—​mainly students, unemployed or semi-​proletarianized rural workers—​ have held a protest camp on Alebban mountain in what is believed to be the country’s longest-​ever protest (Radi 2014). Protesters demanded the halt of water pillage, urging the company and the authorities to deliver on local development and jobs, which have so far mainly benefitted outsiders. The community association they set up, the Movement on the Road of 96—​Imider, has managed to maintain its resistance through linking up with international movements and attending the international Climate Talks in Marrakech (COP22) to put their struggle in the spotlight (Yousfi 2016). Omar one of the young activists who spent a two-​year jail sentence, reflecting in April 2017 on the international solidarity caravan that visited Imider in November 2016 said: ‘That caravan

506   Hamza Hamouchene gave a new breath to our movement, really. With all the different nationalities that came, people felt that their cause was global, not just Moroccan’.

The New Manifestations of Class Struggle and Their Limitations This chapter has highlighted that accumulation strategies bring with them resistance and contradictions between the interests of capital and those of communities, peasants, fishermen, unemployed people, and workers. The past decade has seen a rise in relatively new social mobilizations surrounding resource extraction, connected to global environmental justice movement. These three cases represent the environmentalism of the poor, which ‘grows out of distribution conflicts over the use of ecological resources needed for livelihood’ (Martinez-​Alier 1997, 23). This environmentalism is not so much about the conservation of exotic species and pristine nature. It is rather a quest for environmental and social justice and a fight against the social exclusion, the violence, and the authoritarianism of capitalism in its neoliberal phase. While the cases presented here feature a strong ecological element, this is always secondary to more pressing issues of socioeconomic rights such as jobs, development of urban and rural infrastructure, the distribution of wealth, and the democratization of decision-​making. The mobilizations analysed in the paper see local residents pitted against agents of global capital and against the nation states where they are located. These ‘anti-​extractivist’ social movements in North Africa are not only, and not predominantly, environmental movements, but are better grasped as the latest development in the historical trajectory of class struggle against capitalist exploitation and imperialist domination. Riahi and Ben Khelifa argue that we need another language to accurately describe the social contestations, conflicts, protests, and occupations that took place in the last six to seven years in Tunisia. Rather than describing them as social movements, they argue that we should be talking about social mobilizations instead, as these tend to be ephemeral and localized, lacking solid organizational structures and without a strong popular base and a clear political horizon (Riahi 2016; Ben Khelifa 2017). For example, radical demands made by the unemployed youth in Tataouine such as the nationalization of oil and gas companies and the allocation of 20% of oil and gas revenues for local development have been dropped when negotiations started with the authorities. Similarly, the unemployed movement in Algeria withered away after some jobs have been offered by the government, including in the police forces. The movements led by unemployed youth analysed in this paper do not organize their struggles on a class basis. The objective of their mobilization is not revolution or radical transformation but an insertion into the capitalist system through jobs, no matter how precarious. In this respect, ‘the struggle is defensive and not offensive’ (Lust 2014, 217) as they are keeping natural resources outside the orbit of capitalist accumulation,

Extractivism and Resistance in North Africa    507 albeit temporarily, while begging for some crumbs of the pie. When that happens, the movements disintegrate and disappear. Typically their leadership lacks a radical vision of the movement’s struggles and thus fails to link up with other movements nationally or regionally, which traps their demands in a narrow local context. More importantly, the position of unemployed people outside the sphere of production make it extremely difficult, if not impossible, to advance the class struggle into a higher form where political and class consciousness is made more explicit (Ben Khelifa 2017). Resource extraction is a capital-​intensive sector which employs a minimal number of technically skilled labourers, a situation that tends to be amplified with evolving technology. As a result, very few jobs are offered to local residents, who are usually hired short-​term and on low wages, while the promised infrastructure and services never materialize. This is how extractive companies realize their super-​profits through rapacious appropriation of resources and externalization of costs. In several cases, these companies got their concessions through coercion, bribery, and corruption and when resistance does spring up, they rely on a plethora of strategies including co-​opting movement leaders, dividing populations, and disarticulating struggles through social and environmental responsibility programmes. Failing that, they pressure the states where they operate to intervene to violently repress, as documented in several conflicts earlier. Demanding jobs in industries that externalize environmental and social costs that are borne disproportionately by communities living nearby extractive site is a very thorny issue. These movements are divided around priorities, as employment generation and environmental issues are both pressing. Raouf, an unemployed youth from Oum Laarayes told the visiting solidarity caravan in April 2017: ‘For this region, the deepest and the bloodiest wound is unemployment. After the 2008 Intifada, which lasted six months of struggle against the Ben Ali regime, and with all the repression and broken bones, it’s no time to talk about the environment’. Wassim, an activist from Redeyef disagreed: ‘There is a real problem and a real contradiction with this company [CPG]. It doesn’t just have to do with the social and economic. It has to do with life and the right to life . . . so the issue shouldn’t be just employment’. Ultimately, this type of resistance is fundamentally anti-​systemic and counterhegemonic and can be explicitly anti-​imperialist in certain cases and at specific junctures. However, it is not anti-​capitalist as such. In any way, these social movements or mobilizations against the status quo, as Riahi argues, are ‘carving for themselves an independent space through which they can intervene . . . they have the ability to open new spaces of experimentation that could lead to the creation of alternatives’ (Riahi 2016). In other words, these mobilizations bring the internal contradictions of extractivism and capitalism into the open, thus helping to forge the class consciousness necessary to overthrow capitalism and build a sustainable alternative in its place. In this context, non-​governmental organizations (NGOs) tend to depoliticize their target audiences and grassroots partners while turning them away from a class analysis of their predicament and helping them adapt to the realities of capitalist (under)development and extractivist plunder. Fieldwork interactions with NGO workers highlighted that some of the NGOs and coalitions encountered, environmental or otherwise,

508   Hamza Hamouchene adopted a class collaborationist discourse stirring away from any politics of mobilization of forces of resistance. These tried to carefully channel the demands and the discourse of the social movements in a way that is accommodating and not threatening to capital and the existing political and economic structures of powers. This is coherent with Amanor’s argument that the concept of civil society has been refashioned to replace class interests and the interests of the marginalized where NGOs tend to focus on political and civil human rights, rather than social justice and economic rights based on redistribution (Amanor 2008). Similar to other countries in the African continent and the Arab region, several claims are made about the weakness of ‘civil society’ in the Maghreb by international NGOs, aid and development agencies in order to justify their active role in recruiting and grooming civil society organizations to represent the poor and working people (Amanor 2008). For example, the ‘NGOisation of resistance’ (Roy 2014) was evident in the transitional period in Tunisia after the uprising in 2010–​2011. NGOs catalysed action to turn people away from the streets, avoid an escalation of demands and a radicalization of the revolutionary process that could threaten the profits of transnational capitalist elites as well as the interest of imperial states.

Conclusion/​Alternatives The metabolic rift between capital and nature, as the compulsion to accumulate ever more capital, undermines the metabolic equilibrium that would allow a society to live sustainably and in harmony with its environment (Bellamy Foster 1999). This rift is threatening the entire planet as a place of habitation for humanity and other species. The three cases presented in this chapter show how small-​scale farmers, the unemployed and rural residents in Northern Africa’s frontiers of extraction resist against the crushing weight and the catastrophic convergence of despotism, neoliberal capitalism, and the ecological crisis (Parenti 2011; Moustakbal 2017), all entangled in imperial and neocolonial relations of domination. While for more than three decades, successive governments in the Maghreb have banked on a neoliberal extractivist model of development, we argue that extractivism is not the route to take towards ‘development’, capitalist or otherwise. The ‘new extractivism’ championed by progressive or post-​neoliberal governments in Latin America is not the solution either. This model—​not new—​has shown its limitations and contradictions in the 1970s with countries like Algeria. Today, we see the same contradictions manifesting themselves in Latin America: a mix of FDIs flows and the continuing subordination of the economy to globalized production and value chains; while at the same time, we see tougher state regulation and environmental rules on transnational companies, that is, a dose of resource nationalism and a measure of inclusionary development. The ‘new extractivist’ governments are basically striking a better

Extractivism and Resistance in North Africa    509 deal with capital while maintaining the mechanisms that generate inequality, domination, exploitation, and pauperization. The chapter has documented the upsurge in the forces of resistance accompanied by ‘the entrance of new actors onto the scene’ who demand that wealth be shared and distributed equitably (Sankey 2014). This resistance to extractive capital is led by the communities most directly affected by its destructive operations and by the ‘new proletariat’ formed in a process of ‘accumulation by dispossession’. However, the battles of social movements and rural communities can only be won if they are transformed into a fight against capitalism and imperialism and if they can go beyond the local and reach the national and international levels. This is why the opening up of new horizons of thinking and framing becomes paramount. Construction of discourses that are anti-​colonial and anti-​capitalist will allow the forces of resistance to start asking the right questions, linking up the different struggles (climate justice, environment justice, food sovereignty, trade justice, anti-​ racism, anti-​militarism, anti-​war, anti-​austerity, etc.) because all these are intersectional and interconnected. Any exploration of an ‘alternative development’ must necessarily deal with extractivism. One direction that this can take is post-​extractivism that can be reached through stages. The current form of ‘predatory extractivism’ can transition to a ‘reasonable extractivism’ that is seriously regulated, in which social and environmental norms are rigorously respected. The second step consists to moving towards an ‘indispensable’ or ‘basic’ extractivism where only necessary extractive projects are carried out to satisfy the national and regional needs (Gudynas 2013). A reduction of the extractive sectors must be accompanied by a diversification of the economy, focusing particularly on agriculture, farming, industry, and services at the national level; and by a reorganization at the regional level, to avoid economic strangling by the boycott of international buyers. In that respect, regional integration, in an autonomous way (not subordinated to globalization) is necessary. This autonomous regionalism could take a form of a federation between the three countries: Algeria, Tunisia, and Morocco, where economic and political cooperation, resources sharing and important decisions on the future of the Maghreb are made together. This would need to confront the political systems in all three countries, where authoritarian, corrupt, and comprador elites are imposing their rule and are complicit in the organized looting of their nations. The struggle for environmental and climate justice and for just transitions towards post-​ extractivist development models will be therefore fundamentally democratic.

Acknowledgement I am immensely grateful to Elisa Greco, who has been a truly supportive mentor while I wrote this chapter. Without her help and encouragement, this chapter wouldn’t have

510   Hamza Hamouchene seen the light. My gratitude also goes to Corinna Mullin, who took the time to give me her feedback and reassuring words. A very special thank you goes to Assia Merabet, my loving wife, for supporting my work and for putting up with my repeated absences while conducting the field trips that have been the basis of this research work.

Notes 1. ‘North Africa’ and ‘Maghreb’ are used interchangeably in this article and refer to Tunisia, Algeria, and Morocco. 2. This chapter is dedicated to the memory of Samir Amin, a towering scholar-​activist who dedicated his life to the emancipation of the African continent. It is also dedicated to the memory of Mohamed Abdelmouleh, a dear Tunisian friend and comrade who helped and participated in some of the grassroots work documented in this paper. 3. All names have been changed where appropriate.

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Chapter 28

R ailway Imperia l i sms i n East Afri c a Laying the Tracks for Exploitation Tim Zajontz

Introduction Industrialized Europe cast its imperial influence over much of a still agrarian world in the half century before 1914 by building railways in other people’s countries. [ . . . ] The locomotive had already proved its remarkable capacity for joining local and national economies in growth in Europe and the United States, and once the trunk lines had been completed at home with profits, railway mania spread abroad. Investing heavily in foreign and colonial lines, private capitalists, especially the British, integrated country after country into the international economy as primary producers. (Robinson 1991, 1)

Railways have been the single most important infrastructure for the systematic exploitation of Africans by European states and capital. Rail lines were pivotal to European spatial imaginations and strategies such as Britain’s ‘Cape to Cairo’, the German trope of Mittelafrika, Portugal’s Mapa cor-​de-​rosa, and France’s Grande traverse (Austen 1987, 127; Diogo and Navarro 2018; Hanes 1991). Their strategic importance further increased after the Berlin Conference of 1884–​1885, which partitioned the continent in accordance to existing European ‘spheres of influence’ (Art. 34 of the General Act of the Berlin Conference) and established the doctrine of ‘effective occupation’ (Art. 35) of African territories (Reid 2009, 153). Laying rail tracks became an important way of claiming ‘effective’ control over the African hinterland. However, the geopolitical dynamics of the Scramble for Africa were always inherently interrelated with capital accumulation in the metropolises, with locomotion on

516   Tim Zajontz steel rails providing a vital link between the politics and economics of imperialism. Nineteenth-​century imperialism was indeed unthinkable without railway technology which became one of the main ‘tools of empire’ (Headrick 1981) and rail tracks the steel ‘tentacles’ (Headrick 1988) with which European powers took hold of foreign territories. In The Accumulation of Capital Rosa Luxemburg famously argued that the ‘imperialist phase of capitalist accumulation’ was characterized by ‘lending abroad, railroad constructions, revolutions, and wars’ (2003 [1913], 399). Luxemburg writes that ‘[r]‌ailway construction in Africa and Asia during the last twenty years [ . . . ] almost exclusively served the purposes of an imperialist policy, of economic monopolization and economic subjugation of the backward [sic!] communities’ (2003 [1913], 402). Accordingly, the continuous extension of rail lines was necessary for the spatial penetration of the African continent by imperial capital. Luxemburg documented the growth of the permanent way in Africa from 455 kilometers in 1860, to 1,786 in 1870, 4,646 in 1880. It doubled between 1890 (9,386 kilometers) and 1900 (20,114) and reached 36,854 kilometers in 1910 (2003 [1913], 400). Railways were not only central to the coercive and racialized reordering of African space and the colonization of the continent, they had a lasting impact on Africa’s dependent integration into the global economy, as Walter Rodney aptly describes in How Europe Underdeveloped Africa: The combination of being oppressed, being exploited, and being disregarded is best illustrated by the pattern of the economic infrastructure of African colonies: notably, their roads and railways. These had a clear geographical distribution according to the extent to which particular regions needed to be opened up to import/​export activities. Where exports were not available, roads and railways had no place. The only slight exception is that certain roads and railways were built to move troops and make conquest and oppression easier. (2015 [1972], 193–​194)

As Africa is currently experiencing a ‘railway renaissance’, with rehabilitations and greenfield projects being implemented across the continent, mostly under the auspices of Chinese (state) capital, it seems timely to reconsider the role of railways within economic imperialisms. The notion of ‘railway imperialism’, as employed here, does, of course, not suggest that imperialism, itself a dynamic and hypercomplex amalgamation of social, cultural, political, and economic processes, could be reduced to a particular technology or mode of transportation. The chapter instead documents ways in which railway projects in East Africa have fostered what Rodney called the ‘expatriation of African surplus’ (2015 [1972], 138) in particular historical conjunctures, namely, the region’s subjugation by German and British imperialism at the turn of the nineteenth century, on the one hand, and East Africa’s gradual integration into increasingly China-​centred modes of capital accumulation in recent times, on the other hand. Notwithstanding the historical specificity (and indeed differences) of these conjunctures, there are continuities in the dependent ways in which African territories

Railway Imperialisms in East Africa    517 and economies have been integrated into the global economy with the help of infrastructure. As Enns and Bersaglio underline, Colonial administrations in East Africa prioritised infrastructure development to make the extraction, production, and movement of commodities through their territories more efficient. This infrastructure supported the circulation of capital for the dual purposes of empire-​and profit-​making, enabling European powers to exploit the full economic potential of their subjects and territories. Today, governments in East Africa –​supported by emergent foreign powers, such as China –​are once again pursuing sweeping infrastructure programmes that serve similar purposes. [ . . . ] infrastructure development in the colonial and post-​independence eras alike is associated with the organisation of space to facilitate the extraversion of East African economies. (2020, 115)

The chapter first recounts railway imperialisms in the British protectorates of British East Africa (Kenya) and Uganda as well as in German East Africa, presentday Burundi, Rwanda, and Tanzania (minus Zanzibar) (for a map, see Figure 28.1). It then problematizes how the railroads cemented the region’s dependent integration into imperial economies. Drawing on David Harvey’s theory of spatio-​temporal fixes, the last part of the chapter turns towards contemporary railway imperialism by scrutinizing China’s recent involvement in resurrecting East Africa’s railway sector.

The Imperial Railway Race in East Africa In contrast to European railway imperialisms in the Americas as well as in Asia and with the notable exception of rail lines that linked the mines in southern and central Africa with seaports (see Austen 1987, 126; Hanes 1991), initially there were few economic incentives and high risks for private capital to invest in African railways (Austen 1987, 126–​127). Considering the state of economic development of the Uganda and East Africa protectorates, immediate returns on an investment into building the line could not be expected. Consequently, it was the British government which funded the construction of the Uganda Railway at a cost of £7.2 million through a combination of parliamentary grants and state loans (Nabudere 1982, 52). This was highly controversial in Westminster, with parliamentarian Henry Labouchère famously rhyming about the prohibitive costs and unclear economic benefits of the ‘lunatic line’ (quoted in Taylor 2020, 29). The British prime minister Lord Salisbury justified the immense public expenditure for the construction of the Uganda Railway with the need to secure territories along the Upper Nile against chimerical French claims, which in turn was considered necessary to maintain British control in Egypt and over the Suez Canal (Austen 1987, 128; Robinson 1991, 2–​3; see Miller 1971; Whang 2018). Moreover, immediate interimperial competition with the German Reich in East

518   Tim Zajontz

Figure 28.1  Map of East Africa. Source: The United Nations Map No. 4248 Rev.1, June 2012.

Africa played a crucial role, as the British feared that the Germans could ‘make their road’ into Uganda before themselves (McDermott 1893, 107; also quoted in Aalders 2020, 3). However, from the outset of European railway projects in East Africa geopolitical and geoeconomic considerations were deeply intertwined. In 1885, the British

Railway Imperialisms in East Africa    519 under-​secretary of state for foreign affairs left no doubt about the function of the Uganda Railway for the colonial economy when he declared in parliament that: The name ‘Uganda Railway’ suggests the truth as to the principal object of the railway, viz. that is to bring down to the coast the resources not only of the Ganda Protectorate, but of all those countries in the upper waters of the Nile and of the Congo, which surround at no great distance the Victoria Nyanza—​resources for which the railway will be the natural outlet. (George Curzon, quoted in Nabudere 1981, 39)1

Indeed, without a railway large-​scale commercial cultivation of cotton and coffee in the Uganda Protectorate was unfeasible. Human porterage, despite being hyper-​ exploited, from Uganda to the Indian Ocean cost $1,500 per ton and took about three months. The railroad brought this down to $200 per ton and six days of travel time, while adding the benefit of economies of scale (Austen 1987, 127). Construction of the Uganda Railway began in 1886 and the track reached Nairobi in 1899 and Kisumu at Lake Victoria two years later. The line was built by workers and artisans who were brought in from India and had to work under harsh conditions (Aalders 2020, 3; Nabudere 1982, 20; Taylor 2020, 31). According to a parliamentary report on the railway, 31,983 labourers from India were involved in the construction; 6,454 of them were invalidated and 2,493 died (Hill 1949, 240). Evidently, human costs and benefits of the railway were distributed along racial lines (Kimari and Ernstson 2020, 826). Once completed, an ‘integrated system where buying centres were set up and gazetted’ provided for the centralization and effective monopolization of trade in coffee, rubber, and cotton from smallholding peasant plantations as well as their transportation to the imperial metropole (Nabudere 1981, 43). Compared to the British-​controlled territories, German East Africa had a late start in the railway race, with railway construction remaining limited and underfunded until the end of the nineteenth century. Initially, under the monopoly of Carl Peters’s German East African Company (Deutsche Ostafrika Gesellschaft), German capital gradually took control over the trade in ivory, beeswax, and wild rubber in German East Africa. By the 1880s, sisal, peanuts, rubber, coffee, and cotton were cultivated more systematically in a combination of African smallholder production and plantation experiments (Enns and Bersaglio 2020, 112; Nabudere 1981, 21; Whang 2018, 718). Both the British and the Germans had a keen interest in expanding cotton production in East Africa in order to decrease their textile industries’ dependency on imports from North America (Nabudere 1981, 21, 40–​41). However, as Iliffe asserts for the German territories in East Africa, ‘[i]‌t was not until railway-​building accelerated in the early 1900s that a recognisably colonial economy emerged’, underlining the key function of railroads for the region’s economic exploitation by imperial capital (1979, 123). In 1891, the Deutsche Ostafrika Gesellschaft embarked on the construction of the Northern line from Tanga at the coast to the Usamabara mountains, where the Germans concentrated their coffee plantations. It was largely built by forced labour. By 1899,

520   Tim Zajontz not more than 40 kilometers of rail tracks were laid. Even after the government takeover of the project it took until 1905 that Mombo in West Usambara was reached (Iliffe 1979, 126, 135). German railway imperialism in German East Africa only gained traction after the colony had started to lose revenues as a result of trade diversions caused by the completion of the Uganda railway in 1901. Henceforth, growing volumes of export commodities left the German territory south and west of Lake Victoria via the lake ports in Bukoba and Mwanza, destined for the British railhead in Kisumu and ultimately Mombasa port (Iliffe 1979, 135–​136; Nabudere 1981, 22; see Austen 1987, 127). The number of loads of wax, hides, skins, and rubber which left Tabora for the German-​ controlled seaport in Bagamoyo along the central caravan route decreased from 7,242 in 1904–​1905 to 2,375 two years later. In reverse, this figure rose from 3,259 to 11,275 for the destination of Mwanza from where the goods were forwarded to the Uganda Railway. As Iliffe put it: ‘The Germans were losing their hinterland’ (1979, 136). Besides economic considerations, the railway was considered key to ‘appease’ (and securitize) a vast territory in which German rule had been chronically challenged by revolts (Austen 1987, 126–​127; Nabudere 1981, 22). In 1904, the German government decided to finance the Central Line (Mittellandbahn) connecting Dar es Salaam with Kigoma at Lake Tanganyika via Tabora. The immense expenses of 21 million Mark was justified with the need to ‘stimulate the economy of the western plateau, improve military security, and recapture the trade of the interior’ (Iliffe 1979, 136; see Enns and Bersaglio 2020, 112–​113). Construction began in 1905 and the 1,245 kilometers-​long line reached Kigoma in 1914. In contrast to the Uganda Railway, the Central Line was built by African labourers whose numbers peaked at 20,000 and of whom, depending on the terrain, up to 100 died per month (Iliffe 1979, 137). Generally, colonial railway construction depended on the super-​exploitation of African labour which was ‘forcibly recruited, at low pay, often during peak periods of agricultural labour demand’, hence causing distortions in subsistence agriculture while facilitating commodity exports (Austen 1987, 129). As Rodney asserts: The simplest form of forced labour was that which colonial governments exacted to carry out ‘public works’. Labour for a given number of days per year had to be given free for these ‘public works’ [ . . . ]. A great deal of this forced labour went into the construction of roads, railways and ports to provide the infrastructure for private capitalist investment and to facilitate the export of cash-​crops. (2015 [1972], 154)

Peering at the ‘success’ of the British Uganda Railway, the German government expected growth in commerce and, by implication, an increase in ‘African taxability’ from the Central Line (Nabudere 1981, 25). And indeed, the expansion of the rail network proved crucial in taking control of trade flows. Whereas in 1897 only 22% of exports from German East Africa went to Germany (with 72% going into British hands via Zanzibar), this number grew to 59% by 1911 (with only 10% going to British ports) (Nabudere 1981, 25). At the same time, both German and British railway-​building created demand for surplus capital and railway material from the imperial metropolises.

Railway Imperialisms in East Africa    521

Imperial Capital Inbound, African Surplus Outbound Luxemburg observed that, by the early twentieth century, infrastructure projects had become an important outlet for European surplus capital goods: ‘Realised surplus value, which cannot be capitalised and lies idle in England or Germany, is invested in railway construction, water works, etc. in the Argentine, Australia, the Cape Colony or Mesopotamia. Machinery, materials and the like are supplied by the country where the capital has originated’ (2003 [1913], 407). Volumes of railway iron and steel shipped from Britain into the world tripled between 1845–​1849 and 1870–​1875, while machinery exports grew ninefold (Arrighi 2010, 165). To serve capitalist interests and to secure employment at home, European railway projects in Africa were commonly tied to the procurement of capital goods and materials from the metropolises ‘which sometimes placed additional cost burdens on African economies by excluding competitive bidding from other industrial countries which might offer more efficient services’ (Austen 1987, 128). In the German case, colonies accounted for a significant 7.36% of exported railway materials by 1912. Africa became an increasingly important destination for German railway materials in the early 1900s, with German East Africa notably ranking seventeenth among all export destinations and receiving 208,000 tons between 1899 and 1913 (Kleinöder 2020, 11–​12). Kleinöder shows that prewar projections of railway material needs in the colonies suggested steady growth for German suppliers in colonial railway markets. The World War of course cancelled out such rosy prospects for German industrialists (Kleinöder 2020, 11–​12; see also Schinzinger 1984, 118–​124, 158). After World War I, it was British steel, railway material, and engineering that was used to construct additional lines in Tanganyika, now under British mandate (Nabudere 1981, 29). The German railway projects in East Africa ‘were financed by public loans raised from private investors, the Government of German East Africa owning the railways and paying (essentially from African taxes) a fixed interest rate guaranteed by the Imperial Government’ (Iliffe 1979, 136). In 1913, £8,550,000 out of the colony’s total debt of £8,677,550 were railway-​related and interest payments made up a quarter of public revenue (Iliffe 1979, 136). Luxemburg documents how railway projects integrated non-​ capitalist social formations into imperial circuits of capital accumulation through debt servicing. In the concrete case of the German-​financed railway between Konya and Baghdad, she describes how tithes from peasant farmers were used to pay for the railway: ‘This money is nothing but converted peasant grain; it was not even produced as a commodity. But now, as a state guarantee, it serves towards paying for the construction and operation of railways, i.e. to realise both the value of the means of production and the surplus value extorted from the Asiatic peasants and proletariat in the building and running of the railway’ (Luxemburg 2003, 424; see Noonan 2017, 58–​59). The same system was applied by colonial administrations in East Africa. Loans for rail

522   Tim Zajontz projects had become key means through which imperial finance capital could indirectly extract profits from the African peasantry, which was subjugated to colonial taxation, commonly in kind, and/​or forced into corvée labour (Austen 1987, 127; Nabudere 1981, 21). The ‘debt overhang’ of both the Uganda Railway and the Central Line reinforced the dependent integration of the territories into the political economy of the empires, as their ‘immediate legacy to the territories through which they ran was a major load of indebtedness to the metropole’ (Austen 1987, 127; see Robinson 1991, 4). The debt dependency of the colony or protectorate reinforced the necessity to earn foreign exchange by means of exporting ever-​more primary commodities and, hence, cemented a dependent integration of the territories into imperial systems of capital accumulation according to which the colonies provided cheap export commodities and imported surplus capital goods from Europe (Austen 1987, 127). This international division of labour determined the spatiality of railway imperialism, as lenders and/​or investors in railways ‘naturally favoured lines connecting promising pastoral and agricultural areas to ports and bringing them into export production’ (Robinson 1991, 4). Diogo and Nacarro underline these peculiar spatialities of railway imperialism in Africa: Building railways was the most efficient way to ‘domesticate’ and exploit the African natural and human landscape in situ and, at the same time, to establish an economic hierarchy among geographical spaces both within the colonies and in a world-​wide context. [ . . . ] Railways and other infrastructure—​roads, harbors, dams—​designed by engineers transformed both the African landscape per se, by molding it to the needs of building the railway lines (earthmoving, changes in river beds, tunnels), and its use, by carving the way to plantations, mining, and trade outposts in the land formerly used by indigenous as pastures or hunting territories, and by establishing white settlements. (2018, 106)

As a result, East Africa’s imperial railways accelerated the elimination of existing trade and transport networks. Hill underlines the displacement effects of the Uganda Railway, stating that ‘the peculiarity of a railway [ . . . ] is that where it is once laid it kills every other mode of locomotion that formerly held the same ground’ (1949, 54). Hence, the construction of the Uganda Railway involved the ‘ruination of caravan economies and existing pastoralist modes of mobility’ (Aalders 2020, 9). Equally, the German Mittellandbahn essentially exterminated caravan trade along the Central Corridor. In 1900, 35,000 porters arrived in Bagamoyo and 43,880 departed from there to inland destinations. Twelve years later these numbers stood at 851 and 193 respectively (Iliffe 1979, 137: see Enns and Bersaglio 2020, 114). Railway imperialisms hence served the penetration and take-​over of local/​regional economies with the aim of extracting African surplus under imperial control. The railways ‘opened the country to more intensive European domination, enabling the international economy to absorb indigenous economies and restructure them to meet its needs. The locomotives which steamed inland drew the colonial economy behind them’ (Iliffe 1979, 135).

Railway Imperialisms in East Africa    523 The immense debt-​financed construction costs required both the acceleration and intensification of exploitation in the protectorates. Consequently, the railway debts played a crucial role in making Kenya one of Britain’s last settler colonies (Taylor 2020, 31). As Nabudere, by referring to Huxley, explains: Since the country through which the 580 miles of track ran [East Africa Protectorate, i.e., Kenya] was ‘economically dead country’, what was required was ‘development’, and since the Africans could not, ‘within a measurable distance of time, produce enough surplus goods to feed the railway’, the only hope lay with settlers, who could ‘fill up these empty, dead spaces along the line’, turn the country, the fertile but now wasted soil, ‘to useful account’, grow crops for the railway to carry out and buy machinery and other goods for it to carry in. (Nabudere 1981, 52; see Huxley 1935, 77)

Freight rates were subsequently used to indirectly subsidize settler agriculture in Kenya, with fares for the transport of peasant products from Uganda and Tanganyika being disproportionately higher than rates for goods produced by white settlers in Kenya, hence extracting African surplus to accumulate British capital (Nabudere 1981, 57). At the same time, the railway was ‘being used as tax collector’ to pay off public debt owed to finance capital in London (Nabudere 1982, 53). British railway imperialism in the region expanded in the interwar period. After gaining control over Tanganyika, new lines, such as Tabora-​Mwanza and Moshi-​Arusha, ‘were directed to areas where crops like cotton could be grown, again creating employment in the home textile manufacturing sector’ (Nabudere 1981, 29). Equally, colonial spatial planners extended the Uganda Railway all the way to Kampala and added several branch lines on Kenyan and Ugandan territory (Nabudere 1982, 53–​55). Previous spatial patterns prevailed: The lines should facilitate the import of manufactured goods and machinery from Britain and accelerate the exploitation of primary commodities and African labour. With decolonization the eminent role of railroads in the political economy of the region started to gradually decline, as newly independent governments struggled to maintain the rail network amid a plethora of development challenges they had inherited from colonialism. Economic liberalization further curtailed the governments’ capacity to invest in state-​owned railways, as development funding for large public infrastructure started to dry up as of the late-​1970 (Zajontz and Taylor 2021). In turn, the competitiveness of rail transport continuously decreased and African railways became subject to a ‘steady process of attrition’. Consequently, ‘[t]‌he decline of Africa’s railway systems is merely the most striking example of a technology that had come to be regarded as too expensive and unsuited to African requirements’ (Nugent 2018, 22). It was not until the 1990s that East African railways became a lucrative outlet for (sub-)imperial capital, as World Bank-​sponsored railway restructuring projects triggered a wave of privatizations of state-​owned railway companies and assets, causing the retrenchment of thousands of railway workers (Martin 2007). Railway privatizations of the late 1990s and 2000s in Kenya, Tanzania, and Uganda failed to improve the performance of the region’s railway sector, not least because investors proved unwilling

524   Tim Zajontz to provide adequate capital investment, which resulted in squabbles over terms and conditions of concession agreements and, in some cases, their early termination (AfDB 2015, 64, 146, 181; Bullock 2005). As a result, East Africa’s railways have dilapidated for decades and become, to borrow from David Harvey, ‘devalued capital assets [ . . . ] [that] lie fallow and dormant until surplus capital seizes upon them to breath [sic!] new life into capital accumulation’ (2003, 150–​151). This surplus capital now originates in China and spearheads new forms of railway imperialism in East Africa in the context of the expansionary spatial reorganization of the Chinese economy.

China’s New Railway Imperialism in Africa Contemporary railway imperialism in East Africa is necessarily historically distinct and differs in crucial ways from its predecessors some hundred years ago. First and foremost, it is ‘invited’ by independent host governments and not enforced by outside powers. Nonetheless, in a seminal article on the racialization of large-​scale infrastructure in East Africa which compares the colonial Uganda Railway and Kenya’s new Chinese-​financed and -​built Standard Gauge Railway (SGR), Kimari and Ernstson show that ‘materially and metaphorically both infrastructures run on the same tracks [ . . . ] [and] that empire persists via state invitations’ (2020, 831). Framed by hypermodern imaginations and discourses that emphasize their potential to reap Africa’s economic potential, large-​ scale infrastructures have, over the past two decades, experienced a renaissance in the international development realm, at global capital markets and within development planning in African capitals (Enns and Bersaglio 2020; Wethal 2019; Zajontz and Taylor 2021). Yet, ‘habitually the financing, planning and implementation of these projects brings to light the reinstating [of] imperial logics of space and spatial governance in East Africa’ (Kimari and Ernstson 2020, 831). In this last section, I argue that Chinese ‘loan-​debt investment’ (Sum 2019, 538) in African railways constitutes a new era of railway imperialism, one that is driven by Chinese overaccumulation of capital and material. In recent years, the Chinese state and (state) capital has embarked on a major spatial reorganization of its accumulation system in a series of what Harvey once termed ‘spatio-​temporal fixes’ (Carmody, Taylor, et al. 2021; Taylor and Zajontz 2020). For Harvey, the spatio-​temporal fix signifies ‘a particular solution to capitalist crises through temporal deferral and geographical expansion’ and, hence, constitutes a central driver of capitalist imperialism (Harvey 2003, 115, see also 2004, 65). Railways are involved in both of these ‘moments’ of the ‘fix’. First, they provide capital-​intensive investment outlets for the temporal deferral of surplus (finance) capital in projects with ‘long gestation and turnover time’ (Jessop 2006, 429; see Castree 2009). At the same time, (new) railways allow for the penetration of new markets for commodities, labour, and capital goods (Arrighi 2007, 217; Harvey 2003,

Railway Imperialisms in East Africa    525 109). While Harvey still rightly described China as the recipient of surplus capital from the West in The New Imperialism (Harvey 2003, 122–​123), the gigantic growth of the Chinese economy over the last two decades has turned the tables. In his recently published Anti-​Capitalist Chronicles, Harvey now observes that China becomes an aggressive net exporter of capital. Most of the export takes the form of commercial credit rather than as direct investment in production. China is supplying commercial credit to East Africa to absorb China’s surplus product (e.g. steel rails). In 2000, the map of China’s capital exports was essentially blank. But by 2015, Chinese surplus capital is all over the place. The whole world is being caught up in China’s surplus capital. The Chinese start to orchestrate this around [ . . . ] the ‘Belt and Road Initiative,’ which is a geopolitical expansion plan in which surplus capital from China is allocated to rebuild the transport and communications connectivity of the Eurasian continent, with offshoots across Africa and into Latin America. (2020, 92)

Indeed, launched in 2013 under President Xi’s tight control, the Belt and Road has become the semiotic and material centrepiece of China’s contemporary attempts at a transregional spatio-​temporal fix and is aimed at consolidating a ‘China-​oriented infrastructural mode of growth in production, finance and security’ (Sum 2019, 529; see Li 2016; Taylor and Zajontz 2020). In the wake of the 2007–​2008 global financial crisis, surplus capacities had accumulated not least in China’s infrastructure, construction, and steel sectors (Jones and Zeng 2019, 1422; 1, 978). Domestic stimulus programmes, which, for instance, extended the country’s high speed rail network from 70 miles in 2008 to 15,500 miles ten years later, further exacerbated overcapacities in these sectors (Taylor and Zajontz 2020, 279). Consequently, the Chinese government, in close coordination with its policy banks, actively incentivized the ‘moving out’ of excess capital and material, with the BRI serving as the discursive and institutional superstructure for such efforts (Taylor and Zajontz 2020; Yan 2021; Zajontz 2020b). Notwithstanding official narratives that emphasise ‘win-​win’ cooperation and mutual benefits that are supposed to arise from increased connectivity among BRI participant states and China, some have suggested that the BRI resembles colonial infrastructural geographies and reinforces underdevelopment. Van der Merwe argues that: The infrastructure plans expose the initiative [BRI] as unashamedly colonial, as it reinforces the legacy of transporting resources towards ports—​and not between neighbouring states. Even in the case where transport infrastructure is created between states, the assumption is still that this would facilitate the movement of Chinese remotely manufactured goods onto markets. (2019, 210)

Several major railway projects in Africa have been financed by Chinese policy banks and constructed by Chinese construction companies. A new, partially electrified, Standard Gauge Railway now links the port of Djibouti with Addis Ababa (see Tarrósy 2020). The construction of the 1,343 kilometers-​long Lagos-​Kano railway, connecting

526   Tim Zajontz Nigeria’s commercial capital with the country’s north, is well underway. All across the continent, Chinese contractors have been involved in the rehabilitation of existing lines, such as Angola’s Benguela line. Xinhua, referring to official Chinese sources, counted 6,200 kilometers of Chinese-​built railways in Africa by the end of 2017 (Xinhua 2017).

The ‘Madaraka Express’ and Kenya’s Mounting Railway Debt East Africa’s railway network plays a particularly important role within the BRI, as it connects the ‘Maritime Silk Road’ with African inland markets as well as sites of production and extraction. Hence, Chinese state-​owned banks and construction firms stood ready to assist the Kenyan government in its long-​standing plans to rehabilitate its ailing rail infrastructure. In 2014, contracts to the tune of $3.8 billion were signed for the construction of the first 485 kilometers-​long segment (Mombasa–​Nairobi) of a new Standard Gauge Railway (SGR) along the Northern Corridor. The ‘most expensive infrastructure project implemented in Kenya since its independence’ was 90% financed through commercial and semi-​concessional loans from China Exim Bank, with the government introducing a 1.5% levy on imports to account for the rest as well as for debt service (Lechini et al. 2020, 14). Built by China Road and Bridge Corporation (CRBC) and other Chinese firms, the so-​called Madaraka Express was inaugurated in May 2017. An extension to Naivasha, 120 kilometers northwest of Nairobi, was finished two years later at a cost of another $1.5 billion (Lechini et al. 2020; Taylor 2020). As Taylor documents, an independent feasibility study on the rehabilitation of the region’s railway network conducted in 2009 as well as a 2013 report from the World Bank Africa Transport Unit cast serious doubts on the economic feasibility of an SGR in a new track bed and indicated that an upgrade of the existing track (namely, that of the Uganda Railway) would be the most economical option. Nonetheless, ‘the Kenyan government opted for the most expensive option available’ (Taylor 2020, 32). Meanwhile, there is evidence that ‘procurement laws were ignored in negotiations with the Chinese and that Kenya had [ . . . ] to work under the conditions set by the Chinese’ (Taylor 2020, 33). In its first three years of operation, the railway incurred a combined loss of $200 million. At the same time, the operating firm Africa Star, in which CRBC holds a majority of shares, receives fixed payments of about $28 million every quarter (Carmody, Taylor, et al. 2021, 10). In August 2021, Africa Star announced that it would not transfer the operations of the railway to the Kenyans, which was initially scheduled for May 2022, if outstanding arrears were not cleared (Otieno 2021). Reminiscent of previous railway imperialisms, the project has significantly driven up Kenya’s Chinese-​owned debt, which grew from $737 million to $6.4 billion by the end of 2020. China is now Kenya’s largest bilateral creditor, owning 21% of the country’s external debt by June 2020 (Olander 2021). In 2017, Transport Minister James Macharia still expected that the SGR would boost Kenya’s GDP by 1.5%, enabling the government

Railway Imperialisms in East Africa    527 to pay back the loans ‘in about four years’ (quoted in Kacungira 2020). Reality should prove him wrong. The railway debt, alongside other debt commitments such as Eurobonds, has brought Kenya under enormous debt distress. Just as Ethiopia in 2018, the Kenyan government had to renegotiate repayment schedules for the SGR. Thus far, Chinese state-​owned banks have been lenient, not least because political debates in Kenya and other highly indebted African countries on the supposed Chinese ‘debt trap’ have been damaging to China’s image of a benevolent development financier (Zajontz 2021). In the long run, China will want to see returns on its loan-​debt investment into Kenya’s new railroad. Spatio-​temporal fixes in the form of loan-​debt investment in infrastructure might ‘defer’ profit realization. The latter remains nonetheless their very rationale. As Kimari and Ernstson argue: Against such a debt level, the future portends a financial noose for the coming generations that have been encouraged to seek the benefits from these ‘bankable’ projects’ [ . . . ] we witness flashbacks to a past when Mother England was anxious to get back debt accrued from building the initial Kenya-​Uganda railway, and so multiplied the imperial extractions that continue to jeopardise local lives. (2020, 840)

The new SGR resembles its predecessor, the Uganda Railway, which, as Hill had put it, ‘killed every other mode of locomotion that formerly held the same ground’ (1949, 54). Recent government measures to ‘force’ cargo from the road onto rails in order to minimize the losses made by the SGR will cause further social dislocation within Kenya’s road transport economy which employs thousands, not only in the driver’s cabins of the lorries but also in mostly informal businesses along trucking routes (Irandu and Hansen Owilla 2020, 471). This is not to say that the goal of bringing cargo onto the rail is not noble, especially considering the enormous public costs for road maintenance and the carbon footprint of road haulage. Nonetheless, it implies surplus creation in the transport sector will gradually shift from Kenyan-​owned businesses to the Chinese-​operated SGR. Beyond the transport sector, the railway is likely to reinforce Kenya’s unfavourable integration into Chinese-​centred capital accumulation, not least as the SGR ‘has not been well integrated with the export products networks chain’ (Onjala 2020, 298). Kenya’s trade balance with China remains strongly tilted in the latter’s favour, with Kenya’s imports from China amounting to $4,984.58 million in 2019, compared to $181.21 million in Kenyan exports to China (SAIS-​CARI 2021).

Tanzania’s Cautiousness and a Renewed Railway Race Chinese profit-​seeking railway endeavours in East Africa come fifty years after China under Mao was actively promoting what could be termed ‘railway anti-​imperialism’ in the region by financing and constructing the Tanzania-​Zambia Railway Authority (TAZARA) (see Monson 2009; Zajontz 2022). The railway connected newly independent Zambia which had found herself dependent on transport routes through

528   Tim Zajontz racist Rhodesia and apartheid South Africa with Dar es Salaam port and became the single most important symbol of Chinese solidarity in Africa’s fight for independence. However, even in the case of this ‘Monument to China–​Africa Friendship’ (Chinese Ministry of Foreign Affairs 2015), Chinese state capital has pursued a strategy of profit-​maximization in recent negotiations about TAZARA’s rehabilitation with the Tanzanian and Zambian governments which co-​own the railway. In 2016, a Chinese consortium, including China Railway and China Civil Engineering Construction Corporation (CCECC), tabled a proposal for a 30-​year Rehabilitate-​Operate-​Transfer (ROT) public-​private partnership whose conditions were deemed ‘not workable’ by the shareholding governments (Interview with Tanzanian top official, November 2019). The proposal foresaw the assumption of TAZARA’s outstanding debt by the Tanzanian and Zambian treasuries (which amounts to about $800 million), tax exemptions until the railway would run profitably (which according to the Chinese consortium would take 15–​20 years), and the retrenchment of the company’s entire workforce, with parts of it being re-​employed under new contracts (interview with Tanzanian top official, November 2019; interview with key informant, February 2019; interview with senior Zambian official, June 2017). As one interviewee who is familiar with the content of the negotiations put it: The China that we are dealing with today is not the same China that we were dealing with forty years ago. It’s a different China. These are capitalist-​oriented Chinese. They want to make money. The way they are driving this thing is to make sure they maximise their benefits. They are not saying: ‘We are just helping TAZARA [ . . . ].’ No, they want to make money. [ . . . ] What they’ve been proposing is way too much. What they’ve been asking for is way too much. (interview with key informant, February 2019)

At the time of writing, an agreement between the Chinese investor and the shareholding governments has not been reached, mostly because of the adamant insistence of the Tanzanian government on a revised Chinese proposal with more favourable terms (see Zajontz 2022). Chinese railway imperialism has also proven less ‘successful’ than in Kenya in the context of Tanzania’s new SGR that is currently under construction. In 2014, a Chinese firm had initially won the contract for the first segment of a new SGR along Tanzania’s Central Corridor in a tendering process that was riddled with irregularities. After coming into office of late President Magufuli, who was voted into power on a rigid anti-​corruption campaign in 2015, the contract was re-​tendered. As a result, the Tanzanian government also eschewed loan finance from Chinese policy banks and budgeted for the line in the state budget. Eventually, a Turkish-​Portuguese consortium constructed the first two phases of the line from Dar es Salaam to Makutupora. According to one interviewee, re-​ awarding the contract brought down the project costs from $6 million to $4 million per rail kilometer (Zajontz 2020a, 177–​179; interview with key informant, November 2019; interview with key informant, February 2019; interview with senior official Tanzanian

Railway Imperialisms in East Africa    529 Ministry of Transport, November 2019). In the meantime, two Chinese firms have gotten involved in the SGR, with a $1.3 billion contract signed for the 341 kilometers-​ long segment between Isaka and Mwanza during Chinese Foreign Minister Wang Yi’s Tanzania visit in January 2021 (Ng’wanakilala 2021). Talks are also underway with China Exim Bank to solicit funding for the remaining stretch between Makutupora and Isaka (The Citizen 2021). The Tanzanian government evidently engages China quite pragmatically, as it implements Magufuli’s ‘signature project’, which is deemed crucial for the country’s development. Thus far, it has thereby avoided overextending itself. Just as it did 120 years ago, East Africa currently finds itself in a ‘railway race’. This time the competition does not arise from interimperial competition but from competing railway regionalisms pursued by Kenya and Tanzania, two countries that have long strived for political and economic supremacy in the region which in turn hampered regional integration. The current railway race has exacerbated frictions within the East African Community (EAC), not least since the two SGRs will ultimately compete for the markets in Rwanda, Uganda, and Eastern Congo, granted they should be successfully extended into the neighbouring countries. For an integrated regional railway network to become a reality political cooperation and joint planning is paramount. However, Chinese railway imperialism, which is driven by the motive to move out Chinese excess capacities and erect railway lines that smoothen Chinese value and supply chains, is not necessarily conducive to this goal. In fact, competition between Kenya and Tanzania has arguably been fostered by Chinese railway imperialism. As Otele finds, the ‘tendency of China to ignore regional institutions in its bilateral engagement’ with East African states has exacerbated the ‘intra-​regional infrastructure race’ (2020, 525).

Conclusion This chapter dusted the notion of ‘railway imperialism’ by critically investigating the role played by railroads in the persistent exploitation of (East) Africa by external actors. Initial railway projects in British protectorates and German colonies were pivotal for controlling the hinterland and monopolizing the trade in export commodities. At the same time, both the Uganda Railway and the Mittellandbahn served as welcome outlets for imperial surplus capital. Built by forced labour, the railway projects destroyed existing trade networks and transport economies and subjected East African societies to debt bondage by taxing African peasant farmers and systematically intensifying the ‘expatriation of African surplus’ (Rodney 2015 [1972], 138). Africa’s recent ‘railway renaissance’ is largely a function of a new, distinct form of railway imperialism which is driven by China’s attempt at a spatio-​temporal fix to its chronic overaccumulation problem. The case studies of Chinese railway projects in East Africa that were sketched in this section show that contemporary forms of railway imperialism are crucially conditioned by African actors who plan, negotiate and oversee

530   Tim Zajontz the construction and operation of railway projects. Hence, what Robinson asserted with regard to railway imperialisms of the nineteenth century is still applicable today: They [railway contracts] were thus characteristic of the collaborative bargains of informal imperialism, but the extent to which they spread political ties with the extending empire or unequal economic partnerships with expanding international economy depended on who decided where lines should run, what priorities should be served, and whether the capital lent had imperial strings attached. (Robinson 1991, 5)

Several African countries which have borrowed from Chinese state-​owned banks for railway and other infrastructure projects, including Ethiopia, Kenya and Zambia, have experienced difficulties to service their external debt. Harvey’s presumably rhetorical question has become highly relevant in the context of Chines railway imperialism in Africa, as ‘the question perpetually hovers: what happens when, for whatever reason, the ‘spatial fix’ is stymied and the debts incurred by temporal displacement fall due?’ (2001, 338). Thus far, China has been willing to reschedule debt for railway projects in Ethiopia and Kenya, as the Chinese government tries to uphold the image of being a benign development financier in the Global South (see Zajontz 2021). Nonetheless, as Harvey warns, ‘[f]‌inancial control through indebtedness is now the chief means for imposing the devaluation of capital elsewhere’ (2006, 94). As this chapter has shown, by means of debt both historical and contemporary forms of railway imperialisms have locked East Africa into dependent economic relationships with imperialist capital. East Africa’s railway infrastructure is of strategic importance for Chinese efforts to establish frictionless Chinese-​oriented trade routes across terrestrial and maritime space. In combination with (planned) Chinese-​run special economic zones and mega-​ports along the East African seaboard, the region’s railroads serve the purpose to closely tie East Africa into Chinese capital circuits. In this new era of railway imperialism, it seems timely to recall Nkrumah’s admonitory words: ‘Transport and communications are also sectors where unified planning is needed. Roads, railways, waterways, airlines must be made to serve Africa’s needs, not the requirements of foreign interests’ (1965, 30).

Acknowledgement The research for this chapter was conducted under a European Research Council (ERC) Advanced Grant for the project African Governance and Space: Transport Corridors, Border Towns and Port Cities in Transition (AFRIGOS) [ADG-​2014-​670851].

Note 1. In the mid-​1920s the railway was rebranded as Kenya-​Uganda Railway (Nabudere, 1982, 55).

Railway Imperialisms in East Africa    531

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Chapter 29

Sou thern A fri c a A New Geometry of Imperialism RicaRdo Jacobs and William G. Martin The world is nearly all parcelled out, and what there is left of it is being divided up, conquered and colonised. To think of these stars that you see overhead at night, these vast worlds which we can never reach. I would annex the planets if I could; I often think of that. Cecil Rhodes, 1902 When nine-​tenths of Africa had been seized, when the whole world had been divided up, there was inevitably ushered in the era of monopoly possession of colonies and, consequently, of particularly intense struggle for the division and the redivision of the world. Vladimir Ilyich Lenin, 1914

In the foundational years of imperialism, no world region figured more prominently than Southern Africa. During the heyday of finance capital, Southern Africa’s mines provided the golden foundations of British financial power, drawing in European, African and Asian labour from rebellious and impoverished colonial territories. Challenges to British power by white settlers at the turn of the century led to the dispatch of 500,000 troops from Great Britain, Australia, Canada, and New Zealand—​and the consolidation of novel counterinsurgency tactics, concentration camp construction, and genocidal warfare most notably in Namibia. Journalists, scholars, and revolutionaries flocked to the study of the region, generating the key foundational works on imperialism. Then, as now, the end of a world epoch seemed on the horizon. Signs abounded of the unsettling decline of the world’s dominant economic power, the irruption of nationalist sentiments, startling and repetitive global economic panics, a remaking of the agencies and origins of colonial and imperial exploitation, and rising military competition among new and old powers. The peace that had been maintained among the great Euro-​American powers was crumbling. And in this context the concept of ‘imperialism’ was introduced to make sense of these often unthinkable events. In the first half of the twentieth century, theories of imperialism would prove to be powerfully predictive. How this worked out theoretically we address next, followed by a longer analysis of the course and contours of imperialism in Southern Africa over four periods: the late nineteenth and early twentieth century; the period following the

536    RicaRdo Jacobs and William G. Martin Second World War; the transition to majority rule in South Africa in 1994 and the neoliberal period; and the current, post-​2008 period of rivalry among great and rising powers.

Imperialist Theory and Southern Africa Inspired by the horrors of the killing fields of the Anglo-​Boer war of 1899–​1902, British journalist and scholar John Hobson set the pace in his landmark Imperialism published in 1902. His argument was parsimonious and compelling: underconsumption at home, married with a growing capitalist oligarchy, was propelling excessive and unwarranted overseas expansion and investment. The unexpected scramble for Africa and Asia was no longer epiphenomenal, driven by a momentary panic, but rather a structural pillar of advanced capitalist countries. In quick order parallel arguments were advanced by many and, most famously and powerfully, by Lenin. Lenin’s 1917 Imperialism: The Highest Stage of Capitalism opened with reference to the Anglo-​Boer War and drew openly on Hobson’s Imperialism, Rudolf Hilferding’s 1910 Finance Capital, and Bukharin’s 1917 Imperialism and World Economy. Lenin’s argument advanced three key propositions: monopolies and cartels had replaced the old free competition between scattered manufacturers; bank and industrial capital had merged into finance capital; and the export of capital had replaced the export of goods. Driven by these new forces, imperialism marked, Lenin argued, a new stage of monopolistic possession of and competition for colonial territories. And this, Lenin predicted—​in contrast to many—​could have only one result: a struggle among great powers for a redivision of the world (Lenin 1970, 763–​764). While opponents projected the peaceful division of the world among the great powers, or the merger of finance capitals into one world trust, Lenin pointed towards one irrevocable outcome: war. And indeed, thirty years of war among the great colonial powers ensued across the planet until the dropping of atomic bombs on Hiroshima and Nagasaki in 1945. The postwar years quickly revealed a world capitalist order markedly divergent from Lenin’s imperialist order: colonial territories were becoming new states, great power competition devolved into a stable Cold War, and monopoly capital in the form of the vertically integrated multinational corporate capital leapfrogged over trade and tariff boundaries to integrate the newly demarcated ‘First’ and ‘Third Worlds’ (Braverman, 1974, Baran and Sweezy, 1966). In the immediate postwar years interest in theories of imperialism waned. The struggles of the long 1960s, most notably the armed liberation movements in Asia and Africa, fostered a resurgence of interest in theories of imperialism. Nowhere was intellectual and innovation more evident than in Southern Africa, where wars of national liberation advanced in Angola, the Democratic Republic of the Congo, Mozambique,

Southern Africa   537 Zimbabwe, Namibia, and South Africa. Activists and scholars alike turned back to the study of imperialism, generating a prolific new literature on postwar neocolonialism and imperialism. Three debates energized students of imperialism in the 1960s and 1970s, and in new forms continue to do so today. One, what was the correspondence between Lenin’s imperialism, the postwar era, and capitalism? Was imperialism the last stage of capitalist development or was capitalism from its origins intrinsically imperialist? Two, Third World theorists and activists, especially from settler colonies, interrogated and reformulated European theory around issues of coerced labour, race, and colonial power. Three, the horrors of colonial wars and occupations in settler colonies or ‘subimperial’ areas demanded a fuller accounting of what were previously left to side-​references on ‘semi-​ colonies’ in the imperialist canon. Southern Africa, as at the beginning of the twentieth century, figured prominently. Writing at the close of the long rebellious 1960s, Giovanni Arrighi—​who had been expelled from Zimbabwe by the settler regime—​moved to unearth the foundations of key postwar anomalies in his 1978 The Geometry of Imperialism: The Limits of Hobson’s Paradigm. The problem for students of imperialism was bluntly posed: ‘by the end of the 60s what had once been the pride of Marxism, the theory of imperialism, had become a Tower of Babel’ (1978, 17). The Geometry tackled confounding data and claims by dissecting the different paths of nationalism and state formation followed by great and emerging powers from the mid-​nineteenth to mid-​twentieth century. While competition and the free market gave way everywhere to increasing domination by monopolies, Arrighi’s complex geometry unpacked very different imperialist trajectories tied to varying forms of expansion by different states, nations, and historic forms of capital. This method is particularly instructive as we revisit the nature of imperialism today. For if imperialism—​defined as the domination and exploitation of subject peoples by Euro-​American capital and states—​has operated across the centuries, Arrighi’s method suggests we pay more careful attention to conjunctural configurations of power and wealth constructed by states, nations, and capital. This is especially imperative for regions where the expansion of European nations took the form of settler states—​as Arrighi noted for the United States and, briefly, South Africa. It is to this task we now turn: charting the historical course of imperialist and settler power in Southern Africa.

High Imperialism and Settler Power in Southern Africa By the late nineteenth century Britain had no greater champion of colonialism than Cecil Rhodes. Lenin used his words to illustrate the origins imperialism: ‘In order to save the forty million inhabitants of the United Kingdom from a bloody civil war, our colonial statesmen must acquire new lands for settling the surplus population of this

538    RicaRdo Jacobs and William G. Martin country, to provide new markets. . . . The Empire, as I have always said, is a bread and butter question’ (Lenin 1970, 729). Rhodes’s expectations ran aground, however, as expanding British colonial rule ran up against the implanted British and Dutch settlers who mounted their own claims to the fruits of colonial rule. The exploitation of fabulous diamond deposits in the interior of the region in the 1860s, and then gold fields in the late 1880s, led directly to the Anglo-​Boer war and statehood for white settlers in 1910. The forces of capital also diverged significantly from those propelling imperialism in Europe. While allied to the British colonial project, the great mining companies were neither constructed nor driven by the forces of finance or monopoly capital as depicted by Lenin (or later theorists of monopoly capital like Baran and Sweezy (1966)). They were locally rooted and not part of European cartels, were reliant upon distant capital markets for financing, did not control or monopolize their product and prices, and were not firms with a self-​perpetuating management (Kubicek 1979; Martin 2013a, 23–​24). Accumulation operated through colossal corporate forms, yet the colonial power, and in this case British finance capital, was forced to contend with settlers who exploited interimperial antagonisms and the rising tide of nationalisms to demand power and a settler state—​as had previously occurred a century earlier in North and South America. The geometry of this imperial space thus diverged from Hilferding’s conception of finance capital, Lenin’s slight references to ‘semi-​colonies’, and the British ideal-​typical forms of national colonial expansion as expected by Rhodes and delineated by Arrighi. Just how far such forces could shape imperialism at the regional level emerged after major strikes and revolts by African and white workers in 1920 and 1922 (Beittel 1995, 89; Bonner 1978; Hirson 1993). For in their wake a resolutely white nationalist, Afrikaner government was elected in South Africa in 1924. Pursuing a ‘South Africa First’ program, trade barriers were raised to Great Britain and surrounding colonies like Southern Rhodesia and Mozambique, German assistance was pursued to build a state steel works (one of only two integrated steel works in the Southern Hemisphere), British financial power was undermined through monetary policies, and local manufacturers and infrastructure were given steady preferential treatment. This was nothing less than an attempt to break apart British-​dominated markets across Southern Africa and localize industrial production processes and capital in South Africa. A vast flow of forced cheap labour continued towards the South African mines from across the region but became increasingly restricted and excluded from racially reserved manufacturing and skilled labour employment. South Africa’s Afrikaner government also abandoned attempts by British allies, most notably General Smuts, to expand the South African state by incorporating surrounding British colonies. These settler state interventions accelerated racial and ethnic nationalism, economic inequalities, and interdependencies across the region. The open flows of trade and investment across areas monopolized by Great Britain and British capital were increasingly segmented and subject to settler control. Bipolar North-​South relationships, centred on Britain in the past, gave way to a more complex and uneven capital, labour, and commodity markets across the region with South Africa increasingly at their centre.

Southern Africa   539 The end of World War II accelerated these regional developments by fostering nationalist movements across the colonial world. As Arrighi suggested (1978, 89-​90), these were incompatible with former imperial and colonial state forms; indeed, they would steadily lead to new states and nations through the 1950s and 1960s. For white settlers, this postwar settlement posed an unresolvable dilemma. Unlike in North America and Australia, white settlers were vastly outnumbered by African peoples. Thus, while by the end of the war the South African state had become one of a very few industrial powers outside Europe and North America, it confronted new forces generated by its very success as labour and nationalist unrest, including by a new urban African proletariat, erupted at home and across the region and indeed the world (Silver 2003, 127-​130). Tension among foreign and local, mineral, and industrial capital grew simultaneously (Clark 1994, 107-​132). The explosive 1946 African miners’ strike in South Africa powerfully projected these new forces and their threat to the white settler state (O’Meara 1975). In South Africa, these economic and social crises led to the defeat of the settler fraction allied to Great Britain, and the white election in 1948 of the first apartheid government.

Imperialism and Apartheid Apartheid policies sought to cohere and advance the power and reach of the South African state and capital developed so assiduously in the interwar period. New state enterprises and private Afrikaner finance capital were fostered by the state, mining and farming capital were assured of extraterritorial, coerced sources of African labour through interstate agreements with neighbouring settler and colonial territories, and an alliance was forged with the new face of monopoly capital, multinational, especially US, capital. Apartheid was thus far from simply an atavistic racial phenomenon: it was, by design, configured to match the new contours of capital accumulation and settler power in the postwar period—​and this required mediating new relations with imperialist powers to the north and subordinate surrounding colonial territories. The apartheid state did not however attempt to extend the reach of the state by incorporating colonial territories. The aim of regional policies was to serve South African settler needs: to cohere cheap labour for mines and agriculture, carve out markets for new manufacturing industries, and, what would prove most critical, provide a bulwark against the African nationalist winds of change pressing down from the north. Through the late 1960s these efforts seemed an unqualified success as South Africa’s industrial economy boomed and mining, despite low gold prices, flourished. As the 1960s came to an end, so too did the hubris of the apartheid boom. National liberation movements, advancing throughout the region in the late 1960s and early 1970s, destabilized capital and white settler alliances. Notwithstanding often successful attempts by Northern powers and the apartheid state to foster a conservative turn by nationalist parties and movements, by 1975 Portugal was defeated and independence, without a long-​negotiated settlement (de Bragança 1988), came to neighbouring Angola and Mozambique. Victory by nationalist forces in Zimbabwe was within sight.

540    RicaRdo Jacobs and William G. Martin Growing student, union, and Black consciousness unrest in South Africa undermined the settler regime. Scholars also struggled during these tumultuous years to construct a political and conceptual map of capitalist development and resistance to settler colonialism. What was the nature of apartheid and its relation to capitalism and colonialism, central concerns of studies of imperialism? Models of dependency, so prevalent in Latin and North America, had little purchase among students of South and Southern Africa notwithstanding signal efforts by Samir Amin (1974; 1972) and Walter Rodney (1974); developmentalist concepts drawn from models of advanced capitalist states proved far more attractive. Students of post–​World War War II monopoly capital charted the underpinning of apartheid and accumulation by US multinational corporations at the risk of overestimating the power of foreign capital (Makgetla and Seidman 1980). Scholars rooted in the study of working class labour movements in the United States and Europe framed South Africa in relation to the rise of an urban, waged Black proletariat and a distorted racial Fordism (Saul and Gelb 1981). The rigid focus upon waged labour and industrial capital made apartheid’s construction of rural Bantustans, circulating labour flows, and land struggles of residual concern. African scholars took a different path, tracking out uneven capitalist and colonial relationships across the region. Trying to avoid what Mamdani has felicitously called northern Africanists doing ‘history by analogy’ (Mamdani 1996, 8), African scholars in the early 1970s resolutely attacked those who cast rural Africans as trapped in precapitalist, tribal modes of production. Ben Magubane and Archie Mafeje in a series of essays vociferously attacked the anthropological construction of ‘tribal’ societies (Mafeje 1971; Magubane 1971). The problem, as Mafeje put it, was an ideology of tribalism that could elaborate on village tribalism when half the population were absent working for wages in distant mines: this was advanced capitalism at work. This was, in Samir Amin’s trenchant phrase, a singular region of the continent, the ‘Africa of labour reserves’. Parallel work by Arrighi and others demolished assertions of ‘surplus’ labour supplies in traditional African villages (Arrighi 1970; First et al. 1977), while apartheid was recast, following earlier and largely unacknowledged work by activists in the 1950s and 1960s (Jaffe ‘Mnguni’ 1952; Mbeki 1964; and most notably Tabata 1954), as a system of enforced cheap labour (Wolpe 1972). Yet if South Africa was the ‘generic form of the colonial state’ (Mamdani 1996, 8), where was its location in the imperialist world order? Its contradictory location was expressed in its dual faces, subject to great powers to the North and foreign, now multinational capital even as it constructed imperialist relations on its own with surrounding peoples and colonial and settler states. These dual relationships had been stressed by students of middle power states, most notably Marini who highlighted the ‘subimperialism’ of an aggressively expanding Brazilian state, and students of world-​systems who cast the apartheid state as a ‘semi-​peripheral’ state (Martin 1990). At the heart of apartheid was however not simply a middle position in the hierarchy of power and wreath on a world scale, but the deep and racially constructed relationships

Southern Africa   541 maintained with allies to the North and opponents across Southern Africa. If the apartheid state sought to divide opposition by constructing ever more diverse racial boundaries and reactionary nationalist groups, opposition increasingly advanced an encompassing ‘Black’ unity and alliances across national borders. The wars to end minority and colonial rule would accordingly be carried out across the region and between South Africa and anti-​imperialist coalitions in the North. By the late 1970s apartheid power was withdrawing to its borders; defeat in Zimbabwe would be followed by defeat in Angola. By the mid-​1980s new strike waves erupted in South Africa, while felicitous relations with northern states and multinational capital were sundered as sanctions were imposed and multinational capital largely withdrew. In a sequence too detailed to pursue here, the postwar regional configuration of imperialism in the region, marked by the pivotal power of the South African settler state in alliance with the new forms of monopoly and imperial power, came to an end.

Majority Rule in South Africa and the ‘Neoliberalization of Apartheid’ South Africa’s transition to democracy in 1994 coincided with a turning point in imperialism as a global system of economic exploitation and political domination. By the mid-​1990s, neoliberal ideology and practices had become dominant and, with the accelerating financialization of capitalism and a major restructuring of the regulatory framework for international trade, a new phase of global capitalism was emerging (Wen 2021, Mohamed 2019). The World Trade Organization (WTO), established on January 1, 1995 under the guise of fostering competition, instead brought about its opposite: a further concentration and centralization of capital. The WTO Agreement on Agriculture decimated peasant agriculture in large swathes of the Global South and further entrenched the power of global agribusiness and multinational corporations (Patnaik and Patnaik 2016, Khor 2003). The corollary was new waves of dispossession, agrarian crises, and transfers of wealth from countries of the Global South to the North. The mid-​1990s were a turning point in both imperialism and in anti-​imperialist struggles. South Africa’s transition to majority rule marked the end of the long wave of anti-​ colonial and national liberation movements in twentieth century Africa. Simultaneously, new forms of anti-​imperialist struggles were emerging in response to the restructuring of global capitalism. The 1993 establishment of the international peasant organization La Via Campesina, with the slogan ‘Globalize Hope, Globalize the Struggle’ and the January 1, 1994 Zapatista uprising in Mexico in opposition to the North American Free Trade Agreement (NAFTA) and imperialist globalization, were among the first sprouts of these new forms of anti-​imperialist struggle that would grow further in the twenty-​first century. In this new phase of struggles, anti-​imperialist, ecological, indigenous, feminist and agrarian struggles would be deeply intertwined.

542    RicaRdo Jacobs and William G. Martin Notwithstanding these new forms of resistance around the globe, the transition to majority rule in South Africa coincided with the high tide of neoliberal globalization. South Africa was re-​integrated into the global economy in the 1990s as a ‘neocolonial satellite of American-​led neoliberal globalization’ (Terreblanche 2012, 2). South Africa’s reintegration on these terms led to a permanent crisis and came at a great cost to the majority of the population who were excluded from the wealth generated by globalization. The legal and political underpinnings of apartheid were removed, but the exploitative social relations and racialized inequality of apartheid and settler colonialism remained intact—​an outcome that scholars have characterized as the ‘Neoliberalization of apartheid’ or the continuation of ‘racial capitalism’ in a new form (Clarno 2017). South Africa’s reintegration considerably weakened its role as a junior partner of western imperialism as well as its own semi-​autonomous role as a dominant force in the Southern African region. To be sure, South Africa maintains a powerful economic position within the Southern African region. With the neoliberal turn, the South African economy underwent a process of concentration and centralization in key sectors of the economy, enhancing the power of key South African corporations. For example, in the retail sector a handful of large chains now control more than 70% of the South African market. These large chains expanded on the continent, displacing local firms, and coming to dominate the region’s retail sector. Yet the limits to their domination are visible from the stiff competition they face in Botswana, Zambia, Zimbabwe (and in South Africa itself) from northern retail giants like Walmart (das Nair 2017). South Africa’s diminished hegemonic position in the region can be ascribed to at least two factors. First, the ruling African National Congress (ANC) eliminated apartheid-​ era capital controls, which allowed South African monopolies to ‘denationalize’ and reconnect to the increasingly financialized global economy (Hart 2013, Ashman, Fine, and Newman 2011). Freed from sanctions and capital constraints, South African multinationals moved their primary listings and headquarters to London and New York. The departure of South Africa’s largest company, the mining giant Anglo American founded by Cecil Rhodes, closed out the decade. Second, the Mandela government’s concessions to the IMF, the World Bank, and northern states in 1994 led to the end of protective tariffs and deindustrialization across the country. This wave of disinvestment and deindustrialization had a serious impact on the South African economy, weakening its position within the region. New patterns of labour migration also undermined South Africa’s central position in the region. The increased domestication of the migrant mine labour force led to a considerable reduction of labour inflows from the Southern African region, as did the tightening of South Africa’s borders, new restrictions on employment from surrounding countries, and a rising tide of xenophobia by the state and sections of the population. While neoliberal globalization was the dominant force shaping the region in the first decade of majority rule, the rise of China and the emergence of other players from the Global South became increasingly important forces shaping the region in the early twenty-​first century. China’s rapid industrialization and its reintegration into the world capitalist economy, particularly since becoming a member of the WTO in 2000, set the

Southern Africa   543 stage for a new primary commodity boom in many countries of the Global South. New players from the Global South have emerged over the past two decades in Southern Africa, contesting the spheres of influence of junior partners of western imperialism like South Africa and the older colonial-​imperialist countries of the Global North. The rise of China, in particular, opened two alliance streams for the political elites of Southern Africa, one flowing east in the direction of China and another directed to the western imperialist countries in the North. Rivalry between emerging economies of the Global South like China and the Western imperialist bloc under the hegemony of the US has been particularly acute in Africa with land and natural resources as the primary arenas of competition. Competing factions of political elites and capital may now align themselves with either older western powers or emerging economic powers like China. This has opened new possibilities in the region. During the Jacob Zuma presidency the South African political elite veered towards alliances with the ‘counter’ institutions formed by Brazil, Russia, India and China, the so-​called BRICS. In the aftermath of economic sanctions imposed on Zimbabwe, Robert Mugabe pursued a ‘Look East Policy’, developing extensive bilateral agreements with China albeit with uneven success (Martin 2019). South Africa under the Rand billionaire Cyril Ramaphosa has more recently leaned towards western imperialist countries, western capital, and domestic multinational companies. Zimbabwe’s current President Emmerson Mnangagwa similarly now appeals to the west to lift economic sanctions, dramatically offering to reverse the fast-​track land reform programme and even pay compensation to expropriated white commercial farmers. Such moves reflect radically shifting alliances among states, corporations, and national landowners. Nevertheless, western powers, with their long history of alliances and investments across the region, remain the dominant force in Southern Africa.

Interstate Rivalry and Theories of Imperialism Changing global relationships such as the rise of China and the BRICS alliance are not only reshaping the region but also reshaping conceptual debates over the nature of imperialism today. Sharp debates have erupted among radical scholars over the nature of contemporary imperialist relations (most notably in the pages of roape.net). The cacophony of conflicting interpretations of the nature of imperialism today brings us back again to the challenge posed by Arrighi in the late 1970s: ‘what purpose a theory of imperialism, one distinct from a theory of world capitalism pure and simple, may serve’ (Arrighi 1983, 185). David Harvey, for one, has questioned whether the ‘traditional conception of imperialism derived from Lenin [is] adequate to describe the complex spatial, interterritorial and place-​specific forms of production, realization and distribution that were going on around the world’ (Harvey 2018). Harvey, drawing on Arrighi (1983, 1994), argues that the idea of imperialism should be entirely abandoned ‘in favor of a more fluid understanding of competing and shifting hegemonies within the global state system’ (Harvey 2016, 168).

544    RicaRdo Jacobs and William G. Martin Patnaik and Patnaik (2016, 5) in contrast contend there is an ‘abiding relevance to the concept of imperialism’ as a ‘structural relationship to capitalism’. In their view imperialism proper is centred on the draining of wealth from the Global South to the Global North. In contrast, Harvey argues that there is a reversal of past patterns underway, with the East Asian bloc now draining wealth from North America and Europe (Harvey 2016, 166). This wealth drain, in his view, is class differentiated, with wealth being redistributed to a tiny minority of the population. It is Chinese companies, Harvey argues, that are leading the way with land grabs and extractive operations on the African continent, pointing to the example of Indian and Chinese firms being the ‘largest mineral companies operating in Zambia’s copper belt’ (Harvey 2018). Moyo, Jha, and Yeros counter that even with the entry of new competitors from the Global South, the new scramble for land and natural resources in Africa is primarily driven by ‘western monopolies and their patrons’ (Moyo et al. 2019, viii). Western countries accounted for 47% (6.6 million hectares) of verified land grabbing deals, followed by emerging powers which account for 23% of the land deals (Moyo et al. 2019, 16). From this perspective Harvey’s analysis feeds into western fears and distortions over the influence of Asian countries in Africa. John Smith, in recouping dependency theory, charges that Harvey ignores the driving force behind the fundamental spatial shift of global production from the North to the South: the search by capital for lower-​cost labour and expanded surplus value extraction. For Smith, Harvey thus ignores the critical ‘global labour arbitrage-​driven by the globalization of production’ (or, more technically, the third form of surplus value, namely super exploitation) (Smith 2018). In this formulation the super exploitation of workers in the Global South constitutes the new imperialism of the twenty-​first century. Suwandi’s (2019, 16) synthesis of these debates points to three separate but interrelated aspects of imperialism: 1) ‘geopolitical (including military) struggles by the nation state for positions within the global hierarchy of the system; 2) dispossession of petty producers outside of capitalist production; and 3) global exploitation, along with expropriation, i.e., the extraction or draining of surpluses from countries of the Global South to rich countries in the Global North and their corporations’. Immediately relevant here is the question of how these three elements are playing out in Southern Africa in the early twenty-​first century. South Africa continues to play a pivotal role in global imperialism: the draining of wealth from Southern Africa to western imperialist countries regularly runs through Johannesburg, an ongoing process with devastating socioeconomic and environmental consequences (Ngwane and Bond 2020, 68). In sub-​Saharan Africa net resource transfers to imperialist countries from 1980 to 2012 totalled $792 billion, and capital flight grew more than 20% annually (Smith 2018). According to the Alternative Information and Development Centre (2019), financial outflows from South Africa amounted to more than its 2018–​2019 budget. The transfer of profits through both licit and illicit financial flows are especially pervasive in the South African mining sector, with platinum companies estimated to have illicitly transferred ‘between 2000 and 2015 a total of US$ 323 billion’ out of the country (Gumede and Fadiran 2018, 130).

Southern Africa   545 Zambia is another striking recent example of the wealth drain, with ‘massive outflows of private wealth over the past fifteen years, reaching peaks of almost 20% of GDP in 2012, 15% of GPD in 2015, and over 7% of GDP as recently as 2017’ (Fischer 2020). While many Western commentators blame Zambia’s debt crisis on Chinese loans, the data reveal otherwise: of Zambia’s US$11 billion debt, only US$3 billion is owed to China. And while China provided debt relief in 2020, Eurobond holders (holding equal amounts) have outright refused to do so. Overall, 70% of debt is owed to institutions ‘allied to or headquartered in the west’ including the World Bank, the IMF, commercial banks, and hedge funds (Chelwa 2020; Fischer 2020). As Chelwa concludes, ‘Zambia is being used as fodder in a geopolitical battle raging between the west and China’ (Chelwa 2020). Wengraf criticizes both Harvey and Smith for downplaying such geopolitical battles, which she characterizes as imperialist rivalry. For Wengraf the issue is not simply the draining of wealth, but also ‘a relationship of mutual profiting between an international capitalist class’ that is located in both the Global North and South (Mora 2018; Wengraf 2018b). As in the interwar period, these interimperialist rivalries have been accompanied by the growing militarization of the continent—​most prominently by the declining hegemon, the United States. Expanding under both Democratic and Republican administrations, the US Africa Command (AFRICOM) now has twenty military bases on the continent. The bipartisan 2021 National Defense Authorization boosted AFRICOM’s funding further. The Pentagon had asked for $239 million, but this wasn’t enough for Congress, which added on another $38.5 million (Vasudevan 2020). US financial power has been similarly deployed, as Wengraf argues, with the ‘US treasury ensuring that Africa remains tied to the dollar’ (Wengraf 2020). The centrality and domination of the dollar provides the channel for the illicit transfer of vast sums out of the continent facilitated by the IMF and World Bank (Campbell 2020, 88). As US economist Ramaa Vasudevan explains: The rule of the dollar, instrumental to the exercise of US hegemony, has become even more opaque and pervasive. More significantly, the capacity of US-​led finance to enforce, discipline, and subordinate countries in the periphery has grown far beyond the direct exercise of its political and military domination. It has become clear that the Fed’s nexus with finance and its interventions to preserve and reinforce dollar hegemony are quite independent of the particular regime in power. (Vasudevan 2020)

Despite the competition from the Euro and the People’s Bank of China, the dominance of the US dollar in this era of global financialization, at least for now, continues to underpin the power of the US state and capital. These signs of rivalry, even as the United States remains dominant, raise several questions. During the early twentieth century rivalry was a prelude to the thirty years of world war that theorists of imperialism most notably Lenin predicted. Is the twenty-​ first-​century scramble also a prelude to world war? Is China a rising imperialist power,

546    RicaRdo Jacobs and William G. Martin with expansionist tendencies analogous to those of Germany and Japan facing the United Kingdom and France in the twentieth century? Could we in any meaningful way consider a rapidly developing country like China as imperialist? What does the evidence from Southern Africa support? Scholars like Wengraf and Patrick Bond argue in the affirmative: China is an imperialist country (Wengraf 2018a) or a subimperialist country (Bond 2018a). Wengraf characterizes the competition between China and the United States as an interimperialist rivalry that has spread across the African continent. Bond by contrast contends that what we have in the twenty-​first century is the rise of ‘sub-​imperialist accumulation . . . by semi-​peripheral bloc countries: Brazil, Russia, India, China and South Africa (the BRICs)’ (Bond 2018b). But collapsing China and South Africa into a common global category, and arguing they share equivalent relationships with the North, is not of course without problems (Martin 2013b). A key difficulty is that Wengraf and Bond take the coherence of the semi-​peripheral bloc as actualized, without paying attention to the internal power differentiation and contentions between countries within the BRICS group. Moreover, while China may have the potential to develop into an imperialist force paralleling past imperialist powers, that potential has yet to be realized. From our perspective the global competition between rising countries of the South like China and the United States is best characterized as ‘interstate rivalry’ as opposed to inter-​imperialist rivalry, with US-​led institutions still ‘reproducing the hierarchal configuration between states’ (Mohandesi 2018). Moreover, there is competition between capital based in the US-​ led old imperialist bloc (which is increasingly concentrated and centralized) and newly formed capitals from rising economies like China. It is within this context that the US state is attempting to block or eradicate real competition with China through extra-​economic means, with uneven success so far. While both US and Chinese capital are backed by their states, the states do so from very different positions and with different means. As we have indicated, Chinese banks, firms, trade and especially military deployments do not replicate Northern finance or monopoly capital forms of the twentieth century. Moreover, as Carchedi and Roberts (2021) argue, based on their measure of unequal exchange and surplus value transfer, despite China’s exponential economic growth, ‘the [old] imperialist bloc still gains surplus value through trade with China’. Thus, Carchedi and Roberts (2021) conclude, China is neither imperialist nor sub-​imperialist. To crudely characterize all capitalist social relations as imperialist or subimperialist is to render the concept meaningless in the Southern African context. South Africa is now, for example, unable to coerce or subordinate any country in Southern Africa through the exercise of military or economic power. Despite its economic size in the region, South Africa can still be coerced and subordinated by western imperialist countries, as recently shown during the Obama presidency with US chicken exports. Notwithstanding South Africa’s protestation Obama forced South Africa to accept US imports that devasted its own poultry industry (Reuters 2015).

Southern Africa   547

Labour, Ecology, and Resistance: New Anti-​imperialist Futures? In the early twenty-​first century a wave of novel land, labour and environmental struggles has spread across the region. The Zimbabwean land occupation movement led to the most radical land redistribution from below, reverberating across the Southern African region. This singular act reversed the legacy of settler colonialism, particularly the racialized land inequality, fundamentally changing property and power relations (Moyo and Chambati 2013, Chambati 2013). Does this growing unrest signal the emergence of new anti-​imperialist historical subjects, different from but analogous to the national liberation movements of the last century? Imperialism in every period has generated a corresponding form of anti-​imperialism. In the twentieth century, imperialist and colonial relations within and beyond the region (and anti-​imperialist struggles) rested upon a specific configuration of capital/​labour relations that has undergone a considerable transformation in the neoliberal era. To be sure, Southern Africa is still characterized by what Samir Amin called ‘Africa of the labour reserves’, a condition where super-​exploitation was and remains integral to the capital accumulation process. Labour and the environment are treated as cheap resources in a context of a vast expansion of surplus and precarious populations. Moreover, migrant workers in South African mines and agriculture, as in the past, continue to be paid wages well below the cost of social reproduction. But in recent decades, deindustrialization, capital flight, and financialization has remade the face of migration. Today migration in large part entails the movement of surplus populations with no prospect of being absorbed into the labour market. Those who manage to find wage employment in the Zambian copper and South African platinum mines are compelled to take on escalating debt to meet basic needs for housing, the education of their children, water and electricity. In a context of austerity, the rising cost of living, and precariousness of work (Musonda 2021, 2–​3), costs have been dramatically shifted onto workers. The precarity of livelihoods is rooted in a deep agrarian crisis and a new scramble for natural resource extraction. Peasants, semi-​proletarian households and rural labouring classes are compelled to leave the countryside and migrate to urban centres with no prospect of being absorbed into the labour market. It is within these spaces that ever-​ expanding surplus populations and the employed coexist trying to eke out a living (Jacobs 2018, Jacobs 2021, Benya 2015, Soederberg 2014, Moyo and Yeros 2005). And it is in these spaces that new protest movements have proliferated. Driving these conditions and movements forward is the ongoing global spatial externalization of environmental costs, or what has been called ‘the metabolic shift’ (Saito 2016). This shift has been particularly evident in extractive industries. Extractivism in the region has a long history of externalizing health, environmental and social reproduction costs onto both labour and nature (Cairncross and Kisting 2016). For example, platinum is used to produce catalytic converters to control air pollution in vehicles

548    RicaRdo Jacobs and William G. Martin worldwide. However, the mining of platinum is based on cheap labour, poor working and living conditions, and irreversible environmental destruction in Southern Africa. At the same time, we are seeing an increase in weather related human disasters like cyclone Idia that had a devastating impact, displacing thousands in Malawi, Zimbabwe and Mozambique (Bornman 2019). These labour and ecological contradictions are generating a new wave of explosive tensions and resistance in the region. Peasant and worker resistance against the extractive industry in the countryside is widespread, with an impressive drive against dispossession being led in large measure by women in the region (Ngwane and Bond 2020, Benya 2015). The protracted platinum mine worker and farm worker strikes in 2012 in South Africa against super exploitation and depressed living conditions prefigured a new wave of struggles. However, much is changing: whereas labour was the most important commodity to be extracted in the countryside in the past, today it is essentially the rural landscapes themselves that are at the heart of dispossession; labour increasingly stands without the prospect of being absorbed into the extractive or agricultural labour market. These ruptures with the past give rise to a new revolutionary subject in the twenty-​ first century in which workers and households that are surplus to the needs of capital play a central role. The signs are many ranging, from the explosive Zimbabwean land occupation movement (Moyo and Chambati 2013), through protest against the attempted extraction of oil and gas by Canadian companies in the Okavanga Delta stretching from Botswana to Namibia, to the Amadiba Crisis Committee resistance against the mining companies in rural Eastern Cape in South Africa that has advanced a new ecological basis of existence (De Wet 2011). In Mozambique peasants and broader civil society have successfully resisted the ProSavana land grab deal that targeted 13% of the country and about 17% of the population (Monjane and Bruna 2020). Most of these struggles are directed against international capital and the neoliberal nation state, opening possibilities for progressive transformations. As such, these struggles, in most cases led by women, are at the forefront of anti-​imperialist struggles today. Anti-​imperialist resistance may, as in the twentieth century, take both emancipatory and reactionary forms. On the reactionary side of the ledger, we have witnessed the ‘Islamic’ insurgency in the Cabo Delgado province in Mozambique, which began as a local struggle against poverty, inequality and exclusion tied to the discovery of natural gas and its control by three multinational companies: ExxonMobil (United States), Eni (Italy), and Total (France). Known locally as al-​Shabaab in Mozambique, this insurgency has compelled both Total and Exxon Mobil to withdraw from the region (Hanlon 2021). This should be seen in a larger context of a growing right wing populist shift unfolding within the region, where old solidarities among labouring classes are fractured. This reactionary xenophobic turn in the case of South Africa is openly promoted by both the state and sections of the population often culminating in violent attacks mainly directed at labouring classes from elsewhere on the African continent. Imperialism in Southern Africa and the world has been shaped by struggles from below as each new form of imperialism and rivalry generated new agents and waves of anti-​imperialist struggle. As we look forward, we can expect the same to hold in the

Southern Africa   549 twenty-​first century. New forms of anti-​imperialist resistance are already widespread across the region. But in the absence of a viable continental left project these struggles are in danger of being co-​opted by reactionary projects with dire consequences for the environment and labouring classes in the region.

Acknowledgement The authors thank Beverly Silver for her incisive comments and suggestions.

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552    RicaRdo Jacobs and William G. Martin Musonda, J. 2021. ‘Modernity on Credit: The Experience of Underground Miners on the Zambian Copperbelt’. Journal of Southern African Studies 47, no. 3: 369–​385. Ngwane, T., and P. Bond. 2020. ‘South Africa’s Shrinking Sovereignty: Economic Crises, Ecological Damage, Sub-​Imperialism and Social Resistances’. Vestnik RUDN.International Relations 20, no. 1: 67–​83. https://​doi.org/​10.22363/​2313-​0660-​2020-​20-​1-​67-​83. O’Meara, D. 1975. ‘The 1946 African Mine Workers’ Strike and the Political Economy of South Africa’. Journal of Commonwealth and Comparative Politics 13, no. 2: 146–​173. Patniak, U., and B. Patnaik. 2016. A Theory of Imperialism: with a Commentary by David Harvey. New Delhi: Tulika Books. Reuters Staff. 2015. ‘United States Moves to Punish South Africa over Farm Export Impasse’. 5 November. https://​www.reuters.com/​article/​us-​usa-​safrica-​chicken/​united-​states-​moves-​ to-​punish-​south-​africa-​over-​farm-​export-​impasse-​idUSKCN0SU31220151106 Rodney, W. 1974. How Europe Underdeveloped Africa. Washington, DC: Howard University Press. Saito, K. 2020. ‘Marx’s Theory of Metabolism in the Age of Global Ecological Crisis’. Historical Materialism 28, no. 2: 3–​24. Saul, J., and S. Gelb. 1981. ‘The Crisis in South Africa: Class Defense, Class Revolution’. Monthly Review 33, no. 3: 1–​64. Silver, B. J. 2003. Forces of Labor: Workers’ Movements and Globalization since 1870. Cambridge: Cambridge University Press. Smith, J. 2018. ‘David Harvey Denies Imperialism’. ROAPE, 10 January. https://​roape.net/​2018/​ 01/​10/​david-​harvey-​denies-​imperialism/​ Soederberg, S. 2014. Debtfare States and the Poverty Industry: Money, Discipline and the Surplus Population. London and New York: Routledge, Taylor and Francis Group. Suwandi, I. 2019. Value Chains: The New Economic Imperialism. New York: Monthly Review Press. Tabata, I. B. 1954. ‘On the Agrarian Question’. Cape Town: New Era Fellowship. http://​www.apd​ usa.org.za/​wp-​cont​ent/​books/​IBTla​ndq.pdf. Terreblanche, S. 2012. Lost in Transformation: South Africa’s Search for A New Future since 1986. Johannesburg: KMM Review Publishing Company. Vasudevan, R. 2020. ‘COVID-​19 and Dollar Hegemony’. Catalyst 4, no. 2. https://​catal​yst-​jour​ nal.com/​vol4/​no2/​covid-​19-​and-​dol​lar-​hegem​ony. Wen, T. 2021. Ten Crises: The Political Economy of China’s Development (1949-​2020). Singapore: Palgrave MacMillan. Wengraf, L. 2018a. Extracting Profit: Imperialism, Neoliberalism and the New Scramble for Africa. Chicago, IL: Haymarket Books. Wengraf, L. 2018b. ‘U.S -​China Inter –​Imperial Rivalry in Africa’. ROAPE, 16 November. https://​roape.net/​2018/​11/​16/​u-​s-​china-​inter-​imperial-​rivalry-​in-​africa/​ Wengraf, L. 2020. ‘U.S. Imperialism and Africa’s ‘Perfect Storm’: Public Health Crisis, War, and Financial Crash’. New Politics 18, no. 1. https://​new​pol.org/​auth​ors/​weng​raf-​lee/​. Wolpe, H. 1972. ‘Capitalism and Cheap Labour-​Power in South Africa: From Segregation to Apartheid’. Economy and Society 1, no. 4: 425–​456. https://​doi.org/​10.1080/​030851​4720​ 0000​023.

Chapter 30

Asym met ri c Interdepende nc e North America’s Political Economy Julián Castro-​R ea

The impressionistic, common sense approach to understanding North America’s political economy is straightforward: this is a world region composed of one global power at the centre—​the United States of America—​and two second-​tier countries—​Canada and Mexico—​at the region’s periphery, benefitting somewhat from their powerful common neighbour and also subject to its global influence and heavily dependent on policy decisions made there. This interpretation may indeed be supported with abundant macroeconomic or geopolitical data, showing the heavy unbalance of power and resources existing between the three countries. However, this chapter aims at presenting a somewhat different picture. Inspired by the late Canadian scholar Stephen Clarkson’s seminal scholarly contributions (notably Clarkson and Mildenberger 2011), I argue that a closer historical look reveals a strikingly different picture. Not only have the two minor North American members historically had considerable autonomy to make policy decisions and craft their place in the region and the world but also the power of the hegemon in fact depends to a large extent on the support of and contributions from the two lesser neighbours. In sum, this chapter aims at demonstrating that the political economy of North America can be best described as a situation of asymmetric interdependence, developed over centuries along discernible patterns. The notion of asymmetric interdependence was introduced by Albert Hirschman in 1945 (Hirschman 1945). He then suggested that powerful countries can use asymmetric trade relations as a tool of political influence at the direct expense of the security of their less influential trading partners. However, I would argue that interdependence works both ways, it can also be used by more dependent partners to bargain for concessions that would otherwise be hard to get. Of course, the concept is compatible with complex interdependence theory in international relations (Keohane and Nye 1973), but it

554   Julián Castro-Rea applies explicitly to situations where one of the partners is endowed with more power resources than others. As a concept, asymmetric interdependence has already been employed to characterize the relationship between Mexico and the United States (for instance Délano 2011), and Canada and the United States (as illustrated by Bow 2009). However, in most analyses Mexico’s and Canada’s dependence vis-​à-​vis the United States is usually overemphasized. In this chapter, I highlight the opposite point: the importance that both Mexico and Canada have for the United States, in fact giving North America’s minor partners leverage and the ability to constrain their common neighbour’s capacity to shape the political environment and make wholly independent decisions.

The Origins: US Expansionism The first, obvious way in which asymmetric interdependence started was territorial expansion of the United States. The United States managed to build superpower status thanks to the appropriation of land from neighbouring areas. The original Thirteen British Colonies, a relatively narrow sliver of land on the Atlantic coast, gradually expanded West, South, and North to acquire the territory of what is now the continental United States. Of course, expansion was made at the expense of land already occupied by Indigenous peoples, as well as territories formerly claimed by the British Crown to the North and to the South by the Spanish Crown first and independent Mexico later. The process, clearly, was not devoid of its share of violence, military occupation, and arm-​twisting during heavy-​handed diplomatic negotiations; including a failed attempt to invade British North America in 1812 (Berton 1980), successful annexation of Texas in 1845, and military invasion of Mexico in 1847 (Meltzer 1973). Expansion northward was settled with Canada following the Oregon Treaty in 1846, and southward with Mexico after the Treaty of Mesilla in 1854. For the remainder of the nineteenth century and into the future military might was no longer a factor for territorial expansion, but by then the United States had firmly established a militaristic, intimidating reputation among its neighbours. Each one of them negotiated that potentially threatening aspect of their common neighbour’s agenda differently. Canada became a military ally after fighting on the same side of the United States during the twentieth century’s two major wars; an alliance that was further solidified during the Cold War and is still current with common participation into the North Atlantic Treaty Organization (NATO) and the North American Aerospace Defence Command (NORAD) (Bothwell 2007; Lerhe 2013). Canada thus became a crucial ally to build the US aerial defence system against potential Soviet threats during the Cold War. The bet the Canadian government made was that engagement and a place around the table where defence decisions are made would give Canada the best protection against unilateral imposition. Mexico’s adaptation to US militarism was more nuanced. Even though this country was briefly involved in World War II, Mexico’s reluctance to cooperate on military

Asymmetric Interdependence   555 matters with its northern neighbour was the norm (Deare 2017). True, there was some level of cooperation on anti-​communist counterinsurgency before and drug enforcement after the Cold War. However, Mexico remained just too reluctant to risk a full-​ fledged military alliance with a neighbour that had repeatedly shown no restraint on resorting to military intervention as a means of political pressure. Indeed, after the 1847 invasion, the US army intervened again during the Mexican Revolution, first by attacking and seizing the port of Veracruz in 1914, taking sides in the ongoing civil war, then implementing punitive raids against revolutionary leaders along the common border (Sweetman 1968). Whatever the specific strategy, what is clear is that both Mexico and Canada are understandably seen as key elements for the preservation of US national security. This is an aspect where asymmetric interdependence is clearly noticeable: the United States depends on cooperation from its two continental neighbours, otherwise relatively weak from the defence perspective, to secure its territory against foreign threats. For that reason, the US government will cajole their neighbours to ensure some degree of cooperation on security matters. This goal was achieved recently, for instance, when Canada cooperated in the military invasion of Afghanistan in 2002, intended to retaliate against the perpetrators of the September 11, 2001, attacks on US soil and stop future attacks (Pigott 2007). It was also achieved with the adoption of the Mérida Initiative in 2008, thanks to which the United States and Mexico collaborated to fight violence, drug trafficking, and transnational crime. Thanks to the Initiative, several US agencies provided $3 billion USD in assistance projects to Mexico, including training and equipment, in exchange for cooperation on national security and intelligence matters (US Government Accountability Office 2020).

Economic Development: Shared Resources, Biased Appropriation The second noticeable aspect of asymmetric interdependence among North American countries is exploitation of natural resources. The vast region is rich in natural resources, thanks to both its size and its geophysical diversity, but their distribution is geographically very uneven. Economic and political power were historically exercised to channel those resources to the centres of capital accumulation and political leverage, putting most subregions to the service of supply needs of the poles of economic growth and political decision-​making. Most important among these are non-​renewable mineral resources. Be they water, iron ore, copper, precious metals, coal, uranium, and especially oil and gas, mineral resources have been at the centre of geopolitical exchanges, power dynamics, and exploitation across the continent. The United States taps its two neighbours for these resources, thus enhancing its economic might and influence. A telling example is provided by the

556   Julián Castro-Rea first atomic bombs, dropped by the US Air Force over Japan to put an end to World War II: they were built with uranium extracted in Canada’s Northwest Territories (CBC n.d.); a historical event dramatically explained in a gripping documentary (Blow 1999). Meanwhile, Canadian companies have become the major investor in the mining industry not only in Mexico and the United States but throughout the Americas. Many Canadian mining corporations have deployed their capitals and resource extraction activities across the hemisphere. By 2014, 410 such companies had invested $90.6 billion in Latin America and the Caribbean alone (Mining Association of Canada, 2016, 85). Canadian mining assets in Mexico totaled $19.4 billion CAD ($14.4 billion USD) in 2015, second only to US assets worth an estimated $24.8 billion USD (Alper and Taylor 2017). Oil and gas deserve special mention as non-​renewable natural resources, as they historically were and still are at the centre of intense economic and geopolitical interdependence in North America. In the early twentieth century, when industrial production transitioned from the use of coal to diesel as main source of power, and with the invention of automobiles, oil became a strategic commodity for the US economy. Mexico’s abundant oil resources, and their proximity to the US market, thus became from the US perspective an attractive alternative to imports from the Middle East. Private investment, notably from Standard Oil corporation, flowed to develop and exploit this precious resource. Supply was taken for granted until the Mexican government made the decision of expropriating and nationalizing the oil industry in 1938 (Brown 1993). The US government heavily sided with US investors in reclaiming the reversal of such a decision. Overt confrontation between Mexico and the United States was only averted with the onset of World War II, as the two countries ended up fighting as nominal allies on the same side of the conflict. One century later, it would be Canada’s turn to become a major oil supplier for the US energy needs. In 2019, Canada was the largest foreign supplier of crude oil to the United States, accounting for 48% of total US crude oil imports and for 22% of US refinery crude oil intake. Canada exported 3.7 million barrels per day to the United States in 2019, 98% of all Canadian crude oil exports (Natural Resources Canada 2019). The United States can therefore count on a steady supplier just across one international border, thus diminishing its reliance on imports from the Middle East and consolidating North America’s asymmetric interdependence.

Human Capital: Crucial, Exploited, Yet Discriminated The third area where interdependence is clearly perceived is circulation of the workforce across borders, flowing from high population density areas to the poles of economic

Asymmetric Interdependence   557 growth. Once again, this steady supply of abundant and affordable workforce facilitated economic growth in the United States, to the extent that we can see it as a net subsidy to industrialization and overall economic development in that country. Historically, the most notable flows were Canadian workers contributing to the needs of the growing Northeastern United States industrialization drive by the end of the nineteenth and the turn of the twentieth century (Ramírez 2011) and of skilled professional and managerial workers from that country by the end of that century (Della Savia 2017). Besides, the continuous, unstoppable stream of Mexican manual workers since the mid-​ nineteenth century has played a crucial role in the development of industries such as agriculture, personal care (children, health, the elderly), construction and hospitality in the United States; particularly in the Southwest (Délano 2011). Paradoxically, NAFTA contributed to the increase rather than decrease of the flow of Mexican migrant workers to the United States. It is a paradox because proponents of the trade agreement—​starting with the Mexican government itself—​argued that more trade and investment would create so much employment in Mexico that international migration would become obsolete. In fact, the opposite occurred: some two million Mexican agricultural workers were displaced from their farms by fierce competition of imported products and dispossession of their land, which increased poverty and prompted half a million of them a year to seek survival in the United States (Carlsen 2013). The number of Mexican immigrants more than doubled from 1990 to 2000, when it approached 9.2 million. The flow was reversed—​at least temporarily—​between 2009 and 2014, when 140,000 more Mexicans left the United States than entered it, likely due to the effects of the financial crisis (Floyd 2020). Mistreatment of those migrant workers in the United States is one of North America’s most shameful hidden stories. Even though these workers have been historically essential for the functioning and economic viability of several industries in that country, they are consistently discriminated against, used as disposable labour, accused of being dependent on government handouts, stealing jobs from US workers, and blamed for endemic issues affecting that society (crime, drug addiction, cultural decay, etc.) (Bacon 2013; Bustamante 2012; Golash-​Boza 2015). These accusations—​tantamount to blaming the victim of a skewed, unfair, hypocritical migration regime—​were put at the centre of the North American political agenda during the 2016 US presidential campaign, when then candidate Donald Trump accused Mexican migrants of being drug dealers, criminals and rapists; and promised to build a wall along the over 3 thousand-​kilometre border with Mexico that the neighbouring country would have to pay for (BBC News 2016). However, realities of asymmetric interdependence would make that electoral promise impossible to fulfill; as completely cutting down human circulation across the Mexico-​US border and twisting Mexico’s arm to pay for the physical barrier would be detrimental not just to Mexico but to both partners in the equation; as the US economy would lack a crucial supply of manual labour and would miss the consumption that those workers generate for the domestic market.

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Tourism and International Retirement: Mexico as North America’s Playground Another aspect of interdependence in North America, and another kind of displacement of people, is temporary visitors or relocation of residence, typically after retirement. In this aspect, Mexico is a net recipient of North American travellers, given the country’s more moderate weather. From January to September 2019, Mexico was visited by 7.9 million people from the United States, and 1.7 million from Canada; by far the two main countries of origin of international visitors to Mexico (Mexico’s Embassy in the US 2020). In fact, visitors from these two countries represented about 88% of all international visitors during that period. The US Department of State estimates that there are approximately 1.5 million US citizens living in Mexico alone (US Department of State 2020a ). Although this number is not only indicative of retired migrants, they likely constitute an important percentage of that figure. Even if exact numbers of retirees are extremely difficult to determine, they are undoubtedly in the thousands living in retirement havens in Mexico. An increasing number of individuals have the resources to consider a range of retirement strategies due to their accumulation of wealth and an increase in the lifetime flow of earnings. ‘Baby boomers’—​ people born after World War II until the 1960s and now retiring—​have been exposed to the internationalization of labour migration and mass international tourism. This has allowed individuals to acquire, as Williams et al suggest (Williams 2000, 31), greater knowledge and experience of living abroad. Additionally, another push factor that is becoming more relevant is the increase in the cost of living in wealthy nations such as Canada and the United States; ‘retirees with pensions and savings that must continue to be stretched to support a modest lifestyle at home may meet the resource requirements for immigration to many Latin American countries, where the cost of living is lower’ (Sloane 2020, 11).

Hybrid Identities and Cultural Appropriation The intense movement of people across North America’s borders and the constant exchange of cultural products (films, TV productions, books, internet contents, etc.) has produced a blend of identities uniquely North American. Calls for the preservation of national identities away from foreign influences, coming not only from nativist extreme right movements but also from otherwise respectable academic quarters (for instance, Huntington 2004) are destined to fail, because they run against the grain of sociological realities.

Asymmetric Interdependence   559 Those sociological realities paint a different reality altogether: North America displays a myriad of identities, fashioned by region, history, immigration patterns, Indigenous presence, settlement patterns, and so on. Each regional culture adds a specific flavour to the North American mix, and creates distinct cultural products (Lull 2012). Here again, we can see asymmetric interdependence at play. While it is already commonplace to assume that Hollywood productions and other US-​manufactured media products have an enormous influence over Canada and Mexico; Mexican and Canadian contributions to US culture are less visible yet important for everyday life in the US: Mexican cuisine in the Southwest, sports created in Canada (basketball, hockey), words adopted from Spanish and French in customary English idioms, and so many more. Importantly, some of these adopted cultural products are reframed as original creations, and appropriated as profitable business opportunities. Even the innocuous practice of piñatas at children’s birthday parties in the United States and Canada is in fact a cultural appropriation of Mexico’s traditional posadas, a recreation of the biblical pilgrimage of Jesus’s parents before His birth, played out during the days before Christmas. Nationalisms in North America are state-​created narratives intended to promote a cohesive identity accepted by all citizens. While we cannot deny their role in consolidating political communities, are clearly not accurate descriptions of the deep sociological diversity in place.

Economic Concentration, a Result of Asymmetry An inevitable result of the skewed distribution of economic power is concentration of capital; which in turn perpetuates that very uneven distribution. Being the hub of economic activity, the United States is also at the centre of financial transactions in North America. Figure 30.1 shows foreign direct investment (FDI) net outflow for each country of North America. It is clear that, with the notable exception of 2018, the United States has been a massive net exporter of capital through the post-​NAFTA years. Canada and Mexico have managed to be net exporters as well, although marginally so, with figures that pale in comparison with their common neighbour’s. While in 2019 the United States invested US$188,470 billion abroad, Canada invested US$73,806 billion, and Mexico US$6,102 billion. Most of that investment was made across North American borders. As of 2018, the United States had a stock of US$401 billion in FDI in Canada, which represented 46% of Canada’s total investment (US Department of State 2020b). The corresponding figure for Mexico is US$114.9 billion, which places the United States as Mexico’s top FDI source or 39.7% of all capital inflows to Mexico (US Department of State 2020c)

560   Julián Castro-Rea

Figure 30.1  North America: Foreign direct investment net outflows (current US dollars). Source: World Bank Database, https://​datab​ank.worldb​ank.org/​. Author’s creation.

NAFTA did exponentially increase North America’s economic transactions. Regional trade dramatically shot up over the agreement’s first two decades, from roughly $290 billion in 1993 to more than $1.1 trillion in 2016. Canada is the United States’ second-​largest trade partner, importing US$255.4 billion and exporting US$270.3 billion in 2020 (US Census Bureau 2020). In 2019, Mexico became the US top trading partner in goods, its second-​largest export market, and third-​largest trading partner overall. Bilateral trade grew 654% from 1993 to 2019 (US Department of State 2020c). Cross-​border investment also surged, with US FDI stock in Mexico increasing in that period from $15 billion to more than $100 billion (Chatzky, McBride, and Sergie 2020). However, this was a highly concentrated economic growth, benefitting some industrial sectors and some regions at the expense of all the rest. Net beneficiaries include the automotive industry, export-​oriented agriculture (meat, grains, dairy), wood and paper manufacturing, chemicals, mining, aerospace, oil and natural gas, metal and steel manufacturing, and large retailers. All the other economic activities were negatively affected, especially when carried out by small producers oriented to domestic markets. Economies of scale worked to the benefit of those with more capital, more production capacity, and better ability to channel their products to international markets. An illustration of this skewed distribution is the boom of maquiladoras (assembly plants) along the Mexico-​US border (Kopinak 1997). In 2018, the Manufacturing, Maquiladora and Export Services Industry Program (IMMEX) reported that this

Asymmetric Interdependence   561 industry generated around 3 million direct jobs and more than 7 million indirect jobs across Mexico. The development of the maquiladora industry in the Mexican border states responds to decades of economic promotion of the comparative advantage of its close proximity to the United States, affordable services and supplies, as well as the low wages paid to its workers and their flexible labour conditions. (Business and Human Rights Resource Centre 2020). Along with Mexico, Canada used to be in a subordinate position vis-​à-​vis the United States from the financial point of view. However, that situation started to change in 1996, when North America’s northernmost country became a net exporter of investment rather than recipient, a situation that has consolidated and deepened ever since. As of 2010, Canadian investment abroad was over $616 billion, of which $250 billion went to the United States, representing 40% of Canada’s GDP (Klassen 2014, 142–​148) In 2018, Canada’s FDI stock in the United States reached US$511 billion (US Department of State 2020b) Canadian direct investment in Mexico was $22.5 billion CAD in 2018, which is Canada’s tenth-​largest direct investment destination (Canada, Department of Global Affairs 2020)

Political Power Asymmetry, Corollary, and Guarantee of the Whole Process Existing power dynamics among the three North American governments is a reflection of the asymmetry experienced over the centuries as sketched previously. The imbalance is more noticeable when it comes to Mexico, which is assumed to be a subsidiary country to the mighty country to the North. However, the Mexican government has historically managed to protect its vulnerable position vis-​à-​vis the United States. Strategies to achieve that goal have included ‘the advocacy of the foreign policy principle of nonintervention in dealing with the US political system; delinkage or compartmentalization of issues in the bilateral agenda; and negotiations with the Executive rather than lobbying or working with the US Congress or the relevant departments’ (Délano 2011, 29). In turn, the Canadian government has chosen somewhat different paths to adapt to US power, ranging from close cooperation verging on subordination—​illustrated by Stephen Harper’s governments (2006–​20015)—​to autonomous decision-​making and even confrontation—​illustrated by Pierre Trudeau’s governments (1968–​1978, 1980–​ 1984). Extreme positions on either side of the spectrum have put Canada in a vulnerable situation, the best fit has historically been a pragmatic blend of cooperation and autonomy, depending on the issue at hand (Clark 2013, 131–​148).

562   Julián Castro-Rea In any case, the US government has to tread lightly, making use of soft rather than hard power to secure its neighbour’s cooperation. This cooperation is simply too important to be ignored, thereby stressing asymmetrical interdependence. A metaphor may be useful to better explain this situation. The late Mexican scholar and diplomat Carlos Rico developed the concept of ‘the cliff paradox’ to explain Mexico-​US relations. According to this idea, the United States government will pressure its Mexican counterpart to align its international behaviour to US interests and obtain as many concessions as possible in domestic public policy. That is, Washington will push Mexico to the edge of a metaphorical cliff, but will never push the weaker partner to make it fall. Simply put, the United States stands to lose more than gain from an unstable and resentful partner. Therefore, assistance will be offered to remedy potentially threatening situations. In turn, the Mexican government is aware of this paradox, and will expect Washington to offer a hand during critical times (Rico 1986). The metaphor is still useful to make sense of North American intergovernmental relations, including Canada-​US interactions, as it graphically underscores asymmetric interdependence.

Conclusions Long before NAFTA’s inception, over the centuries a clear pattern developed in North America, which can be summed up with the concept of asymmetric interdependence. This dynamic relationship is nurtured by informal, everyday interactions among private actors in all three countries. Ignoring borders and political sovereignty, people and productive activities located in the large area of land North of the Americas interact, exchange, move, in a motion that resembles cross-​pollination (Castro-​Rea 2012). Power dynamics have the effect of making some regions benefit more than others from this interaction, but even the most powerful actors are unable to totally direct and control the constant movement of people and resources, or to call all the shots of government action. As a result, many transactions occur independently or even despite formally sanctioned interaction; smuggling of illegal drugs and guns and undocumented migration being prime examples of that pattern. Lesser players within North America would be well advised to take note of the prevailing asymmetric interdependence, and make use of it to advance their own interests. Governments or other political or economic actors willing and able to do that have been able to reset the terms of imbalance and negotiate for better settlement. In sum, North America has been a coherent economic and social unit long before the adoption of NAFTA; defined by asymmetrically dependent trade, consumption, capital and labour markets, and human personal interaction. Governments and borders—​ these markers of sovereign power—​try to grapple with these complex realities, but have a hard time managing all aspects of this rich and complicated interaction.

Asymmetric Interdependence   563

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564   Julián Castro-Rea Golash-​Boza, Tanya Maria. 2015. Deported: Immigrant Policing, Disposable Labor, and Global Capitalism. New York: New York University Press. Hirschman, Albert O. 1945. National Power and the Structure of Foreign Trade. Berkeley: University of California Press. Huntington, Samuel. 2004. Who Are We? The Challenges to America’s National Identity. New York: Simon and Schuster. Keohane, Robert O., and Joseph S. Nye. 1973. ‘Power and Interdependence’. Survival 15, no. 4 (July): 158–​165. Klassen, Jerome. 2014. Joining Empire: The Political Economy of the New Canadian Foreign Policy. Toronto: University of Toronto Press. Kopinak, Kathryn. 1997. Desert Capitalism: What Are the Maquiladoras? Montreal: Black Rose Books. Lerhe, E. James. 2013. At What Cost Sovereignty? Canada-​US Military Interoperability in the War on Terror. Halifax: Centre for Foreign Policy Studies, Dalhousie University. Lull, James. 2012. ‘Our North America: A Continent of Cultural Change’. In Our North America: Social and Political Issues beyond NAFTA, edited by Julián Castro-​Rea, 183–​196. Farnham: Ashgate. Meltzer, M. 1973. The Mexican-​American War. New York: Grossman. Mexico’s Embassy to the United States. 2020. ‘Statistics’. https://​emba​mex.sre.gob.mx/​eua/​ index.php/​en/​2016-​04-​09-​20-​40-​5 1/​tour​ism/​1602-​tour​ism-​sta​tist​ics#:~:text=​For%20 the%20curr​ e nt%202​ 0 19%20per​ i od,King​ d om%2C%20C ​ o lom ​ b ia%2C%20and%20Ar​ gent​ina. Mining Association of Canada. 2016. Facts and Figures of the Canadian Mining Industry 2016. Ottawa: MAC. http://​min​ing.ca/​sites/​defa​ult/​files/​docume​nts/​Facts-​and-​Figu​res-​ 2016.pdf. Natural Resources Canada. 2019. ‘Crude Oil Facts’. https://​www.nrcan.gc.ca/​scie​nce-​data/​ data-​analy​sis/​ene​rgy-​data-​analy​sis/​ene​rgy-​facts/​crude-​oil-​facts/​20064. Pigott, Peter. 2007. Canada in Afghanistan: The War So Far. Toronto: Dundurn. Ramirez, Bruno. 2011. ‘Through the Northern Borderlands: Canada-​US Migrations in the Nineteenth and Twentieth Centuries’. In Migrants and Migration in Modern North America: Cross-​Border Lives, Labor Markets, and Politics, edited by D. Hoerder and N. Helen Faires. Durham: Duke University Press. Rico, Carlos. 1986. ‘Las relaciones mexicano-​norteamericanas y la “paradoja del precipicio” ’. In Fundamentos y prioridades de la política exterior de México, edited by Humberto Garza. Mexico: El Colegio de México. Sloane, Philip D., Sheryl Zimmerman, and Johanna Silbersack. 2020. Retirement Migration from the US to Latin American Colonial Cities. Switzerland: Springer Nature. Sweetman, J. 1968. The Landing at Veracruz: 1914: The First Complete Chronicle of a Strange Encounter in April, 1914, When the United States Navy Captured and Occupied the City of Veracruz, Mexico. Annapolis: US Naval Institute. US Census Bureau. 2020. ‘Trade in Goods with Canada’. https://​www.cen​sus.gov/​fore​ign-​ trade/​bala​nce/​c1220.html. US Department of State. 2020a. ‘US Relations with Mexico’. Bureau of Western Hemisphere Affairs. https://​www.state.gov/​u-​s-​relati​ons-​with-​mex​ico/​. US Department of State. 2020b. ‘Investment Climate Statements: Canada’. https://​www.state. gov/​repo​rts/​2020-​inv​estm​ent-​clim​ate-​sta​teme​nts/​can​ada/​.

Asymmetric Interdependence   565 US Department of State. 2020c. ‘Investment Climate Statements: Mexico’. https://​www.state. gov/​repo​rts/​2020-​inv​estm​ent-​clim​ate-​sta​teme​nts/​mex​ico/​. US Government Accountability Office. 2020. ‘US Assistance to Mexico: State Department Could Improve Its Monitoring of Mérida Initiative Projects’. Released 12 May. https://​www. gao.gov/​produ​cts/​GAO-​20-​388. Williams, Allan M., et. al. 2000. ‘Tourism and International Retirement Migration: New Forms of an Old Relationship in Southern Europe,’ Tourism Geographies 2, no. 1: 31.

Chapter 31

C ol om bia a nd OE C D How Institutional Imperialism Shapes the Global Order and National Development Brayan Camilo Rojas and Ernesto Vivares

International Organizations and States: A Complex Relation Current discussions in international relations weigh whether international organizations (IOs) play a main role in conditioning states’ performance. Previous studies include three theoretical approaches that consider that IO are either: actors from the neoliberal point of view, realms from a realistic perspective, or instruments from a Marxist understanding (Rittberger and Zangl 2006; Karns and Mingst 2004, 38–​62).1 The first two theoretical trends follow the international political economy (IPE) approach. Neoliberalism and realism tend to an epistemological determinism and consider that a single factor explains phenomena such as the relationship between states and IOs. Specifically, according to neoliberalism global institutions and their growing influence is decisive, while realism favours the material capacity of the states. Table 31.1 analyses neoliberalism and realism mainstream explanations towards the relationship between IOs and the states from a political economy and international relations point of view. This information highlights possible shortcomings in these approaches. According to neoliberalism, economic interests are objective conditions for the deepening of interdependence, something that is accomplished by institutions that allow the states to prioritize absolute profits. This ideology favours the freedom of commerce, market, and competition and is very optimistic concerning the possibility of cooperation between states and the organizations derived from these agreements. Common preferences are the basis for cooperation that allows absolute profits (Hansenclever, Mayer, and Rittberger 2002, 505). The most optimistic version of this perspective comes from institutionalism (Keohane 1984, 7), in which authors ‘consider that cooperation is

568    Brayan Camilo Rojas and Ernesto Vivares Table 31.1 Ways of Understanding the Relationship between IO and the State from an IPE Perspective Approach

Neoliberal (actors)

Realism (realms)

International political economy

Enhancement of free trade and commerce

Mercantilism: accumulation of power and wealth.

International relations

Optimism towards IO: common preferences towards absolute profit.

State centred and global state of nature. Priority to relative earnings.

Relationship OI and states

Institutionalism: cooperation towards economic interdependence. Requires norms and institutions.

Instrumental: benefits the powerful. Irrelevant: states are determinant (Deacon, Hulse, and Stubbs 1997).

Case study

Promote freedom and economic competition. Converging preferences. Cooperation towards absolute profits.

Relative earnings over periphery countries. Meet instrumental goals of the state.

Problems for the Relativization of power: assumed case innocuous preferences.

Poor understanding of IO and disregard of its relevance. A simplistic and instrumental approach.

Source: Author’s elaboration.

essential in a world of economic interdependence and maintain that shared economic interests create a demand for international norms and institutions’. Accordingly, this theory would explain Colombia’s accession to the OECD as a process that enhances the freedom of commerce, market, and competition and benefits the country to the extent that it takes advantage of its comparative advantages. Colombia would join the OECD because of supposedly shared preferences with the organization and other member states. The OECD would be a cooperation platform that enables absolute profits to participating states through strengthening a complex interdependence with developed countries. With the assistance of international institutions and arguing that there are shared interests with other actors, Colombia self-​imposes ‘good practices’. The key problem of this explanation is that it relativizes power. The theory does acknowledge the chief role of IOs in global governance but an organization such as the OECD appears to be an impartial actor whose explicit role is to develop the economic and social freedoms of its members. Nevertheless, neoliberalism purposely undermines the capabilities of periphery countries against developed countries. This conception disguises the political nature of IOs by presenting them as purely technical agents, in the case of OECD the ‘good practices’ are supposed to be necessary steps towards development. One of the findings in this study is that the OECD’s recommendations are both technical and political and have been designed to reproduce the hegemonic project by institutional methods. Distinct power dynamics take place at the juncture of the domestic-​international realms.

Colombia and OECD    569 In the case of realism, the approach is state-​centred, however the wider structure is one of disorder (anarchy) in which individual actors aim to protect their aims through self-​help: the Hobbesian state of nature on a global scale (Waltz 2001). According to this understanding, IOs are: (1) instruments that display national interest and allow the most powerful states mainly meet their goals (Abbott y Snidal 1998, 8) and (2) not relevant because the states are still the main actors of global governance. Summarizing, inasmuch as IOs can be rendered useful, the states do not use them to modify international anarchy because they do not want to give up their decision-​making power. Realism would explain Colombia’s accession to the OECD as a decision aimed to improve the country’s co-​relation with smaller states. In order to accumulate power and wealth, partnering with developed states increases relative earnings and their competitive capacity with other peripheral states. It is an instrument deployed by the government of Colombia to achieve diverse goals, however, considering that it reflects the current capacities of other states, Colombia will be able to improve its relative position against certain competitors but with very slim chances of modifying the asymmetric structure that underlies the current order of things. This interpretation disregards the actual power that an IO has, in other words relativizing its importance in the theoretical field does not eliminate its capabilities on the international scene. Colombia joins the OECD to strengthen its relative position regarding other peripheral countries but, afterwards, it will face an adverse set-​up because the global power preferences remain unmodified and Colombia will have to adapt its policies to those interests. In the universe of IOs, the OECD is the only one addressing issues such as fishing or Internet from a market perspective. Its goal is to standardize states’ policies and to change their agendas to ease world elites’ business making. This study will show how the OECD’s recommendations are conditions intended to shape technical aspects and create a political frame for national development in key areas and to insert the country within the current imperialist order. Cox—​who follows a global political economy (GPE) development—​using a ‘historical structures’ method, synthesizes both realistic material capacities and neoliberal institutions and also adds constructivist ideas. This author argues that the action framework among the actors of international relations are affected by a complex interaction between: (1) material capacities as a reflection of the mode of production; (2) ideas as intersubjective thoughts (habits or discourses of power) and as collective images (ideas in contradiction), and (3) institutions as mechanisms to perpetuate an order, based on concrete power relations, that amalgamates ideas and material capacities (Cox 1993, 141–​144). In coincidence with the above, IOs have a clear role within the capitalist system. They are central elements in the construction of concrete world order through the establishment of several norms, institutions, recommendations, or speeches. According to this, world order would establish and reproduce itself through norms (or, as by the OECD, ‘recommendations’). The use of the method of historical structures is summarized, in a comparative manner, in Table 31.2

570    Brayan Camilo Rojas and Ernesto Vivares Table 31.2 Ways of Understanding the State–​IO Relationship from a GPE Perspective Perspective

Marxism (instruments)

IPE

• Capitalist system creates institutions that reproduce it (Balaam 2013). • Class struggle, rejection of state-​centrism, the existence of vertical relationship, and imperialism (Parpart and Veltmeyer 2011).

International relations

• Historical structures method: the framework of action for IR actors is the sum of material conditions, ideas, and institutions.

State–​IO relationship

• Point of departure is a dominant capitalist production system (Cox 2010). • The IOs contribute to the construction of a capitalist world order. They are its institutional product. • IOs put forward dominant intersubjective thoughts: recommendations, speeches, and norms/​rules of behaviour (Cox 1993).

Case study

• OECD incorporates Colombia because of its material conditions (in the intermediate growth pole). The country, in addition, is institutionally and ideologically aligned with the hegemonic project. • OECD presents itself as if ‘suggesting’ policies, however membership implies conditionality: Colombia has to agree to a policy roadmap to join this club. • OECD outlines some ideas that reproduce the world order and its asymmetries, which are then presented to Colombia as ‘good practices’ for development.

Source: Author’s elaboration.

These premises make it possible to establish the particularities of the OECD as an IO, its material capacities in the current world order, and also examine the ideas that were implemented in Colombia to configure, technically and politically, its national development within the hegemonic world order. Far from presenting these requirements as actual impositions in exchange for loans (a classic IMF equation of policy-​based loans), the OECD will shape Colombia’s domestic politics through an alleged consensual model which can be seen as institutional imperialism.

Particularities of the OECD as an Institution The OECD derives from a concrete world order led by the United States. Some authors call this period, that follows World War II, an ‘integrated liberalism’: a global project that is prompted by a institutional framework and with organizations that come from the Bretton Woods agreement and serve as catalysts of the US hegemony. The OECD

Colombia and OECD    571 first emerged in 1948 and it was called then Organization for European Economic Cooperation (OEEC). Its goal was to implement the Marshall Plan, in the words of its ideologist, George Marshall, the main idea was to establish an agreement among European countries regarding the situation and the role that each country would play to properly carry out any initiative that might be undertaken by the government of the United States (OECD 2019). Thus, the OEEC originates in the Bretton Woods agreements to establish a US hegemony in Europe to reactivate the market in a war-​ razed continent. With this goal in mind, through the Marshall Plan, over 13,000 million dollars were invested, most of which went directly to OEEC (Toussaint 2020). Nevertheless, the OECD has historically shown a special capacity to modify its goals and adjust to an incoming world order (Table 31.3). The first stage of OECD corresponds to the consequences of both World Wars. In a postwar aftermath, Europe’s learning was that defeated nations should not be punished, instead the main focus should be the social, political, and economic reconfiguration of the continent. The Marshall Plan accomplished this through efficiently rebuilding the markets and a 35% growth in industrial production (Selva 2019). The OEEC meant to contribute to this rebuilding process and, at the same time, within a bipolar world structure, the USSR was doing something similar in Western Europe. This particular setting suggested the necessity of implementing the idea of NATO in the economic plane. In 1960, thirteen European members of NATO invited Canada and the United States to join a new organization that stopped being OEEC to become OECD (2019a). From 1961 onwards, when the creation agreement signed in December 1960 entered into force, this organization adjusted to bipolarity and articulated NATO members in a cooperative scenario to compete with their communist opponent, COMECON. This agreement outlined what would be an Atlantic imperialism. During the 1960s, two main ideas drove the OECD. First was the reproduction of the basic dyad of neoclassical thought on development: individual freedom and economic prosperity. Second was international cooperation as the basis for general welfare with, however, a ‘genuinely Keynesian vision of the economy which, consequently, gave the state an essential role in the economic and social progress’ (Nieto 2011, 49). To visualize this, the OECD had five competencies: (1) to deepen the economic expansion and world trade; (2) expand the liberalization of the movements of capital; (3) compel the states to provide information to the IO; (4) declare its sovereignty, and (5) make ‘binding decisions for all members, [ . . . ] make recommendations to them, and commit to agreements with members and non-​members’ (Vicher 2014, 119). The period 1970–​1990 was ambiguous for the OECD due to internal contradictions caused by convulsive changes in the world order. The Bretton Woods agreements were bound to fail due to the problem of convertibility of the gold standard system, added to the fact that control was exercised by a single country. The collapse of the agreements led to reformulation of the postwar accords; however, the World Bank and the IMF, far from giving up on their aims, expanded them. While the world order established in 1948 tumbled and fell, the institutional structure was strengthened and gave a qualitative leap in its functions. The settlement not only would prevent wars in

572    Brayan Camilo Rojas and Ernesto Vivares Table 31.3 Approach to Historical Changes within the OECD Period

Historic Structure Characteristics of the OECD

1948–​1960

Outcomes of WWII

(i) Created originally as OECC, an organization derived from the Bretton Woods agreements that gave way to Europe reconstruction through Marshall Plan. (ii) Considered NATO economic ‘sister’.

1960–​1970

Bipolar

(i) OECD is created under a Keynesian concept: State supports the performance of market. (ii) Neoclassic foundations: (a) enhancing individual freedom leads to collective economic prosperity, and (b) international cooperation is key to economic development. It is COMECON rival. (iii) Unlike all others, this IO is a club for rich countries.

1970–​1990

Historic transition (within a bipolar frame)

( i) Promotion of state policy in a Keynesian key. (ii) Swift from a welfare state to a monetarism system articulated to the World Bank (WB) and International Monetary Fund (IMF) agendas.

1990–​2008

Unipolar

(i) Starts a global opening. Without communist adversaries, OECD function relativizes. (ii) A negotiation scheme begins with non-​member states to grant memberships. (iii) Alignment with neoliberalism: its recommendations combine the Consensus and the post-​Washington Consensus

2008–​2018

Multipolar

(i) Becomes a think tank through systematically producing reports and policies destined to members and not member states. (ii) Globalization à la carte: OECD chooses what countries to admit. (iii) Enhances a global imperialist structure through widespread institutional recommendations. (iv) Stands apart from a traditional World Bank and IMF logic. Works under imperialist policies, OECD reproduces a capitalist system through policies presented as being technical and consensual.

Source: Author’s elaboration.

Europe but also would lead the new economic model: neoliberalism, towards which the OECD slowly drifted. Until the mid-​1970s, OECD’s approaches to the State were framed within a Keynesian perspective of the economy [ . . . ] Later it moved towards neoliberalism by internalizing orthodox economic conceptions, which extended to the

Colombia and OECD    573 formulation of ‘new ideas’ to organize social relations and state activities. (Vicher 2014, 115–​116).

The OECD began to articulate, along with the World Bank and the IMF, the global financial liberalization—​as stated in its founding act—​by minimizing the participation of the state in different realms. The first reduction scenario is economy, nevertheless, this is a liberal notion that outreaches the political realm (Webb and Porter 2007, 3). The OECD’s performance after bipolarity is somehow contradictory: It articulated a monetarist agenda along with the World Bank and IMF but still under Keynesian policies promulged by the State. This is not a minor contradiction because it shows the dual role the OECD was performing in relation to the global infrastructure: (1) making decisions by consensus, not unilaterally, suppressing any idea of vetoes; and (2) expanding the idea of the market as a social model in spheres not addressed by other IOs, while promoting public policies that resolve market and state shortcomings. After the fall of communism, the role of some IOs changed. The OECD reassessed its role as a closed ‘club’ of Atlantic imperialism, since COMECON, its greatest rival, no longer existed. Following a gradual opening, its plan implied negotiating with each country an admission as symmetrical as possible. That, however, was a mistake, because even the OECD itself considered that ‘such policies assumed a “single formula” applicable to all countries, that consisted in the liberalization, macroeconomic stabilization, privatization, and creation of market institutions’ (Clifton and Díaz-​Fuentes 2011, 129). To rethink the idea of ‘club’ was essential. The historical unipolar structure demanded a wider aperture to guarantee its validity. Multipolarity, however, stresses this demand because more countries dispute world order leadership. The OECD does not abandon the idea of being an exclusive ‘club’, this IO still grants privileged access, but the exclusiveness is relative. It adapts to a new reality and recognizes that does not bring together some of the current world powers are not considered and besides, the economic and population weight of ‘richer countries’ has also shifted (Table 31.4). This, if compared to the previous arrangement, poses another contradiction: originally the OECD had brought together the richest countries but upcoming (not-​member) powers were undermining this IO leadership. The crises of the traditional powers and the emergence of new leadership in the Global South have transformed the logic of the OECD in two ways. First of all, it is not only about capitalists from the North; the new idea is to unify the bourgeoisies from the North and the Global South to reproduce the capitalist system with a ‘globalization à la carte’. The idea is to build a global administrator ‘with its ideology, strategy and institutions of collective action. [. . . . ] Its organizational focal points are the World Bank, the IMF and the OECD, [which] constitute an ideas’ framework and action guidelines for policies’ (Cox 1993, 172). Second, the logic of imposing itself through loans has concluded. The OECD uses a more subtle method for domination: institutional capitalism. What this technique consists of and how it shapes the development of countries and the promulgation of policies to reproduce OECD’s material capacities will be discussed in what follows.

574    Brayan Camilo Rojas and Ernesto Vivares Table 31.4 Evolution of OECD and BRIC in World Economy (1961–​2030) 1961

1970

1980

1990

2000

2010

2030

OECD member countries

20

Developed countries’ members

16

22

24

24

30

34

37

18

23

23

27

30

OECD

17.5

19.0

17.6

16.2

18.5

17.9

15.7

BRIC

42.7

43.2

43.5

43.3

42.8

42.3

40.0

OECD

53.2

58.5

57.2

56.4

59.0

50.5

43.2

BRIC

17.6

16.3

16.7

18.9

21.7

27.6

31.7

OECD

55.2

70.7

64.9

70.3

71.2

60.0

44.2

BRIC

6.8

5.3

5.5

5.1

6.5

14.9

37.5

OECD

59.6

69.6

69.4

72.5

73.9

75.7

47.3

BRIC

7.5

5.1

5.6

4.7

5.7

12.4

35.7

World population (percentage)

World GDP (percentage)

World exports (percentage)

World imports (percentage)

Source: Clifton y Díaz-​Fuentes (2011, 313).

Material Capacities of the OECD The aim of the OECD is to reproduce certain material capacities that contribute to maintaining the hegemonic world order. For Cox (1993, 142), the material capacities are ‘productive and destructive potentials. In their dynamic form, they exist as technological and organizational capacities, and in their accumulated forms as natural resources with technology that can be transformed, [ . . . ] and the wealth which can command these’. In this context, OECD capacities orbit five main fields: (1) financial system, (2) political economy, (3) technology, (4) globalization, and (5) war. Each field is related with a key element of world order and the OECD has accumulated capacities in each of them (Table 31.5). This section illustrates what those capacities are, their concrete relationship to the capitalist system and the social contradiction that has inflicted upon the world.

Neoliberal Globalization of the Financial Speculative System Out of one hundred banks with the largest number of shares and market capitalization, sixty are based in sixteen OECD countries. The first Colombian bank to appear in this list

Colombia and OECD    575 Table 31.5 OECD’s Material Capacities Main Element of World Order

Material Capacities

Financial system

Globalization of neoliberal financial speculative system

Out of 100 banks with the largest number of shares and market capitalization in the world, 60 are based in 16 OECD countries (Brand Finance 2021).

Political economy

Neoliberalism current IGP per capita OECD vs world, year 2020: 37.241 vs. 10.565 stage of capitalist USD (World Bank 2021). This asymmetry derives from development an uneven distribution of work internationally. OECD represents the 50.5% world IGP, 60% of exports and 65.7% of imports (Clifton and Díaz-​Fuentes 2011, 313).

Technology

Tecno-​economic cybernetic paradigm

Global Innovation Index: out of 40 countries with the best indicators of Science, Technology, and Innovation (STI), 30 are OECD members (INSEAD and WIPO 2020, 33).

Globalization

Space dimension of capitalism

Global Connectivity Index: of the 50 more globalized countries, 34 are OECD members (DHL 2020, 47).

War

Military imperialism

Of the 40 most powerful armies in the world, 22 are OECD members (GFP 2020).

Field

Source: Author’s elaboration.

is ranked 146; additionally, Colombia has five important firms among the 500 most important banks in the world (Brand Finance 2021). It is not a minor issue because one of the main points into Colombia’s admittance to OECD is access to preferential financing, both from banks and private investors that have the consent of risk assessment firms. Financial capital has, nevertheless, played a key role in capitalism. According to Ianni (1996, 23), the integration of a world economy occurs through greater interdependence of two components: ‘a swift technological change and a growing international financial integration’. These two components behave in a complementary way because waves of technological development are triggered by highly volatile financial investment, while national productive capital behaves more conservatively and requires state intervention (Pérez 2009, 11–​21). The latter has given way in recent decades in the face of a global financial capital increasingly relevant for the imperialist-​capitalist system. It has resulted in frequent crisis events due to the financialization of the global economy, and this is what Strange called ‘casino capitalism’ (1996), that after the loss of all kind of checks and controls during the ’80s was ‘crazy money’.

Neoliberalism: Current Stage of Capitalist Development Neoliberalism first appears, in the theoretical realm, with the ‘Mont-​Pelerin Society’ and, in practice, from 1973 onwards with the military dictatorships in the Southern Cone.

576    Brayan Camilo Rojas and Ernesto Vivares Table 31.6 Complementarity between the Consensus and the Post-​Washington Consensus Original Washington Consensus

New Washington Consensus The original list plus:

Fiscal Deficit

Public Law Reform

Public Spending Re-​Orientation

New Institutions

Tax Reform

Anti-​Corruption

Financial Liberalization

Labour Market Flexibilization

Competitive Exchange Rates

OMC agreement

Free Trade

International Financial Standards

Open Capital Account

Prudent Open Capital Accounts

Privatization

Exchange Rate not regulated

Deregulation

Social Security Networks

Private property

Poverty Reduction

Source: Martínez and Soto (2012, 58).

Strategic capitalist programmes were executed by short-​term policies consigned during the Consensuses: Washington (Williamson 1990), Post-​Washington (Bustelo 2003), and Beijing. These agreements although different were complementary (Table 31.6). The first Consensus mistakenly tried to apply the same policies to every country, which brought political and economic unrest, led to reshape the scheme and to reforms that complemented and correct this mistake. The post-​Consensus meant to articulate ‘second-​generation reforms of neoliberalism’. This is a key differentiation inasmuch as the recommendations from the World Bank and the IMF leaned towards the Consensus. On the other hand, the OECD, without renouncing to the original decalogue, focuses on the post-​Consensus and plays a conciliatory role, assumes some anti-​hegemonic ideas, and proposes policies that appear to be socially advanced.

Tecno-​Economic Cybernetic Paradigm The Global Innovation Index is a ‘thorough quantitative instrument that helps decision makers to find ways to stimulate the innovation that triggers human and economic development’ (WIPO 2019). This index exhaustively analyses how institutions, human capital, research, infrastructure, and market interact to strengthen technological innovation in the world. In 2020, out of forty of the best qualified countries only ten did not belong to the OECD (INSEAD and WIPO 2020). In comparing Colombia with Switzerland, the country with the best indicators in the world and a member of the

Colombia and OECD    577 OECD, the asymmetry is outstanding: out of 100 points the European country scores 66.08 while the Latin American scores 33.84, in 68th position (GII 2020, 33). Generally speaking, technology has played a central role in capitalism. As it has proven to be a system capable of continually changing over productive forces. An example of this is the five technological revolutions in the past 230 years (Pérez 2009, 15). Nevertheless, this development has been contradictory between the developed North and the Global South, while the first progressed technologically the second specialized in providing commodities (Svampa 2013). Milanovic would assert that we are in the presence of technological development that is a socially regressive or irrelevant innovation that benefits the well-​off sectors at the expense of the growing unmet needs of the widespread population (Dabat, Hernández y Vega 2015).

Space Dimension of Capitalism The Global Connectivity Index is a ‘detailed analysis of capitalism assessed by international flows of trade, information and people’ (DHL 2020, 10). According to this index, out of the fifty more globalized countries, thirty-​four are OECD members. Netherlands, with 91 points, has the highest rate of global relations, while Colombia has less than 87 (DHL 2020, 47). Globalization is a by-​product of the historical development of capitalism. Several authors place its origin in the fifteenth and sixteenth centuries; from that moment on, capitalism expanded throughout the world. Technology, today, gives capitalism two of its main characteristics: instantaneity, which means immediate movement in any place, and simultaneity that conceives movement across any territory (Scholte 2007, 30). However, contradictions define this dynamic. One contradiction is the tension between global and local, evident in the liberalization of capitals and money against the nationalization of work and politics. Another more complex contradiction is the two faces of globalization, often anchored to imperialism, looting, war, and lack of progress for most of the world. The first face is ‘benign, based in voluntary exchanges and free movement of people, capital, goods and ideas; the other face is based on coercion and brute force’ (Milanovic 2003, 5).

Military Imperialism The main role on this matter goes to NATO, the OECD’s military counterpart and an organization that shares members with the former. It should be considered that NATO has twenty-​two of the forty most powerful armies in the world (GFP 2020) that have actively participated in recent wars. Of forty-​eight countries that participated in 2001’s invasion of Afghanistan, thirty-​two were OECD members (ISAF 2012). The same can be said of Iraq’s invasion in 2003, of forty-​eight participating countries (White House

578    Brayan Camilo Rojas and Ernesto Vivares 2003) twenty-​three were OECD members. In 2011 invasion to Libya participated fourteen countries and only Qatar and United Arab Emirates were not OECD members. As with the other factors, war has been a constant trade of capitalism. From Colonial times to twentieth-​century imperialism and the currently discussed the current accumulation by dispossession, the idea of liberal world order as an ongoing consensus is a myth: ‘from the colonial period to the post–​Cold War era, the liberal order has been imposed through coercion: economic, political and military’ (Acharya 2014, 16). Contemporary imperialism, led unilaterally by the United States between 1992 and 2008, it has played a central role in the asymmetries between North and South: ‘looting of natural resources and degradation of the environment; developed countries adopting protectionist measures that harm primary exports from peripheral countries; setting unequal terms of trade; punitive military operations against defiant governments’ (Vilas 1996, 8). In conclusion, OECD has material capabilities in five main realms, that are the core pillars of world order: the financial system, the political economy, technology, globalization, and war. Constant and contradictory interaction within each of these fields are issues that the OECD prioritizes in its public policy recommendations. Consequently, it is reasonable to analyse what kind of recommendations the OECD gave to Colombia and how the IO bespoke these recommendations to shape the technical and political arguments. The next section analyses OECD’s public policy recommendations and the way they reproduce the material capacities of the organization.

Ideas: Norms Built by the OECD There are three historic particularities in the OECD. First, it represents a discursive and cognitive way of reproducing norms of behaviour. It is the centrepiece of theoretical and ideological production of imperialism. Its political role has been underrated, by characterizing it simply as a ‘think tank’, setting aside the fact that ‘knowledge produced in their networks has not only constituted a sum of data but also sets a guideline towards future decisions in the reproduction and development of practices that shape and increasingly harmonize the political and economic system’ (Vicher 2014, 126). Second, as an IO it appears to be self-​conditioning: It does not impose arbitrarily recommendations to its members. However, the socialization and evaluation of experts lead to a process of homogenization imposed by the most powerful countries. It develops ‘inquisitive and meditative modes of government, under a strong neoliberal perspective’ (Vicher 2014, 123). Third, its role as a builder of norms has a triple scope. 1. Investigations with very high qualifications that provide legitimacy to its recommendations. 2. As it was the case after World War II, it is a place of convergence where world elites agree on policies.

Colombia and OECD    579 COUNCIL Supervision Strategic Direction Country members and European Commision make decisions by consensus

COMMITTEE Implementation Country members and others country observers invitted and observers working on specific issues

SECRETARIAT Analysis and Proposals General Secretary, Managements and others

Figure 31.1  OECD organization chart. Source: Congress of Peru (2017).

3. As an entity that builds, reviews and monitors the application of its policies it can be asserted that the Committees, Council, and Secretary carry out, respectively, each of the previous tasks (see Figure 31.1). The OECD shares with other IOs, such as the World Bank or the IMF, the institutional reproduction of imperialism. It does this through the systematic construction of norms, practices, and ideas that reflect the hegemonic project. If compared to other IOs whose mechanisms of policy financing are obviously unsympathetic, the OECD’s means are ‘softer’ although constant (Nieto 2011, 44; Vicher 2014, 115); but, in the end, they reproduce the hegemonic project and its contradictions.

A Case Study: Signposting Norms for Colombia 2010–​2018 OECD has produced a vast bibliography about Colombia: 1,711 public reports on 17 themes (OECD 2021). The first report dates back to 1995, and the number of documents about the country was not significant until 2008. In 2009, there is an increase, from 2013 onwards, when Colombia applied for membership, the reports grew exponentially, reaching a peak of 284 in 2015. This data represents a growing OECD interest in Colombia. What is important is to explain how these reports include recommendations by which OECD reproduces its material capacities and configures technically and politically Colombia’s national development. As shown in the previous section, world order is based on five major areas in which the OECD develops its material

580    Brayan Camilo Rojas and Ernesto Vivares capabilities. This section analyses two of them: public policy recommendations suggested by the OECD analyses in the financial system and the political-​economy realms. The areas that more clearly show this argument are the tax system and education. Taxation policies demonstrate how material capacities reproduce through the OECD’s recommendations and, on the other hand, education illustrates the prevalence of the political economy2. The area that is signalled the most in OECD reports is the economy, with 555 documents while development issues are in the seventh position. Tax policy is present in both sectors thus, it is important to understand the reproduction of the financial system. The area of education and STI consist of 153 reports and show how the reproduction of political economy occurred. In summary, the OECD has produced a considerable number of reports on Colombia, with the aim of technically and politically delimiting its development. Fourteen reports on taxes, finances, and investments gave clues to discuss the material capacity of the financial system. To assess the material capacity of the political economy, recommendations in twelve reports on education and STI have been taken into account. Tables 31.7 and 31.8 summarize this information. They show how OECD recommendations between 2010 and 2018 were put into place to reproduce material capacities that the Colombian government implemented using public policy. Tax and educational policy in Colombia have not only been influenced by domestic factors or forces but also compelled by OECD. The tax policy within period the study reveals three trends: (1) an increase in indirect taxes, the most inequitable, with the expansion of regressive quotas such as the Value Added Tax (VAT) and the Financial Transaction Tax (FTT); (2) lower taxes on the wealthiest companies, where multiple benefits to the financial sector stand out. However, reinvestment through job creation is not guaranteed but rather accumulation and growth of the profit rate are encouraged; and, (3) an increase in the universe of individuals who must pay higher taxes, strengthening the bankarization of the economy for the payment of income taxes. On the other hand, educational policy focuses on three major trends: (1) the strengthening of Colombia as a supplier of commodities, guaranteeing the transfer of value to the Global North with raw materials and environmental goods; (2) the decrease of public investment in higher education, in benefit of the delivery of loans through banks aimed at private institutions; and, (3) the increase in inequality in terms of access to and completion of education, standardizing knowledge for those who receive lower quality education. It cannot be overlooked that these OECD recommendations have also brought important tax and social advances in the tax and educational policy in Colombia (Rojas 2020, 121–​130), unveiling the double character of its recommendations that combine first and second Washington Consensus. However, this case study allows to establish that the OECD has generated an extensive transformation of public education and tax policies, at least, during the last decade. This may suggest that peripheral and historically dependent states assume the hegemonic project without hesitation and incorporate, with minor comments, the conditions of the IOs. Regarding the policies, the

Table 31.7 OECD’s Recommendations to Colombia that Reproduce the Financial System within Tax Policya Area

OECD Orientation

Colombian Legislation

Consequences trend

Direct Foreign Investment Opening

Colombia meets the normative OECD (2012, 10). One of the most attractive countries in Latin America (OECD 2015, 17; OECD 2012, 9). Must expand international trade (OECD 2018, 167).

Decree 390 of 2016 (New Customs), Statute by Resolution No. 00041 of 2016.

Regulatory restrictions index on FDI with a limit de 0.05, one of the lowest in the world (Ministry of Commerce, Industry and Tourism 2018). One of 25 main destinations of FDI globally (Procolombia 2018).

Financial Liberation

Support the tax exemption regime for the financial sector (OECD 2016, 5; OECD 2015, 17). Colombia allows ‘privatization to be open without limitations for foreign investors’ (OECD 2012, 9).

Subscription of OECD’s Declaration of International Investment and Multinational Companies and law 1950 of 2019.

Growth of the financial sector in relation to GDP. In 2010 was 19%. Became the leading productive sector in Colombia with 21% in 2018 (Clavijo 2018). In 2021, the tertiary sector, to which financial capital belongs, will account for 69.5% of GDP (Ministry of Commerce, Industry and Tourism 2021).

Tax Reform

Any kind of social policy can only be financed through tax reforms (OECD 2013, 22). Implies ‘structural tax reform’ every two years (OECD 2015a, 64; OECD 2017, 12).

Laws 1607 de 2012, 1819 de 2016, 1943 de 2018, 1694 de 2013, 1739 de 2014, 1429 y 1430 de 2010; decree law 4825 de 2010.

These reforms created indirect taxes and exceptions for certain companies. Eliminated the wealth tax. Financial tax, that was due to be suppressed, was prolonged (Jaimes y Fuentes 2017, 4).

Deregulation

Eliminate tax burdens on companies (OECD 2017, 7; OECD 2015b, 4). Lower taxes on rent, net worth (OECD 2015b, 22). Reduce tax regulations (OECD 2015b, 29).

Law 1429 de 2010, art. 4–​5; 1430 de 2010, art. 1, paragraph 3.; 1607 de 2012, art. 20 y 25; 1607 de 2012, art. 9; 1819 de 2016, art. 100; 1819 de 2016, art. 9, 16, 123, 144 y 185; 1819 de 2016.

Large companies are exempted from income tax through legal stability contracts for large national and international banks. Reduction of income tax from 42% to 33% for any type of national and international company. Reduction of income tax on national companies by 25%.

Fiscal Discipline

The fiscal distribution framework will be the fiscal rule (OECD 2017, 24; 2015b, 4; 21). Reduce investment and prioritize debt repayment (OECD 2017, 21).

Legislative act 03 of 2011, law 1473 of 2011 and 1695 de 2013.

‘A restrictive fiscal policy: increased taxes, permanent spending cuts [ . . . ] to reduce the deficit and control the level of indebtedness’ (Sanoja 2017, 21).

Reorientation of public spending

Targeting programs without universality (OECD 2013, 22).

Art. 361 of law 1819 of 2016 and Decree 320 of Ministry of Hacienda.

Cuts on social investment: from 17,2% of the nation’s General Budget in 2010 to 16,6% in 2018. Increase of operative costs from 56,2% in 2010 to 62,9% in 2018 (Rojas 2020, 166).

Source: Author’s elaboration. a

This topic also strengthens the material capabilities of the OECD in the area of globalization setting imperative of economic openness in countries who seek a membership. Colombia, in our case, is driven for international commitments to foment trade, demanding to it increase more results in globalization.

Table 31.8 OECD’s Recommendations to Colombia That Reproduce Neoliberalism within Education Policya Area

OECD Orientation

Colombian Legislation

Consequences

Fiscal Discipline

(I) Do not increase resources for public education (OECD 2018a, 29–​31; 2016a, 260). (II) Investment subject to the ‘Fiscal Rule’ (OECD 2018a, 1).

Art. 361from law 1819 of 2016 and Decree 1790 de 2012

Prioritization of operating expenses and debt above social investment (education also).

Reorientation of public spending

( I) To extend sales of services (OECD 2018a, 130–​136). (II) Reduction of wages for teachers (OECD 2018a, 3). (III) Resource targeting (2016a, 127–​128). Specially through ICETEX (OECD 2012a, 335–​337).

CONFISb (20/​10/​2016). CONPES 3880 y 3914

De-​budgeting public university, sale of the extension, parallel payrolls and greater resources for private sectors.

Tax Reform

(I) Increase of investment subject to further taxation (OECD 2018b, 28–​29; 2016a, 62).

Law 1607 de 2012, 1819 de 2016 y 1943 de 2018.

More taxes justified arguing additional resources for education.

Privatization

(I) Focussed on encouraging ‘public financing of private activities’ (OECD 2014, 26). (II) Strengthen Public–​Private Partnerships (APP) (OECD 2018a, 198–​209). (III) Increase private resources (OECD 2016a, 129).

Decree 1075 of 2015, CONPES 3914 de 2018 and framework agreement N° 771 of 2014 subscribed between Ministry of Education and ICETEX.

Increase of private enrolment to the disadvantage of public universities. OECD’s number for private enrolment is 30% and is considered ‘good practice’ in education (OECD 2016a, 129). Colombia, however, received the recommendation of increasing private resources.

Standardization

(I) Build single education frameworks (OECD 2016a, Agreement (Acuerdo por lo 204; 206; 2014, 30; 2012a, 84). Superior) 2034 and law 1753 (II) Knowledge as merchandise, adjusted to logics of de 2015. markets (OECD 2014a, 1). (III) Urged to ‘standardize downwards’ curriculums (OECD 2012a, 77–​78; 334; 346).

Colombia plays the role of a supplier of raw materials in the international distribution of workc. OECD’s recommendations reproduce inequalities through educational policy. The policy that incorporates the most recommendations is Acuerdo por lo Superior (CESU 2014).

Source: Author’s elaboration. aThis information is based on twelve OECD reports on education and STI between 2012 and 2018. For further details on these reports, see Rojas (2020, 68–​70; 158–​163). bSpanish acronyms, CONFIS: Consejo Superior de Política Fiscal. CONPES: Consejo Nacional de Política Económica y Social. ICETEX: Instituto Colombiano de Crédito

Educativo y Estudios Técnicos en el Exterior. CESU: Consejo Nacional de Educación Superior. cThe OECD’s recommendations do not aim to overcome international division of labour, instead, the OECD urges Colombia to pass from a postindustrial to an

informational capitalism strengthening its technological material capabilities.

Colombia and OECD:    583 government made small considerations, however, acknowledged the world order that derives from the OECD in multiple areas of public policies. It can argue that economic and political elites presented the state as a uniform body in order to comply with the roadmap conditions and join the OECD. The Colombian government directed most of its domestic policy and implemented measures on all kinds of issues to fulfil the conditionalities that OECD imposed through its committees. Based on the findings, it can be pointed out that the OECD has the role of building ideas within the world order, with the aim of reproducing the bases of this order. This idea is shared by several authors who describe the IO as a foundation of global hegemony. What specific role the OECD does play? This IO has material capabilities in five large fields (Table 31.5) and the objective of its recommendations is to reproduce these capabilities. This country welcomes the whole of OECD guidelines and states that is an arguably consensual mechanism the one used by this OI to technically and politically demarcate the development of a country towards a worthy end: membership. In 2013, Colombia received guidelines to join the OECD: a long list of public policy modifications that the country must implement (OECD 2013a). By accepting these guidelines, Colombia shows itself as imposing ‘good practices for development’, minimizing that they are recommendations with a specific ideological orientation that reproduce the material capacities of the OECD (Tables 31.7 and 31.8), which technically shape and politically frame the national development. In other words, they are far from being simple and aseptic, neutral, and purely technical recommendations.

Conclusions The role of the OECD is a historical product resulting from its adaptations to the world order. It has adapted to the prevailing order since its emergence from 1961, going through three major stages. Within the bipolar phase the Atlantic imperialism—​the alliance of the northern part of America and Europe—​set the organization as the economic counterpart of NATO. Its central objective will be to promote financial liberalization, trade openness, and economic growth as a project, but with Keynesian policies. Under a unipolar historical structure, the OECD went thorough complex contradic­tions imposed by the struggling world order. The fall of the Bretton Woods Accords, the oil crisis, the emergence of neoliberalism, the fall of the USSR, and the fifth industrial revolution, among other factors, delimited the changes in the OECD. The organization’s turn at the end of the 1970s, from Keynesianism to monetarism, would produce in 1990 the idea of opening the ‘club’ with a complex contradiction: the policies were more orthodox and neoliberalism-​based but it implemented some social reforms that had drifted apart from the World Bank and IMF notions. This is the historical framework that leads the OECD to establish itself as the basis of a global

584    Brayan Camilo Rojas and Ernesto Vivares agreement of the capitalist class, to build an administrative sector that articulates the world elites and overcomes the, once irremediable, tensions between the West–​East and North-​South dyads. The third stage is characterized by the change in the world order imposed by multipolarity, the economic crisis of 2008, the emergence of new powers and the erosion of the traditional methods of imposing policies by means of accrediting loans as implemented by the World Bank and the IMF. Here the idea of institutional imperialism arises: the same structural model is shared, but the forms are not imposing and dominant. The OECD has a task: to convince on its own terms and through the construction of legitimate and technically sound standards. As they are highly developed techniques, its norms are presented as moral imperatives legitimated at a global level. It means that its technical-​political forms is, or appears to be, subtle, consensual, and an alternative to market and state failures. This less conflictive, more hegemonic role in Gramscian logic represents a discursive and cognitive way of reproducing the material capacities of capitalism through the establishment of norms. Summarizing, the OECD plays a relevant role in the world order since it has become a scenario for agreement between global elites. It is a highly technical institution that homogenizes domestic policies through consensus and the application of reforms that reproduce material capacities of OECD state members countries, according with the capitalist system dynamics. This evidence given; it is likely that realism might be wrong. The idea of relativity is not accurate, OECD was able to declare itself sovereign (Supplementary Protocols I and II) from the time of its foundation. In particular, it is capable of forcing member and non-​member states to modify their behaviour based on the information they provide. Neoliberalism might also be wrong: its idea of the neutrality of IOs is not exact because the OECD has a clear commitment to reproducing the logic of the capitalist system. In particular, with financial markets, trade, and economic growth as pillars of the global development model. There is no doubt that the OECD, since its emergence, had the objective of functioning as a global institution that articulated the ideas of (financial) liberalization, (commercial) opening, and globalization (IO over the states). These reproduce the material capacities of capitalism in the states. Thus, Robert Cox’s theory of historical structures. Even critical readings that simplistically point to the OECD as a capitalist instrument are also wrong. This IO, unlike many others, uses counterhegemonic politics and ideas to reproduce the world order. In other words, they propose palliative solutions to complex social problems, which strengthens their halo of legitimacy in public opinion. Consequently, describing it as an imperialist instrument without examining its recommendations makes it hard to understand capitalism as the complex organism that it is. The institutional architecture of the world order has the task of reproducing capitalism, in a complementary but not homogeneous way: Gramsci’s classic idea about the heterogeneous character of the dominant bloc. Of course, the OECD has a central role in the reproduction of imperialism through the construction of ideas; this institutional

Colombia and OECD    585 role, however, is completed in a more complex way. This chapter proposes different approaches to understand this misperception. Regarding the case study and in conclusion, the ideas conceived for Colombia lay within three main fields. The first is the Washington Consensus, understood as the framework for more monetarist proposals and clearly directed at the economic structure of the state. This could suggest that in economic matters the OECD is concerned with determining domestic policy —​not just suggesting it—​which is why this IO is as orthodox on the subject as the World Bank or the IMF. The second is the post-​Washington Consensus, understood as the framework of proposals close to Keynesian and anchored to the political, institutional, and social superstructure of the state. The OECD may issue recommendations opposed to the World Bank and IMF’s policies and with a noticeable social character as those of the UN or Food and Agriculture Organization -​ FAO. Here a Marxist method of analysis allows for a better understanding: this IO, as a whole, reproduces capitalism; it is a contemporary global institutional superstructure. However, the OECD has contradictions with others such as the World Bank or the IMF, as it is capable of promoting social reforms contrary to the recommendations of other IOs, strengthening its global legitimacy. Third, public policies in Colombia have been influenced strongly by the OECD membership. Consequently, positive and negative results should be assessed in an equipollent manner, within a binary relation. Finally, the OECD has recently outlined a ‘Marshall Plan’ for the entire world in the post-​pandemic. This program considers progressive social measures such as universal health, policies to combat unemployment, and temporary basic income (2020). At the same time, however, it defends the reduction of taxes on large capital and, in the case of Colombia, the application of a decisive tax reform that would deepen inequality (Semana 2020). Given the imminent fall of the world order led by Atlantic imperialism and the shift towards the Pacific axis of leadership in the world order, will it be possible for us to move from the Washington Consensus to the OECD Consensus? A new consensus with interventionist policies reproducing the asymmetries of capitalism and boosting imperialism from the institutional infrastructure?

Notes 1. This paper is based on Camilo Rojas’s master’s dissertation carried out at FLACSO (Latin American Faculty of Social Sciences) in Ecuador. 2. The triangulation among OECD’s policy recommendations, government actions, and material capabilities makes a mere conceptual division of these concepts, as they in fact overlap. For instance, OECD’s policy advice upon the national financial system is deeply linked to the strengthening of globalization, in particular, with the promotion of foreign direct investment. While, in turn, the OECD’s policy recommendations on education are anchored to technological development, fomenting the expansion of the component of sciences, technology, and innovation in the country. For a detailed analysis of these recommendations, see Rojas (2020, 70–​72, 118–​139).

586    Brayan Camilo Rojas and Ernesto Vivares

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Chapter 32

Eastern Eu rope ’ s P ost-​T ransi t i ona l Integration i nto Western Ec onomi c Rel ations th rou g h So cial L a b ou r Rec o gni t i on Ivan Rubinić and Maks Tajnikar

Introduction In the 1990s, lured by Western success purportedly driven by the triumph of free-​market fundamentalism, the eastern European countries radically transformed the existing societal relations (Hare and Turley 2019). These were the countries emerging from the collapse of the Soviet Union, the dissolution of the Warsaw Pact’s military alliance, and the breakdown of Yugoslavia (see Gross and Steinherr 2004; Gevorkyan 2018). Although historically developed through distinct pathways, their fundamental, cross-​country societal changes are associated with common features encompassing political, military, and economic alterations. Through the political transformation, the newly founded countries established constitutional orders and the rule of law, thus guaranteeing political freedoms and enabling the formation of democratic societies. Finally, the economic autonomy introduced the possibility of independent development and brought about the transition to the economic system built upon private property and the market economy.

590    Ivan Rubinić and Maks Tajnikar These developments have profoundly affected the global course of events, with their most crucial segment being the economic component, generally referred to as ‘the transition’. Despite different starting points and cross-​country eclecticism regarding the reforms leading to departure from command towards the market economy (Godoy and Stiglitz 2007), the transition, possibly the single greatest social experiment of modern times, was rooted in establishing private property structure and supporting the market-​ oriented institutional setting. With corporate culture and profit motive at the forefront of the newly instituted socioeconomic regime, the latter was immediately followed by the formation of the internal markets and has led to the gradual integration of the transition economies into international trade arrangements, thus exposing previously self-​ sufficient production factors to foreign competition with long-​standing rivals. It is precisely the latter processes that constitute this study’s prime concern. In this context, the present exposition engages into critical and in-​depth assessments of cross-​ country dynamics stemming from the opening and liberalization of trade between the eastern and western European nation states. Moreover, given that it covers the period from 1995 to 2017, the current investigation includes complex and multilayered phenomena comprising several parallel and reinforcing processes (transition, EU integration, and globalization) which have, through the east–​west trading relations and non-​equivalent labour exchange, exerted and continue to exert the dependency and economic inequalities between the two European blocs. That having been said, the European east–​west division is classified through the geopolitical prism, as a schism between the traditionally capitalist (western) countries and (eastern) transitional countries marked with the legacy of a planned economy. In reference to the selected central and eastern Europe and former Soviet Union countries, terms ‘eastern’ and ‘transitional’ are used interchangeably throughout (Gevorkyan 2018). Consequently, the central tenet of this entry is that the east–​west collision produced a two-​fold and conflicting effect. The integration of eastern Europe into western European economic relations has stimulated the growth and development of the transition countries. Simultaneously, the transition brought about a skewed distribution of east–​west integrational benefits, thus demonstrating that the freedom of exchange has disguised an inherited system of dependency relations resulting in a peculiar reproduction of the core-​periphery hierarchy between post-​transition member states and the west.

Theoretical Underpinnings The theoretical justification behind the integration of eastern Europe into western economic relations is anchored to the orthodox theory of international trade (Ohlin 1933; Barro 1997) and neoclassical growth theory (Solow 1956; Baumol 1986). The former considers opening of the economy and liberalization of trade as a cross-​country positive-​sum game, while the latter holds that (due to diminishing returns on capital and

Eastern Europe’s Post-Transitional Integration    591 labour) convergence will take place. In perspective of the European east–​west schism, this entails that the growth rate of the eastern countries should be faster than that of the west, and that intra-​group real per capita income disparities should diminish over time. Even though certain aspects of these theories are empirically validated in this exposition, the models advancing this theoretical backbone are generally focusing on rudimentary macroeconomic projections (GDP growth and GDP per capita), which are oversimplifying and exhibiting biased fragments of economic reality. Measuring country performance solely through the level of real GDP per capita and the rate at which it is growing lacks systemic examination of cross-​country economic inequalities and overlooks the matter in its entirety (Stiglitz 2012; Milanović 2016). To overcome this shortcoming and to shed new light on present-​day eastern Europe’s cross-​country elusive convergence and evident divergence (e.g., Hein and Truger 2005; Mihaljek 2018; Rubinić and Tajnikar 2019b; Lapavitsas 2019), this chapter departs from the mainstream narrative by drawing from the unequal exchange and dependency theories (Emmanuel 1972). The underlying inequalities are captured through the mechanics of the geographical value transfers stemming from the unequal labour exchange (Cope 2019), which enables western countries to siphon and extort surplus value from the east. To achieve this goal, through the application of the van Schaik’s (1976) cross-​sectoral model of the productive economy to the cross-​country environment, a synthesis of the Marxist and the heterodox tradition is used (Rubinić and Tajnikar 2019a). As a result, the east–​west economic inequalities are seen as the function of labour force exploitation analytically modelled through the (market-​driven) process of the labour force recognition. The cornerstone for this analysis is the interplay between the value and price systems of the ‘physical bodies of commodities’. On one end there is the country’s new value created as the price-​ based approximation of per capita value created by the consumption of the labour force within the national production. On the other end, there is an actual GDP as the measure of the wealth captured by the country (Smith 2011), once the trade has been realized on the markets. Finally, the net outcome between these two categories points out the intriguing phenomena of the cross-​country social recognition of the used labour, defined as the unit-​level difference between GDP and the new value created (amount of labour consumed). Provided that the unit of analysis can be an individual country or cluster of countries, this indicator and its determinants are the finest quantitative benchmarks for measuring the transition’s degree of success. Accordingly, the unequal social recognition of the labour consumed provides an insightful vehicle for the study of the east–​west dynamic. Given that it can quantitatively confirm the east–​west unequal exchange and provide an argument for the claim that the gains of the west and losses of the east are dialectically related, this inequality measure is essential for the confirmation that the eastern growth is contingent upon western dominance. Such a multifaceted macroeconomic take on east–​west relations disentangles a number of crucial components omitted by mainstream adversaries and provides appropriate groundwork for the study of east–​west subordination, dependency, and unequal exchange.

592    Ivan Rubinić and Maks Tajnikar

Methodological and Data Issues Explaining whether the economic transition fostered a comparably faster growth and development and enabled the east to catch-​up with the west, and what phenomena prompted or impeded this cross-​country convergence, are the central themes of this chapter. The transitional success and integrational convergence investigation encompasses twenty-​eight countries, analysed through east–​west blocs, based on transition and a geopolitical markers as cluster criteria. The first group includes nineteen traditionally capitalist countries, referred to as west Europe (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom). The second group comprises nine countries that have experienced the transition, referred to as eastern Europe (Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia). East–​west relations are investigated through the two-​stage comparative study of economic outcomes resulting from eighteen years of transition. For this purpose, two periods are compared, frozen at a certain point in time. The initial phase with average cross-​country scores between 1995 and1999, in which the eastern countries have generally introduced the private ownership and market system, and the final phase with the average cross-​country scores between 2013 and 2017, in which a temporal gap allows the evaluation of the transition’s success and resulting east–​west relations. The current research furnishes empirical content regarding the European east–​west integrational dynamics, from which a knowledgeable audience can get insightful information and a starting point for broadening their understanding of the phenomena at play. However, this chapter does not include a systematic overview of the transition process, nor does it provide an in-​depth exposition of the methods used. For the latter purposes, a concise explanation follows. In the first part of the analysis (fourth section), the empirical assessment of the post-​transitional integration of eastern Europe into western economic relations advances the innovative model of unequal labour exchange by Rubinić and Tajnikar (2019a). This approach helps make sense of the east–​west inequalities by using the dual system and cross-​country disparities regarding social labour recognition. In the second part (fifth section), this methodology is complemented with cross-​country economic efficiency analysis, preformed through a nonparametric mathematical programming method—​data envelopment analysis, and calculated through the MaxDEA software. On a technical note, the approach used in this chapter appraises the transition process through east–​west cross-​country inequalities, where the member states are treated as if they represent the total international market. This closed economy restriction is supplemented with the assumption that the national and the international markets, regarding the law of value, operate similarly. On these grounds, the economic system produces commodities through the employment of capital and labour; both are homogeneous, competitive, and mobile. The empirical analysis implicitly assumes that all labour produces value and that the eastern countries became privately owned market economies followed by the transition.

Eastern Europe’s Post-Transitional Integration    593 Factorial income distribution is calculated by following Gollin’s (2002) approach in determining the specific factor shares, where profit income is calculated and labour income it the residual. The latter presupposes that labour income is composed of wage income and the public sector. The capital stock is estimated using the standard perpetual-​inventory method (Harberger 1978). Unless stated otherwise, all values are expressed in constant prices, by using the World Bank’s PPP spatial price deflators and currency converters to eliminate cross-​country price differences and enable international comparisons. Finally, the information on all data used is presented in the notes to the illustrations, whereas a detailed analytical exposition of the model used is found in Rubinić (2020).

Empirical Assessment of the Post-​Transitional Integration The empirical data exhibited in Table 32.1 strongly supports the claim that the transition countries, upon abandoning collective property and planned economies for private property and market economies, experienced significantly faster growth and development relative to the west. Table 32.1 The East-​West Comparative Analysis of Selected Macroeconomic Aggregates

Category

GDP

Capital Stock

GDP per Total Person Employment Employed

Capital–​ Labour

Unemployment Rate

Period 1: 1995–​1999 Western Europe

665

37,008

167

75,494

214,901

10.17%

Eastern Europe

130

2,910

46

30,912

65,393

9.91%

East–​West Ratio

0.20

0.08

0.28

0.41

0.30

0.97

Period 2: 2013–​2017 Western Europe

869

51,179

191

86,374,

275,287

9.50%

Eastern Europe

230

4,951

44

57,083

117,447

7.72%

East–​West Ratio

0.26

0.10

0.23

0.66

0.43

0.81

The Period Ratio (P2/​P1) West-​West Ratio

1.31

1.38

1.14

1.14

1.28

0.93

East-​East Ratio

1.77

1.70

0.96

1.85

1.80

0.78

Note: Values are intraperiod annual averages. GDP and capital are intragroup means, in billions of constant 2011 PPP $; Total employment is in millions of people engaged (15+​). Source: GDP: The World Bank. Total employment: PWT 9.1. Unemployment rate: (weighted average, 15+​) ILO; Capital, GDP per person employed, and capital–​labour ratio: own calculations.

594    Ivan Rubinić and Maks Tajnikar Through interperiod comparison, it becomes evident that the across-​the-​board average, east–​west GDP ratio increased in favour of the east (from 0.2 to 0.26). Equally, the average cross-​country GDP of western Europe grew at the rate of 31%, as opposed to the much higher pace of 77% recorded in eastern Europe. From the GDP’s viewpoint, the latter suggests that the transition economies have relatively outperformed the west. Arising from the productive factors’ data and irrespective of the group in question, it may be inferred that the capital availability is a predominant driver influencing economic performance. The former becomes apparent by accounting for the across-​the-​ board average capital stock increase, which was 38% in western Europe and 70% in eastern Europe. Simultaneously, total employment volume rose in western countries by 14%. In contrast, the transition economies experienced a decline, with the final workforce count reporting 96% of the initial volume. The abovementioned developments have led to the substantial elimination of the transition countries’ sizeable lag, in terms of GDP per person employed. Initially, the western countries’ GDP per person employed was 2.4 times higher. Even though eastern Europe was still falling behind in the second period, by a significantly lower factor of 1.5, it had improved its relative standing. Moreover, the eighteen-​year interperiod comparison indicates that the GDP per person employed in eastern countries increased by 85% instead of western countries’ 14%. This growing GDP per person employed movement was reflected through the GDP per capita. According to the World Bank official data concerning the investigation period, western countries’ across-​the-​board average GDP per capita increased by 65%. Relatedly, transition economies experienced a remarkable boost of 251%. In the first period, the eastern countries’ GDP per capita reached only 15% of the western counterparts’ value, only to experience a two-​fold increase, while ending the second period at 33%. Concurrently, it bears mentioning that a comparable pattern is registered when it comes to the unemployment rate. In line with this, the weighted across-​the-​ board average unemployment rate of western countries declined from 10.17% to 9.5%, while eastern countries exhibited a steeper decline from 9.91% to 7.72%. Since the period of transition, the eastern countries’ economic growth has considerably outpaced that of the west. The basic macroeconomic indicators are pointing out the peculiarities in the observed trends, even at first glance. In post-​transition eastern Europe, rapid economic growth was triggered via a substantial increase in the disposable capital stock. This growth was so high that it had enabled comparably faster GDP growth relative to the west, irrespective of the concurrent decline in the eastern countries’ labour force volume. From the standpoint of technical composition, the latter was mirrored through the immediate increase in the transition countries’ capital–​labour ratio. This has brought about the growth of the averaged interperiod, capital–​labour ratio of 28% and 80%, for the western and eastern clusters, respectively. However, regardless of the moderate increase, the western cluster reported an increase in both production factors, meaning that the capital–​labour ratio could not increase to the same extent as in the transition economies. Therefore, the assertion appears straightforward that the transition countries’ growth was mainly driven through the surge in capital intensity. In the same vein, this

Eastern Europe’s Post-Transitional Integration    595 developmental feature was reflected through the GDP per person employed. As a consequence, even though they remain far-​off, the eastern group of countries is slowly catching up and has reached approximately 66% of the western GDP per person employed. Considering that this indicator measured 41% eighteen years ago, assuming linear and persisting GDP per person employed trends, the east–​west gap could entirely disappear after twenty years. In addition, it must be taken into account that the former dynamics were under the influence of the drop in the transition countries’ unemployment rate, which has had a favourable effect on the GDP per capita. On these grounds, the cross-​country variations in the GDP per person employed are subsequently explained through the use of three distinct determinants: disequilibrium prices, capital stock availability, and economic efficiency (Rubinić and Tajnikar 2019a, 2019b, 2021). An additional benefit of the aforementioned factors is that they possess invaluable explanatory power when used in studying the east–​west economic cleavage. In relation to this, as will be shown in the remainder of this exposition and according to Mihaljek (2018), the choice of the benchmark is a central component in the assessment of east–​west convergence.

The East–​West Schism Determinants: The Capital Stock Availability The finding that transition countries’ growth has exceeded that of western countries, due to the rapid increase of the capital stock availability, points out on the nexus among the GDP per person employed, capital–​labour ratios, and increasing profits (seen as the pull force regarding capital mobility). If it is assumed that the return per unit of capital (profit rate) remained unchanged, the vast increase in the transition countries’ capital stock must be accompanied by the corresponding profit increase. Since profits are a constituent part of the national income, by definition, their increase implied the rise of GDP. As can be concluded from the following table, the mentioned developments took place within the transition countries parallel to the labour force reduction. In contrast with the previously hypothesized effects and in addition to the capital–​ labour ratios, the profit income’s formation was heavily influenced by alterations in return on capital. Derived from Table 32.2, it is visible that the western European profit rates dropped across two periods. Conversely, the transition economies exhibited a 16% interperiod profit rate increase. In other words, the comparably higher growth of GDP in transition countries was the outcome of an increase in the capital stock availability and return to capital. The data shows the capital’s gravity regarding the European aggregate cross-​country distribution of income. From this point of view, two essential distributional comparisons can be drawn. The first concerns cross-​country GDP distribution following the two-​ factor approach, that is, assuming the GDP distribution among countries in accordance with the capital and labour consumption. The second deals with the national income’s

596    Ivan Rubinić and Maks Tajnikar Table 32.2 The East-​West Macroeconomic Indices and the New Value Created

Category

GDP

New Value Created (NV)

Capital–​ Labour Ratio

Profit Rate

GDP-​NV Ratio

GDP-​NV

Period 1: 1995–​1999 Western Europe

665

580

214,901

11.9%

1.15

1,615

Eastern Europe

130

277

65,393

18.1%

0.47

–​1,615

East–​West Ratio

0.20

0.48

0.30

1.52

0.41

–​

Period 2: 2013–​2017 Western Europe

869

813

275,287

11.5%

1.07

1,053

Eastern Europe

230

325

117,447

21.0%

0.71

–​1,053

East–​West Ratio

0.26

0.40

0.43

1.83

0.66

–​

The Period Ratio (P2/​P1) West-​West Ratio

1.31

1.40

1.28

0.96

–​

0.65

East-​East Ratio

1.77

1.18

1.80

1.16

–​

0.65

Note: Values are intragroup, intraperiod annual averages. GDP and NV in billions of constant 2011 PPP $. Capital–​labour ratios are in constant 2011 PPP $. Profit rate is intragroup weighed mean. Source: GDP: The World Bank. The remaining variables: own calculations.

cross-​country distribution addressed only through labour. Regarding the latter, it is defined that the aggregate national income distribution, stemming solely from labour consumption within the individual country’s production process, is the new value created. In this regard, the relative position of the transition countries was significantly improved. In the initial period, only 47% of the labour consumed (measured via total persons engaged) in the transition economies was recognized in the GDP of the same group. In the final period, the eastern cluster’s share of the socially recognized labour was 71%. Regardless of improvement, in terms of the social recognition of labour consumed in the GDP, the eastern countries are still disadvantaged relative to the west. In comparison, during the first period, the western countries have received 115% of their new value created in their GDPs, and they have additionally received more gains than the labour consumed in the second period (107% of new value created). Because of this, in the period between 1995 and 1999, the transition countries lost approximately 1,615 billion constant 2011 PPP $ (annual average) due to the lower capital–​labour ratio and despite the relatively higher capital returns. This part of the new value created constitutes geographical value transfers benefitting the western cluster of countries who, through unequal labour exchange, appropriate 1,615 billion constant 2011 PPP $ in excess of the value of the labour they have consumed in their production process. In the second period (2013–​2017) a certain reduction took place and the eastern group lost about 1,053 billion constant 2011 PPP $ (annual average), which was appropriated by the west. Accordingly, the European GDP redistribution,

Eastern Europe’s Post-Transitional Integration    597 favouring the western countries due to capital intensity, remains a critical source of the east-​west divide. In light of this, due to higher capital intensity, the western countries appropriate a part of the value produced by the eastern countries. This difference is reflected through the positive western countries’ GDP-​to-​new-​value-​created ratio and results in considerably smaller GDP than the value created in the eastern group. It is true, however, that the extent of this asymmetrical redistribution has decreased over the analysed period. Nevertheless, the transition countries still suffer from the unequal exchange and do not receive the entire social recognition of the labour consumed.

The East–​West Schism Determinants: The Disequilibrium Prices The second benchmark for the assessment of east–​west relations is the disequilibrium prices. Their influence is analysed through a comparison between actual GDP and equilibrium GDP, where equilibrium GDP is received by imputing average cross-​country prices of capital and labour. In doing so, it is implicitly assumed that there exists a long-​ run steady state in which all factors of production receive equilibrium prices. In such a state, the incentive for cross-​country factor reallocation disappears, enabling the formation of equilibrium price levels of productive factors. Through assuming that the volumes of production factors’ use are given (not necessarily efficient), the equilibrium profits, equilibrium wages, and equilibrium GDP (as the sum of equilibrium profits and wages) can be calculated. It is, therefore, reasonable to prescribe the cross-​country difference between the actual and equilibrium GDP to the existence of disequilibrium prices on the European internal markets where the trade takes place. Consequently, the dominant country obtains above-​average prices for the commodity sold, and vice versa, the disadvantaged country realizes trade deals through below-​average prices. This difference channels the surplus via above-​equilibrium profit or wage rates or recycles the unequal exchange losses via below-​average productive factors compensation. From this, it follows that the owners of production factors are (more or less) rewarded in accordance with the (more or less) competitive position of their companies in the markets. It is important to note that this is not to say that the transition countries’ companies are more or less competitive because they have lower or higher prices of factors of production. In this sense, the European international trade data and cross-​country factorial mobility are essential, when related to the east–​west prism. The statistical information on imports and exports of products and services (Table 32.3) demonstrates that transitional countries’ involvement in the international exchange was radically fostered between the analysed periods. The data indicates that the involvement of western countries in international trade with other European countries, and the world, has increased. Still, the increase in transition countries has been significantly higher. Relative

Table 32.3 The East-​West International Trade Indicators Exports (% of GDP)

Imports (% of GDP)

Balance

Category

1995–​1999

2013–​2017

1995–​1999

2013–​2017

1995–​1999

2013–​2017

1995–​1999

2013–​2017

Western Europe

47.3

65.27

44.27

58.92

9,1

32,6

1.06

1.09

Eastern Europe

41.1

68.34

45.74

65.38

-​1,3

4,1

0.91

1.06

Note: Values are intra-​period annual averages. Balance is in billions of current $. Source: The World Bank.

Exports–​Imports Ratio

Eastern Europe’s Post-Transitional Integration    599 to GDP, the transition countries exported or imported around 40%–​45% in the first period and 65%–​69% in the second period. Precisely due to the latter, it becomes evident that the key catalyst behind the east–​west performance lies in the liberalization of the markets and resulting exposure of the previously isolated transitional countries to the developed competition from the western countries and beyond. On another note, the Eurostat data on migration shows that the labour mobility and the integration of the eastern workforce into European labour markets was significantly lower than the trade flows. Average annual immigration between 2013 and 2017 in the western group reached 1.42% of the total number of employed, whereas in eastern group only 0.62%. Analogously, the average annual emigration as a share of total employment reached 0.45% in the west and 1.03% in the east. This intuitive dynamic explicitly confirms that, as opposed to commodities and capital, the labour markets remained primarily localised despite the transition and integrational processes. The same rationale does not hold when applied to the capital markets. With a narrow outlook on capital mobility restricted only on foreign direct investments as a share of capital stock (Table 32.4), the data indicates that cross-​country capital flows are significantly higher in western countries. Moreover, western countries have roughly balanced capital inflows and outflows. On the opposite end, net inflows in transition countries reached significantly higher shares of the total capital stock than net outflows. The preceding data is consistent and aligned with conclusions from previous sections. Arguably, an 80% increase in the transition countries’ capital–​labour ratios was largely the outcome of the capital inflow from abroad. The fact that local labour markets dominated national economies lead to the conclusion that the pressure of international capital markets shaped the division of GDP into profit and labour incomes. International capital mobility was conditioned by the high returns and interest rates, which formed a framework to which the transition economies had to abide by given the constant pressure brought about by foreign competition. Being governed by such market conditions makes it is possible to explain why transition countries achieved below equilibrium prices in both periods observed. Table 32.4 The East–​West FDI Indicators

Category

FDI Net Inflows (BoP, % of Capital)

FDI Net Outflows (BoP, % of Capital)

FDI (BoP, % of Capital)

1995–​1999 2013–​2017

1995–​1999 2013–​2017

1995–​1999 2013–​2017

Western Europe

0.73

1.49

1.09

1.55

0.36

 0.08

Eastern Europe

0.55

0.95

0.02

0.51

-​0.53

–​0.44

Note: Values are intraperiod annual averages. Source: Own calculation based on the investment data from the World Bank.

600    Ivan Rubinić and Maks Tajnikar Empirically, all data confirm that the transition countries suffered major losses in final and intermediate markets, derived from below equilibrium prices that they received for commodities sold. Further data-​based support for this claim is found within the confirmation that the average equilibrium GDP, over the period in question, grew more in western (38%) then in transition countries (24%), as presented in Table 32.5. The exact magnitude of the impact of prices on the GDP is only attainable by comparing actual GDP with equilibrium GDP. In the early stages of transition, the western countries achieved above equilibrium prices, as actual GDP was 8% above the equilibrium. However, this excess over the equilibrium GDP decreased by the second period, in which the western countries’ actual GDP exceeded equilibrium levels by 2%. The data show that the transition countries have continuously obtained prices below equilibrium. Still, their lag in prices obtained on the commodity markets has been narrowing throughout. In accord to this, the transition countries’ actual GDP has reached only 61% of the equilibrium GDP in the initial phase and 87% in the final period. In absolute terms, this lag in the selling prices of transition countries in the final and intermediate markets has shifted the distribution of the GDP of the whole area at the benefit of western countries. However, the distributional impact of prices was less than that of capital intensity. Due to below equilibrium prices, in the second period, the transition countries lost 362 billion constant 2011 PPP $ annually, on average. By the same token, the eastern loss was gained by the western countries, which have enjoyed above equilibrium prices. Nonetheless, through the interperiod comparison, it must be emphasised that the east–​west unequal exchange due to price disequilibrium has decreased substantially, from 906 to 362 billion constant 2011 PPP $ at the end of the observed period. In general, it can be concluded that transition countries achieve exclusively below-​ equilibrium prices throughout the entire period, that they lose less GDP due to the effect of market disequilibria than what is the case with low capital–​labour ratios, and that they improve their relative position faster in terms of catching up with the western price levels than the western capital intensity levels. The disequilibrium commodity prices realized in the final and intermediate markets must surface through the cross-​country disequilibrium levels of factor reimbursement. The below equilibrium prices of transition countries will, by definition, mean that the sum of wages and profits of this group will also be below equilibrium. Given that the existence of market disequilibria, through the price effect, channelled 906 billion constant 2011 PPP $ towards the western European countries, the eastern countries realized below equilibrium GDP and had to lower their production factors’ reimbursements. A notable finding is that the transitional countries’ losses, due to below-​average prices, were entirely substituted with lower labour incomes (1,074 billion constant 2011 PPP $). Even more so, the wage cuts were greater than the fall in GDP due to below equilibrium prices. This, in turn, allowed transitional countries’ profits to exceed equilibrium levels (168 billion constant 2011 PPP $). Such a state of affairs allowed the western countries to enjoy 1,074 billion constant 2011 PPP $ of above-​equilibrium wages

Table 32.5 The East-​West GDP, Equilibrium GDP, and Factorial Incomes Analysis GDP

Western Europe

665

617

1.08

Eastern Europe

130

212

0.61 0.57

–​

Category

GDP (GDPpc) Ratio

Changes in Incomes

Equilibrium GDP (GDPpc)

GDP (GDPpc)

Wages

Profits

Sum

Wage Rate

Profit Rate

906

1,074

–​168

906

49,146

11.9%

–​906

–​1,074

168

–​906

19,501

18.1%

–​

–​

–​

0.40

Period 1: 1995–​1999

East–​West Ratio

0.20

0.34

1.51

Period 2: 2013–​2017 Western Europe

869

850

1.02

362

792

–​430

362

55,623

11.5%

Eastern Europe

230

263

0.87

–​362

–​792

430

–​362

33,581

21.0%

–​

–​

–​

–​

0.60

1.83

East–​West Ratio

0.26

0.31

0.86

West-​West Ratio

1.31

1.38

0.95

0.40

0.74

2.57

0.40

1.13

0.96

East-​East Ratio

1.77

1.24

1.43

0.40

0.74

2.57

0.40

1.72

1.16

The Period Ratio (P2/​P1)

Note: Values are intragroup, intraperiod annual averages. GDP and GDPpc are in billions of constant 2011 PPP $. The difference between GDP, GDPpc, and income changes are aggregate values in billions of constant 2011 PPP $. Wage (constant 2011 PPP $) and profit (%) rates are intragroup weighed means. Source: GDP: The World Bank. The remaining variables: own calculations.

602    Ivan Rubinić and Maks Tajnikar simultaneously while experiencing below equilibrium profits amounting to 168 billion constant 2011 PPP $. Although eastern countries improved their price position and neared equilibrium levels in the second period (61%–​87%), the distribution of their national incomes in favour of profits has tightened. The wage reduction below the equilibrium levels in the eastern countries was 2.19 times higher than the fall in GDP due to below equilibrium prices. The latter was the source allowing the large, above equilibrium increases in eastern countries’ profits. This characteristic effect of the transitional countries became a larger concern in the second period, even though the transitional countries’ prices were closer to the equilibrium levels than in the first period. The distribution favouring the profits at the expense of wages had to be backed by the underlying labour market’s supply and demand interaction. Hence, as the labour markets remained primarily confined to national (local) borders, it comes as no surprise that transitional countries’ unemployment levels (Table 32.1) remained high and retained downward pressure on wage levels throughout the studied period. In contrast, the distribution of income favouring profits is primarily determined by the capital market, which is not local, but international. Thus, it can be concluded that the factorial income distribution of GDP was largely influenced by the situation on the capital markets, where internationalization took place. This internationalization affected the distribution of GDP in the eastern group of countries, through the capitals’ demand for high returns, allowed by the excessive supply in national labour markets. The profit rate averaged across all countries remained practically unchanged (12.37% in the first and 12.32% in the second period). However, profits in the transitional countries rose due to the increase in capital stock, reflected through rising capital–​labour ratios. The second source for transitional countries’ surge in profits was made possible by the distribution of disequilibrium GDP to the detriment of wages. Over eighteen years, the averaged profit rate of eastern countries increased 16%, whereas that of western countries fell 4%. The higher profit rate attracted capital inflows and savings, which further increased the eastern countries’ capital–​labour ratios. Ultimately, the increase in profits led to an increase in GDP. In such circumstances, the wage rate conclusively rose in both clusters of countries. Wages rates in transitional countries increased 72% and in the western countries, 13%. Regardless, the east–​west divide remained. In the second period, the eastern wage rates reached only 60% of their western counterparts. The 4% fall in total employment and 77% GDP growth in the transitional countries enabled the aforementioned increases in wages. Regrettably, the eastern countries’ wage growth was below GDP growth, as the need to compensate for GDP losses due to disequilibrium prices increased. Consequently, the need to compensate for losses stemming from the market disequilibria and adverse price effects did not allow wage rates in transitional countries to reach the level of western countries throughout the period.

Eastern Europe’s Post-Transitional Integration    603

The East–​West Schism Determinants: The Economic Efficiency The remaining criterion for the assessment of east–​west affairs is economic efficiency, measured as the cumulative effect of labour productivity and efficient use of means of production. Until now, the analysis of value transfers, due to the capital intensity and disequilibrium prices, accounted for the actual consumption of labour and capital per unit of GDP. However, as will be extensively researched in the forthcoming sections, the economic efficiency levels differ across east–​west blocks. The fact that European countries consume varying degrees of capital and labour per unit of GDP implies that individual countries have different capacities to increase their GDP by efficiently managing the employment of available factors of production. This possibility to increase labour productivity and capital efficiency can be regarded as a national reserve for the advancement of comparative position vis-​à-​vis trade partners. The discrepancy in labour productivity and capital efficiency in individual countries can be measured by weighting the actual GDP (with country-​specific quantities of used factors) with the efficient GDP, which represents a theoretical construct calculated by assuming the consumption of the same (average) cross-​country quantities of production factors per unit of GDP. The difference between these two categories points out the gains/​losses enjoyed/​suffered by individual countries involved in the international trade due to the use of efficient/​non-​efficient production methods. As will be made clear, this procedure does not reveal all the characteristics of efficiency differences. Still, it highlights potential reserves in economic efficiency that individual countries could exploit if they reached average economic efficiency (labour productivity and capital efficiency) of the group in question. The table illustrates that the western countries achieved above-​average economic efficiency in both the first and second periods, while the transition countries achieved below-​average economic efficiency. However, the lag of transition countries behind the west, seen in Table 32.6, has significantly decreased over the analysed eighteen years. If transition countries took advantage of this efficiency-​lag between 1995 and1999, their GDP would increase 59%. In a similar fashion, albeit of smaller intensity, if the eastern countries utilized the efficiency reserve between 2013 and 2017, their GDP would increase 11%. Even in absolute terms, the 2013–​2017 transition countries’ reserve in economic efficiency has decreased to 32% of the reserve levels calculated during the first period (840 to 226 billion constant 2011 PPP $). The economic efficiency of transition countries has increased significantly compared to western countries meaning that the reserves for increasing GDP through advancing economic efficiency have also decreased. However, the transition countries’ efficiency losses, measured in the manner set out in this chapter, are significantly smaller than the losses due to disequilibrium prices and low capital–​labour ratios.

604    Ivan Rubinić and Maks Tajnikar Table 32.6 The Comparative Analysis of East-​West Efficiency Reserves Category

GDP

Efficient GDP (GDPe)

GDPe–​GDP Ratio

Western Europe

665

614

0.92

962

0.08

Eastern Europe

130

206

1.59

–​840

–​0.59

East–​West Ratio

0.20

0.34

1.73

–​0.87

–​7.38

Western Europe

869

846

0.97

425

0.03

Eastern Europe

230

254

1.11

–​266

–​0.11

East–​West Ratio

0.26

0.30

1.14

–​0.63

–​3.67

West–​West Ratio

1.31

1.37

1.06

0.44

0.34

East–​East Ratio

1.77

1.15

0.70

0.32

0.18

GDPe–​GDP

GDPe–​GDP (% of GDP)

Period 1: 1995–​1999

Period 2: 2013–​2017

The Period Ratio (P2/​P1)

Note: Values are intraperiod annual averages. GDP and GDPe are intragroup means, in billions of constant 2011 PPP $, whereas their differences are aggregate, intragroup values in billions of constant 2011 PPP $. Source: GDP: The World Bank. The remaining variables: own calculations.

Post-​Transitional, East–​West Convergence–​Divergence Dynamics The processes that led to the described changes in eastern and western countries, their relationship, and the transition process can all be additionally scrutinized by using a conventional tool of efficiency analysis—​cross-​country data envelopment analysis (Deliktas and Balcilar 2005; Rabar 2017). Proceeds of this are the technical, allocation, and cost measures of economic efficiency. The technical measure shows the relationship between inputs and outputs. The allocative measure indicates the adjustment of employment of production factors (in cost form) to their prices. The cost measure combines the previous two effects.

Technical Efficiency Catch-​Up In the first step, the transition process efficiency analysis observes the individual countries’ GDP as an output produced by employing two inputs, capital, and labour. In essence, even in this case, the measure used implies a type of technical efficiency, with respect to the use of production factors in the production of national GDP. From this

Eastern Europe’s Post-Transitional Integration    605 perspective, a more efficient country is one that uses fewer factors of production per unit of GDP. In the second step, tracing the combinations of inputs with the same level of output forms the isoquant of the most efficient countries. Any point laying on such an isoquant indicates the minimum quantities of capital and labour required to produce a unit of GDP. In this context, it is worthy of mentioning that efficient countries mutually differ in terms of the relationship between capital and labour and that the measurement concerning remaining inefficient countries is not affected by capital intensity. Nonetheless, the changes in capital intensity and their impact on technical efficiency, according to the relationship between capital and labour, can be determined. On these foundations, the technical efficiency was calculated by respecting the east–​west clustering of European countries, separately for the first (1995–​1999) and second (2013–​2017) periods. The useful feature of such an approach is that it allows for intergroup and interperiod comparisons of chosen cross-​country efficiency measures. At the present point, the procedure did not focus on the pursuit of countries that make up the most efficient countries (lying on the isoquant) for each group. Rather than that, the focus was on capturing an ‘instantaneous photograph’ of east–​west economic efficiency at two points in time. Toward that end, to make intertemporal comparisons visually readily apparent, the efficiency data points for countries belonging to the same group over the same period are framed in data clouds. Figure 32.1 depicts four data clouds of countries showing the level and scattering of technical efficiencies for east–​west groups of countries, over two periods. The transition countries have experienced significant changes in technical efficiency in the eighteen years analysed. From a set of heterogeneous countries with very low capital intensity Western Europe 50,000

40,000

40,000 Labour-to-GDP Ratio

Labour-to-GDP Ratio

Eastern Europe 50,000

30,000

20,000

10,000

0

30,000

20,000

10,000

0

1

2

3

4

Capital-to-GDP Ratio Period 1995–999

Period 2013–2017

5

0

0

1

2

3

4

5

Capital-to-GDP Ratio Period 1995–999

Period 2013–2017

Figure 32.1  The East–​West macroeconomic input–​output reallocation Note: Values are intraperiod annual averages. Labour-​to-​GDP ratio exhibits total number of employed per billion of GDP (constant 2011PPP $). Source: GDP: The World Bank. Labour: (person’s engaged) PWT 9.1. Capital: own calculation.

606    Ivan Rubinić and Maks Tajnikar (left black data cloud), eastern countries changed into a more homogenized group of countries becoming increasingly similar to the western countries in terms of capital intensity (left grey data cloud). The eastern countries’ data clouds shift from 1995–​1999 to 2013–​2017 and reintroduce previously raised characteristics of transition countries—​a large increase in capital intensity. Figure 32.1 exhibits another vital development that remained disguised so far. First, transition countries have become homogenized through transition processes, and in terms of technical efficiency, they have become more similar to each other. Moreover, Figure 32.1 shows that, in the first period, individual transition countries were efficient in relation to the whole set of countries. However, they were effective at very low capital intensity. These specific cases reached their maximum GDP at a meagre capital–​ labour ratio, which made them efficient countries within the whole east-​west sample set. Relatedly, some transition countries were efficient within their cluster of countries but were not efficient within the setting of all countries encompassed by this study. From this perspective, these cases experienced a too-​high capital intensity of productions and have secured their places on the transition countries’ isoquant without entering the data cloud of western countries. Higher capital intensity gave them a comparative advantage from the viewpoint of transition countries, even though they were unable to achieve the technical efficiency of the west. Figure 32.1 clearly demonstrates that the western countries slightly changed their position. Western countries somewhat increased their capital intensity, but to a significantly lesser degree than transition countries (shift from the right, black to the right, grey data cloud). They have moderately increased the groups’ homogeneity in terms of efficiency and have reached efficiency levels exclusively supported by high capital intensity. Considering that their effectiveness can be appropriately measured only when weighed against a western cluster, the developed, western countries have reached their maximal economic output with high capital–​labour ratios. Figure 32.1 furnishes evidence that eastern countries could be technically efficient at low capital intensities, whereas western countries can be efficient at high capital intensities. The figure shows that the transition countries’ situation has changed significantly. In eighteen years, they have started to resemble the western countries more and more. Some transition countries have become just as technically efficient as the western countries. This was made possible by the rapid increase in the capital–​labour ratio which, in certain eastern countries, reached the levels corresponding to individual western members. The efficiency levels from Table 32.7 presents east-​west estimates of the five-​year annual average efficiency index, calculated for the period 1995–​1999 and 2013–​2017. The range of the efficiency index is between zero (full inefficiency) and one (full efficiency). The calculation was performed by using intput-​oriented, constant returns to scale data envelopment analysis (Charnes, Cooper, and Rhodes 1978). All the aforementioned is confirmed by data discussed in the previous sections and by the scores of the technical efficiency analysis from Table 32.7. At this point, it bears repeating that the capital–​labour ratio increased 80% in transition countries and 28%

Eastern Europe’s Post-Transitional Integration    607 Table 32.7 The East–​West MaxDEA Efficiency Scores and Productive Factors’ Analysis Category

Group

Period 1 1995–​1999

Period 2 2013–​2017

The Period Ratio (P2/​P1)

Wage Rate

Western Europe

49,151

56,990

1.16

Eastern Europe

20,964

33,980

1.62

East–​West Ratio

0.43

0.60

–​

Western Europe

14.5%

13.8%

0.95

Eastern Europe

21.4%

20.7%

0.97

East–​West Ratio

1.48

1.51

–​

Western Europe

214,901

275,287

1.28

Eastern Europe

65,393

117,447

1.80

East–​West Ratio

0.30

0.43

–​

Western Europe

0.69

0.73

1.05

Eastern Europe

0.80

0.78

0.98

Western Europe

0.59

0.65

1.09

Eastern Europe

0.32

0.51

1.60

Western Europe

0.66

0.84

1.28

Eastern Europe

0.68

0.65

0.96

Western Europe

0.86

0.89

1.03

Eastern Europe

0.43

0.66

1.53

Western Europe

0.96

1.17

1.23

Eastern Europe

0.93

0.84

0.90

Profit Rate

Capital–​Labour Ratio

Technical Efficiency* Cost Efficiency* Cost Efficiency** Allocative Efficiency* Allocative Efficiency**

Note: Capital–​labour ratio (constant 2011 PPP $), wage (constant 2011 PPP $) and profit rates are intragroup mean annual averages. * Efficiency scores obtained by using mean prices of production factors of all countries analysed. ** Efficiency scores obtained by using country–​specific mean prices of production factors. Source: Own calculation.

in the western ones. Despite that, over the eighteen years, transition countries have lost technical efficiency by about 2%, while the western countries gained around 5%. By becoming more capital-​intensive, transition countries have lost some technical efficiency compared to the western countries (this could also be inferred from the data cloud movements in Figure 32.1). This is to say that, by becoming more similar to the western group of countries in terms of capital intensity, the eastern countries have become less efficient. In addition to cross-​group, the eastern and western clusters of countries have reported within-​group homogenization in terms of efficiency. This especially holds in the transition countries case, where the standard deviation of technical efficiency assessments decreased in the second period to 63% of the first period (from 0.1945 to

608    Ivan Rubinić and Maks Tajnikar 0.1232). Moreover, the east–​west, within-​group, cross-​country differences in efficiency have become nearly equal when measured in the standard deviation.

Cost Efficiency Catch-​Up An equally beneficial outlook on the transition processes is obtained by supplementing the analysis of technical efficiency with the study of allocative efficiency. In the latter case, the extent of the capital intensity’s correspondence to the relative prices of factors of production can be investigated. Where together with the quantities employed, the relative prices of factors of production determine the cost of production of GDP. This is an extremely relevant aspect because, at specific prices of factors of production, only one combination of capital and labour yields minimal cost and begets efficiency. If any given country remains technically efficient through satisfying this unique combination, such a country is also cost-​efficient. It follows from here that a given country has produced its GDP by minimizing the costs of factors of production. From the hitherto analysis, it was made clear that the transition countries experienced rapid growth of wage rates and significantly greater stability of profit rates in the analysed period (Table 32.7). Wage and profit rates in the western group of countries also undergo an analogous, yet significantly smaller change. Contemporaneously, the transition countries have experienced a robust capital intensity increase. These changes in the transitional group of countries were theoretically consistent in a way that the higher relative labour prices correlated with higher capital intensity. Based on the mean factors’ prices of all countries during the whole period, calculations of allocative efficiency show that the transition countries in the first period adjusted poorly to the relative prices of factors of production. The allocative efficiency of the eastern countries in the first period lagged behind the western countries by 50%. However, suppose that instead of the average relative prices of production factors for all countries, the analysis accounts for country-​specific, actual relative prices of production factors during the first period. In that case, the eastern countries lag behind the western ones in allocative efficiency by only three percentage points. Apparently, both the transition and western countries were efficient in terms of the relative country-​specific prices of the factors of production in the first period. Neither group of countries exhibited tendential adjustment to the average relative prices of factors of production for all countries. Hence, it is reasonable to conclude that the low relative labour prices in transition countries encouraged and enabled low capital intensity. Throughout the initial period (1995–​1999), bearing sufficiently lower costs allowed the eastern group of countries to render GDP through the sales in final and intermediate markets, where their commodities could be price competitive. In summary, between 1995 and 1999, the transition countries were able to sell and generate GDP in a competitive way relative to the western countries due to comparably lower labour prices and corresponding capital intensity. The cost-​efficiency analysis further confirms the validity of the previous conclusion. The fact that the transition

Eastern Europe’s Post-Transitional Integration    609 countries were leading in cost efficiency by three percentage points (Table 32.7) relative to the western group was attainable only through high technical efficiency in productions with low capital intensity and low labour prices. The latter, in turn, enabled high allocative efficiency at low capital intensity. The wage rates rise of 62%, continuously high-​profit rates, and increase in the capital intensity of 80%, are, by and large, the finest indicator that from 1995 to 2017, the eastern countries model of economic governance has been radically modified. In terms of these three indicators, the changes in the western countries followed a similar pattern, albeit significantly less intensive. The technical efficiency of transition countries has slightly decreased over eighteen years. As was previously mentioned, this is due to the east–​ west technological composition’s convergence (measured by the capital–​labour ratio), although technical composition remained higher in the western countries. However, if the relative prices of production factors for all countries between 2013 and 2017 are accounted for, the cost-​ efficiency of transition countries increased 60% (in the western countries only 9%). The full extent of these alterations in transition countries surfaces if it is taken into account that the cost efficiency, calculated through country-​specific relative (actual-​mean) prices of production factors, decreased 4%. The former scenario was only possible if, by increasing their capital intensity, the eastern countries took a greater account of the relative prices of factors of production throughout the European market and less so in their national, local labour and capital markets. This leads to the following finding. Owing to the substantial (average) price differentials of production factors between the national and European markets, in pursuit of greater national competitiveness and new governance models, which would enable the supply of eastern commodities to western markets, the transition countries did not prioritize local markets of production factors. Instead, the eastern countries turned to the European market, which was highly influenced by western countries. The former was made possible given that the eastern countries adjusted their capital intensity, as well as the organization and assortment of the production, to European final and intermediate markets (products and services) and not to the local markets of factors of production. As the data in Table 32.7 show, the integration of transition countries into the European economic area clearly required them to increase the capital–​labour ratio. To be able to compete with western rivals, the transition countries had to take into account the prices of factors of production in European labour and capital markets. This is because adherence to the prices formed on national/​local markets did not render a sufficiently low cost with increased capital intensity. The changes in cost efficiencies offer a plausible explanation for such a claim. The increase in capital intensity was a logical sequence following the transitional countries’ integration into European markets. As transitional countries began to supply commodities to the European markets, they had to modify their former production methods to meet technical demands imposed by western competitors. This data-​driven interpretation substantiates an assumption hypothesized by this chapter that the capital and labour incomes depended on the transition countries’

610    Ivan Rubinić and Maks Tajnikar competitive standing in the European commodities markets, and not vice versa, as was determined earlier in this section. The more eastern countries became integrated into the European trade regime, the more their producers competed for the common market share. The more they become exposed to western competition, they had to cope with the international competition in the commodities markets and adjust their capital intensities to western benchmarks to maintain and preserve their competitiveness. A beneficial outcome of the mentioned integrational arrangements is that a fraction of them became reflected within the rising price of the transition countries’ labour force. However, cost efficiency has increased 60% and this trend did not eliminate the transition countries’ lag in price competitiveness. Between 2013 and 2017, the east–​west cost-​ efficiency lag (14 percentage points) remained present despite an extensive increase in transition countries’ relative efficiency. As was established earlier in this section, at the origin of this shortcoming is the eastern countries’ GDP growth lag, occurring due to the below equilibrium prices that these countries achieved by realizing their commodities in European markets. Even though the east–​west capital intensity adjustment to higher labour prices allowed for a 62% increase in the transition countries, it is precisely the lag resulting from commodity markets’ disbalances that caused labour prices in transition countries to fall behind the west in the final period (with the east–​west wage ratio of 60%).

Conclusions and Discussion During the second half of the 1990s, the low capital intensity was the eastern European hallmark. At the early stages of the transition period, hardly any eastern country had a capital intensity comparable to western Europe’s intragroup means. This was expected, given that the east-​European cluster comprised of past autarkies using a specific set of technologies for the production of localized commodities. The techniques applied and commodities produced vastly differed from those used and sold by the west. Such dynamics were the outcome of self-​sufficient systems banning foreign competitors’ access to national markets. In such a scenario, even intragroup eastern competition did not play a major role, as evidenced by the high cross-​country dispersion of technical efficiencies lacking competitive relations that would reduce dispersion. It comes as no surprise that the critical adjustment following the transition process and liberalization of trade was the 80% increase in eastern Europe’s intraperiod capital intensity. The eastern integration into an international trade regime radically overhauled the pretransition production modes through increased capital availability and decreased employee count. Resultantly, an increase in capital intensity reflects the necessity of eastern countries to fundamentally reform production programmes and technologies used to meet the demands of a post-​transitional market setting. Over the eighteen years analysed, in terms of technological composition, the transition countries have become increasingly similar to one another, and to western countries. This

Eastern Europe’s Post-Transitional Integration    611 dramatic transformation was brought about by transition countries’ producing a homogeneous range of commodities and their realization on the same markets by competing against western rivals. In the meantime, the western countries have also advanced regarding the technical efficiency and become more homogeneous. However, since their upward trajectory was of a much lesser degree than that of the transition countries, the east–​west convergence took place. Since transition, by definition, implies the integration of eastern countries into the single European (and global) economic area, it can be asserted that the capital intensity rise is a straightforward consequence of exposure to foreign competition in the markets of products and services, and capital and labour. Where, guided by the profit motive and pressured by western competition, transition countries had to adopt techniques with a higher capital intensity in producing market commodities, that is, they had to join the international capital markets. The transition countries’ capital increase (relative to the labour force) was made possible due to the sizeable net inflow of capital and the high savings level, both of which were reported concurrently with the eastern labour markets remaining predominantly national as shown by the data on (im)mobility. The minor loss of transition countries’ technical efficiency from the first to the second period demonstrates that the eastern countries have neared the west, with respect to major technological aspects but have not, hitherto, caught up with western, state-​of-​the-​ art technologies. Moreover, this is evidence that transition countries have largely (but not entirely) gravitated towards the same economic area as the west. In such a situation, competition was a driving force behind eastern cross-​country homogenization, evident from interperiod dynamics. In the initial period, both groups of countries had a consistent model of economic governance. In terms of allocative efficiency, the transition countries associated low capital intensity with low relative labour prices. With limited foreign competition and high technical efficiency, the latter allowed eastern countries to maintain a competitive market position within the national boundaries. Furthermore, the cost-​efficiency analysis backed this rationale by indicating that the eastern cluster reported, relative to the west, comparably higher efficiency if the country-​specific production factors’ prices are taken into account. From the governance standpoint, the western cluster maintained consistency over the second period. In contrast, transition countries signified erratic movements between (local) relative labour prices and capital intensity. The latter has become too high, followed by the transition and given the low relative labour prices. Capital intensity has adjusted more to the prices of production factors in western countries than to the prices of production factors in transition countries. Solely through this, could the transition countries obtain the cost-​efficiency inter-​group dominance indispensable for competing with the western economies. By adapting to the local (instead of intra-​group) labour prices, transition countries would achieve capital intensity which would not allow a competitive position vis-​á-​vis the west. This means that the transition countries’ choice of technology was formed by taking a greater account of prices in the final and intermediate markets than the (local) prices of production factors. Under constant threat

612    Ivan Rubinić and Maks Tajnikar by foreign competition, the transition countries prioritized the conditions forming at the commodity markets rather than those at production factors’ markets. The increase in capital intensity increased GDP per employee. Considering that the profits are an integral part of GDP, at the beginning of the transition, eastern countries’ GDP per employee was low due to low capital intensity and regardless of above-​average returns per unit of capital. Following the transition, and in addition to the above-​average profit rates reported between 2013 and 2017, the spill over from increases in capital and profits positively affected the eastern countries’ GDP per employee. The surge in capital intensity of transition countries was the principal vehicle behind reducing the east–​west non-​equivalent exchange of work. Thus, in the initial period, only 47% of the labour consumed in transition countries was recognized through GDP while, in the final period, the share of socially recognized labour was 71%. However, this does not suggest the elimination of exploitative cross-​country relations. This is confirmed by the data on the transition countries average annual loss of 1,053 billion constant 2011 PPP $ from 2013 to 2017, arising due to the smaller lag in capital intensity and despite high-​profit rates. This loss is an expression of a situation in which the owners of capital employed in the eastern countries appropriate above-​equilibrium profit margins but claim fewer profit incomes because of comparably smaller capital per labour force. Hence, the transition countries’ lower GDPs. Through the sales competition and intrinsically linked cost and allocation efficiencies, the transition countries adjust to the relative prices of production factors on the European capital and labour markets. However, this does not mean that the transition countries’ local labour prices are equal to average European or western levels, because of their inferior standing in the final and intermediate markets is generally expressed through lower wage rates. The east–​west gap in labour prices is due to the price differentials that transition countries achieve in commodity markets. Regardless of the improved relative standing stemming from opening to the European markets, the transition countries have realized below-​equilibrium prices in the final and intermediate markets throughout the observed period. In the initial period, the eastern countries GDP reached only 61% of the equilibrium GDP, whereas the second period measured 87%. Hence, the transition countries can clearly compete with western countries only if they offer goods at below-​equilibrium prices. This motion has generated an annual average loss at the transition countries’ expense amounting to 906 billion constant 2011 PPP $ in the first period and 362 billion constant 2011 PPP $ in the second period. As was the case with the other forms of value transfers, the eastern losses constituted the western gains and the unequal partnership. As was demonstrated, this loss of GDP was fully offset by below equilibrium wage rates which formed a basis for above-​equilibrium profit margins. This is to say that the conditions in the markets of final and intermediate goods determined the conditions in the local labour markets. The end result being a detrimental European divide, with the average east–​west wage ratio of 43% (1995–​1999) and 60% (2013–​2017). Given the comparably lower eastern countries’ unemployment rates, it is evident that the situation within local labour markets of individual transition countries did not play

Eastern Europe’s Post-Transitional Integration    613 a decisive role in cross-​country geographical distribution of the produced economic output. The underlying reason had to be within capital markets. The onset of the transition initiated another process—​the eastern integration into the European economic area. Due to international competition exposure, this process forced eastern countries towards higher capital intensity, obtainable through increased foreign capital inflows combined with domestic savings, and achievable through higher profit margins. The higher profits in transition countries made a higher GDP it possible, given that GDP losses due to below equilibrium prices were more than offset by lower wages. Despite the detrimental redistribution regarding the wages, the GDP growth and increased labour productivity enabled a rise in the eastern wage rates. However, they remained lagging far behind the western countries in both periods. The growth of eastern wage rates (relative to the west) was influenced by the economic efficiency increase and the effect of disequilibrium prices on final and intermediate markets, whereas the level of wage rates was affected only by the latter. The eastern growth surge, driven primarily by foreign capital inflow, higher profits and lower wages, and the geographical value transfers benefiting western countries, are the greatest testimonies that the transition process, trade liberalization, and eastern accession into western economic relations are undeniably an integration of unequal partners. Consequently, crucial for understanding the east’s subordinate status to the west is the unequal social labour recognition as a detrimental social power relation that is the constitutive antithesis of European integration. As an omen of trade imperialism, this cross-​country inequality brings about the threat of retreating to sovereignty or the need to renegotiate the terms of east–​west relations in the post-​transitional world.

References Barro, R. J. 1997. Determinants of Economic Growth: A Cross-​ Country Empirical Study. Cambridge, MA: MIT Press. Baumol, W. J. 1986. ‘Productivity Growth, Convergence, and Welfare: What the Long-​Run Data Show’. American Economic Review 76, no. 5: 1072–​1085. Charnes, A., W. W. Cooper, and E. Rhodes. 1978. ‘Measuring the Efficiency of Decision Making Units’. European Journal of Operational Research 2, no. 6: 429–​444. Cope, Z. 2012. Divided World Divided Class. Montreal: Kersplebedeb. Cope, Z. 2019. The Wealth of (Some) Nations. London: Pluto Press. Delikatas, E., and M. Balcilar. 2005. ‘A Comparative Analysis of Productivity Growth, Catch-​ Up, and Convergence in Transition Economies’. Emerging Markets Finance and Trade 41, no. 1: 6–​28. Emmanuel, A. 1972. Unequal Exchange: A Study of the Imperialism of Trade. New York: Monthly Review Press. Gevorkyan, A. V., 2018. Transition Economies: Transformation, Development, and Society in Eastern Europe and the Former Soviet Union. New York: Routledge. Godoy, S., and J. E. Stiglitz. 2007. ‘Growth, Initial Conditions, Law and Speed of Privatization in Transition Countries: 11 Years Later’. In Transition and Beyond, edited by S. Estrin, G. W. Kolodko, and M. Uvalic, 89–​117. New York: Palgrave Macmillan.

614    Ivan Rubinić and Maks Tajnikar Gollin, D. 2002. ‘Getting Income Shares Right’. Journal of Political Economy 110, no. 2: 458–​474. Gross, D., and A. Steinherr. 2004. Economic Transition in Central and Eastern Europe. Cambridge: Cambridge University Press. Harberger, A. 1978. ‘Perspectives on Capital and Technology in Less Developed Countries’. In Contemporary Economic Analysis, edited by M. J. Artis and A. R. Nobay, 15–​40. London: Croom Helm. Hare, P., and G. Turley. 2019. Handbook of the Economics and Political Economy of Transition. New York: Routledge. Hein, E., and A. Truger. 2005. ‘European Monetary Union: Nominal Convergence, Real Divergence and Slow Growth?’. Structural Change and Economic Dynamics 16, no. 1: 7–​33. Lapavitsas, C. 2019. The Left Case against the EU. Cambridge: Polity Press. Mihaljek, D. 2018. ‘Convergence in Central and Eastern Europe: Can All Get to EU Average?’. Comparative Economic Studies 60, no. 2: 217–​229. Milanović, B. 2016. Global Inequality: A New Approach for the Age of Globalization. Cambridge, MA: Harvard University Press. Ohlin, B. G. 1933. Interregional and International Trade. Cambridge, MA: Harvard University Press. Rabar, D. 2017. ‘An Overview of Data Envelopment Analysis Application in Studies on the Socio-​Economic Performance of OECD Countries’. Economic Research 30, no. 1: 1770–​1784. Rubinić, I. 2020. ‘The Dynamics of Economic Inequality in Euro Area Based on the Marxist Theory of Exploitation’. PhD diss., University of Ljubljana: School of Economics and Business. Rubinić, I., and M. Tajnikar. 2019a. ‘Labour Force Exploitation and Unequal Labour Exchange as the Root Cause of the Eurozone’s Inequality’. Društvena Istraživanja 28, no. 2: 207–​228. Rubinić, I., and M. Tajnikar. 2019b. ‘The Influence of the Economic Cycle on Eurozone Cross-​ Country Inequality Dynamics’. South-​Eastern Europe Journal of Economics 17, no. 2: 267–​290. Rubinić, I., and M. Tajnikar. 2021. ‘Political Economy of the European Periphery’. In The Palgrave Encyclopedia of Imperialism and Anti-​Imperialism, 2nd ed., edited by I. Ness and Z. Cope. Cham: Palgrave Macmillan, 2246–​2265. Smith, J. 2011. ‘Imperialism and the Law of Value’. Global Discourse 2, no. 1: 1–​36. Solow, R. 1956. ‘A Contribution to the Theory of Economic Growth’. Quarterly Journal of Economics 70, no. 1: 65–​94. Stiglitz, J. E. 2012. The Price of Inequality. New York: W. W. Norton & Company. van Schaik, A. B. T. M. (1976). Reproduction and Fixed Capital. Tilburg: Tilburg University Press.

Chapter 33

L and Grab bi ng i n Sou theastern E u rope i n Historical C ont e xt NAZİF Mandaci

In July 2014 the Serbian media announced that the Arab investors lost their appetite for investing in Serbian agricultural sector upon the growing protests of the farmers from Sivac, Kurscic, Lipar, Nova Gajdobra, and Crvenka in the province of Vojvodina.1 The outraged farmers were asking their government to explain why it offered the fertile land to the Arabs but not to themselves, moreover, at a price below its market value.2 The protests, which did not capture the attention of any but some careful observers of the western Balkans, were ostensibly a part of global phenomenon that recently urged some authors to re-​elaborate the capitalism–​agriculture relationship in the era of growing neoliberal dominance. The involved phenomenon, namely, land grabbing, was first identified by the non-​governmental organization GRAIN in 2008, following the spikes in food prices or export bans, along with the post-​2007 financial crisis, which forced the investors to divert their capital from financial markets to the sectors of food commodities and agriculture.3 In the following decade the majority of authors deployed critical theoretical approaches relating to land control to explore and define some distinct dimensions and forms of contemporary land grabbing, which in some cases obviously undermined de jure and de facto control of the land and concomitantly sovereignty of nations.4 In the relevant literature large-​scale farmland acquisitions are taken, re-​surfacing symptoms of allegedly completed historical stages such as enclosure and primitive accumulation5 or their newly emerged modern form carried out by the new global actors—​ accumulation by dispossession (ABD), as coined by Harvey.6 Hence, first, critics hint that primitive accumulation is non-​temporal as long as its peculiar processes of enclosure through which workers are divorced from the ownership of the conditions of their own labour and turned into wage labourers are sustained. This author, too, considers that the crux is the forms and conditions under which producers are separated from the means of production, which have repeated themselves in different historical

616   NAZİF Mandaci contingencies and resulted in similar social, economic, and political outcomes. Second, this chapter departs from the general claim that land grabbing has universal characteristics independent from geography due to some reasons. Despite its geographical proximity, Southeast Europe has always remained on the periphery of the European economic/​industrial core since the times of antiquity, and despite increasing Western intervention, because of its sociopolitical conditions and its land system peculiarities it began and steadily continued to integrate in the developing global economic system since the eighteenth century. The region saw some cycles of colonization and authoritative division of labour in different historical phases, yet, it never experienced them in the form and scales that occurred in other parts of the world like Africa. This chapter commences by suggesting that even during medieval times the region had seen practices of primitive accumulation that harmed smallholders under conditions similar to the modern ones including the process of becoming periphery to a distant economic core. The onset of economic peripherization of the region to the West can be dated back to the eleventh century, when the Byzantine emperors had to grant important commercial privileges to the Latin merchants, which delimited their sovereign rights. Many students of Byzantium accept that at least until the twelfth century, the empire did not share similar characteristics with those of western European feudalism because of the extent the state and its institutions intervened in agrarian relations; its transition to feudal mode occurred later, yet without a significant external stimulus. With the arrival of the Ottomans, this process of feudalization came to an end although the region retained its peripheral status until the seventeenth century, when commercial revolution in the western Europe began to change the socioeconomic structure of the region. In the following centuries, not all parts of southeastern Europe integrated into the global economic system, because of characteristics of land relations and nation-​building processes. In the first half of the twentieth century, the region continued to remain on the periphery of Europe’s economic core, in the second half, during the socialist period, it found itself this time on the periphery of Soviet industrial powerhouse, and today on the periphery of the European Union (EU). It is obvious that the last series of land reforms under direct or indirect scrutiny of the EU, which promoted a neoliberal agenda, has spurred another cycle of enclosure and concentration of land in the newly accessed and candidate states in the region. It seems that this neoliberal agenda has found popular support in the region, yet, it has indeed ignored in large extent food security/​ sovereignty of the nations identified by citizens’ right to access to food, land, and decision-​ making regarding agricultural affairs.

Ossification of Economic Hierarchy and Peripherization After the division of the Roman Empire in the fifth century, the eastern part economy remained desperately autarchic until the emperors showed some progress in creating

Land Grabbing in Southeastern Europe in Historical Context    617 a monetized fiscal system and commercialized agriculture, which enlarged the imperial economy and prospered the population. However, since the end of the sixth century, growing perils of Slavic tribes in the Balkans, Arabs in the east, and bubonic plague, which destroyed almost half of the productive population weakened the empire. Although the empire recovered in the tenth century and started to give a bitter fight back against invaders, Constantinople’s economic position steadily declined. Following the capture of the city by the Crusaders in 1204, the city lost its economic centrality, and this process coupled with a partial orientation of eastern Mediterranean supply networks toward the West, particularly to Venice, Genoa, and Pisa.7 One should see the connection between the swarm of Latin merchants in Constantinople and the changes in the land tenure system in the countryside in this century, which led to breakdown of a delicate balance between smallholders and rural aristocracy. It follows that enlargement of the middle class played an indirect role in large-​scale land concentrations in countryside, which in return increased food supply to urban centres, drew food prices low, and enabled citizens to save more for luxurious living. Latin merchants who consolidated their role as the medium of commercial activities in the eastern Mediterranean, transformed the autarchic economic system of the empire and they must have whetted the appetite of landed aristocracy in several parts of the empire for larger profits. It is certified in historical documents that they really did it in the Aegean islands and Morea—​ and probably in Asia Minor—​and passion of profit drove landlords (archons) to control larger holdings particularly for olive oil and vine production.8 Latins safeguarded their privileges for centuries until the arrival of the Ottomans. Even before the Ottomans, Seljukid Turks and some beyliks, which held under control important portions of the Asia Minor, had granted capitulations to Venetians. Needless to say, the fall of Constantinople was a deadly blow to Latin supremacy, yet the conqueror Mehmet II, who understood the merit of the commercial grid of Latins to reinvigorate economic life in the city, granted capitulations to Venetians and Genoese. Actually with those privileges, the economic hierarchy between the east and west since the eleventh century was reinstated as understood from the fact that the Venetian gold ducat retained its preponderance as a kind of reserve currency, even after Mehmet and succeeding sultans minted their own gold coin.9 Furthermore, occasionally these two Mediterranean powers went to war, yet, following the end of hostilities the Ottoman sultans immediately restored the commercial privileges of the Venetians until the mid-​ sixteenth century, when the French replaced them. A large number of historians agree that the fall of the Byzantine Empire could be explained with the collapse of the established agrarian system, which significantly relied on populous free peasantry as the backbone of its fiscal and military power and as a guarantee of the imperial sovereignty in the face of rising rural aristocracy.10 With economic opening and monetarization, big landholders took the advantage of the new monetary conditions through purchases of the land of those less cash-​rich and introducing wage system on their own properties; the latter especially forced smallholders to seek either their patronage or employment. Monetarization of economy had some other ramifications also; for instance, military officers begun to ask for their

618   NAZİF Mandaci stipends in cash and peasants were compelled to sell their harvest below their real price to pay their taxes. Hence, while the urban population enjoyed cheap and plentiful food, the rural population became more dependent on the new class of landlords.11 Since the tenth century, the Byzantine emperors took measures to halt the transfer of land from the poor (penetes) to the new rising class of rich landowners (dunatoi). However, since the eleventh century onwards, the empire saw a rapid feudalization, which fundamentally shifted the agrarian relations entirely to the detriment of small peasantry12 particularly with the introduction of pronoia; the institution providing military officials with land along with its bounded peasants (paroikoi). However, this new rising landed class’s greed for wealth undermined the legal order, which had been designed to protect small villagers, and in the beginning of the thirteenth century the tenants on the estates of magnates and businessmen for the first time outnumbered independent smallholders.13 Thus, the imperial policies to curb the growing power of landed aristocracy failed and the state lost its struggle against the big landholders for the share of the land and the productive forces on it.14 When they arrived, the Ottomans founded pronoia as a consolidated agrarian institution not only in Thrace or Macedonia but also in Serbia, Montenegro (Zeta), Epirus, and Thessaly. Although these regions were annexed by the Serbian king Stephen Dushan in the fourteenth century, life retained its Byzantine character and besides religious and cultural traits, Serbs gradually adopted the superior Byzantine administrative, fiscal, and legal system including pronoia. Surprisingly, local people from all classes found the new conquerors’ system much fairer, as the Turkish sultans kept the taxes low and aligned with the previous pronoia holders until they cemented their political control to replace the prevailing land tenure system by a more centralized one.15 To the contrary of pronoia, which could be taken as a symptom revealing that agrarian relations in the Balkans had begun to share similar characteristics with the western European feudalism, in its zenith the land tenure system of the Ottomans (timar) managed to avoid transformation of land into personal appanages. In addition, the sultans overtly took side with peasantry (reaya) against timar holders, which always showed a natural tendency to expand their land at the expense of reaya’s land,16 just like their Byzantine predecessors, to maintain the centralized character of the timar system. This system suffered major setbacks in the sixteenth century due to several reasons and led the state authorities to seek alternative ways such as tax farming (iltizam) to maintain transfer of revenues relied upon agricultural surplus in rural areas. Historians recorded the rise of a class of landowners (ayans) and large market-​oriented estates (chiftliks) in the same century certainly because of administrative irregularities; and probably due to the presence of loopholes in the tımar system that permitted capital accumulation in local level.17 However, it was the commercial revolution in western Europe in the seventeenth and eighteenth centuries that fundamentally changed socioeconomic structure of the empire by accelerating the concentration of land in the hands of powerful landholders and emigration of rural inhabitants to urban areas.18

Land Grabbing in Southeastern Europe in Historical Context    619

Modernity, Peripherization, and Capital Accumulation The unprecedented implications of peripherization became visible in the late seventeenth century, with downgrade of peasants’ status to a kind of serfdom in chiftliks as the Ottoman Empire evolved into a neat exporter of raw materials and food to Europe’s industrial centres.19 From the eighteenth century onwards, wealthy local tradesmen and Phanariot Greek hospodars appointed by the Porte grabbed the control of almost all arable land in Wallachia and Moldavia through well-​known methods of enclosure. Hence, when the Ottoman state opened markets in the Balkan periphery, first and comparatively in larger extent the Principalities (Romania) with rich arable lands integrated with the central European economy as happens today, and Romanian landlords, besides traditional small privately owned farms operating under market dynamics were those who primarily benefitted from this liberalization.20 As with the Principalities (Romania), in Serbia and Bosnia high-​ranking Muslim military officers and Ottoman bureaucracy controlled large-​scale agricultural holdings; however, the chiftlik system could not penetrate in the southern part of the Balkans, and the region’s integration with the European economy was very slow. In Bosnia smaller tracts owned by Muslim and Christian villagers still constituted largest part of the surface of arable lands and in Bulgaria chiftliks covered about 20% of all cultivated land, and less than 10% of Bulgarian peasant turned wage labourers.21 Starting from the 1830s the Ottoman Empire carried out some reforms further liberalizing its land sector, yet these changes could not facilitate the familiar conditions to channel the rural labour force into industrial production. The regional economy retained it highly agrarian character, and furthermore liberalization was resisted in some corners of the empire, where feudal relations firmly held their sway, as in Bosnia and Albania.22 Even the Habsburgs, after they took over Bosnia in 1878, did not attempt to change feudal landholding practices and structures or create large estates employing local labour, for they needed to align with Muslim landlords against the rising Slav nationalism.23 In the second half of the nineteenth century, as economic integration with the European market gathered momentum, especially Romania turned into a hotspot of struggle for sharing rural labour between traditional feudal elite and progressive agribusiness owners. In 1863 Cuza reforms ended serfdom by abolishing all dues to landlords (boiars), allotted small plots to landless peasants and a constitutional amendment in 1866 granted foreign investors the freedom to buy agricultural land. Traditional forces bitterly resisted against those fundamental changes and actually, they won as it turned out the plots granted to poor rapidly fragmented due to tradition of equal inheritance, thereby losing it economic effectivity. Once serfdom was banned, peasants who had nothing but to sell their plots now became wage labourers in large estates of the same landlords who resumed feudal practices24 However, peasants’ growing resentment toward landowners, particularly those who leased their estates to

620   NAZİF Mandaci rapacious intermediaries, led to massive peasant uprisings in 1888 and 1907 and finally brought an end to the boiar supremacy.25 The period following World War I can be characterized by dispossession of thousands of alien landlords; hence major motives behind land reform in the region in the 1920s were certainly not economic, but political, mostly concerned with appeasing land hunger of the peasantry and avoiding social unrest.26 In Bosnia, immediately after the end of the war the property of Muslim landholders was appropriated by ordinary people. Until the early 1930s the Yugoslav Kingdom reforms transferred land ownership in Bosnia, Kosovo, and Macedonia to Christian Serb peasants; only in some parts of Croatia and Slovenia Austrians and Hungarians were allowed to retain their holdings. Just as happened in the other parts of the Balkans, except Albania, the departure of Ottoman overlords and collapse of feudal structures undermined traditional communal life style emblematic with zadruga and prompted individualism in young generations.27 In south and central Albania, however, beys remained a powerful political clique congesting process of socioeconomic modernization of the country. After independence in 1912, the vast majority of land was controlled by five families, each owning more than 60,000 hectares.28 During the 1930s instead of putting up a harsh resistance, Albanian big landowners either aligned themselves with the native or foreign political forces or tried to slow down the process of expropriation, which would give a third of their holdings to landless peasants. In Bulgaria immediately after the end of Ottoman rule in 1878, the Bulgarian communities had confiscated the land. The Bulgarian state attempted to regulate the land regime, yet it encountered an organized resistance from the local communities, who wanted to keep it intact. Also agrarian interest organized politically and even dominated the Bulgarian political landscape until the mid-​1930s; a setting which later played into hands of the following socialist regime that planned large-​scale collectivization of land. However, as industrialization progressed at a snail’s pace without leading to any drastic change in labour relations in rural area, the economy remained dependent on agriculture all over the region.29 The Balkan nations remained highly agrarian—​78% of population in Romania, 80% in Bulgaria, and 75% in Yugoslavia; and land reforms did not bring prosperity to the peasantry for several reasons. In the 1920s uneconomic holdings—​only in Romania were landed estates available—​could not compete with highly capitalized farms of America in the European grain market.30 As small peasantry had no access neither to modern agricultural know-​how nor to techniques and machinery, and the tradition of dividing the land among surviving sons continued (by 3 hectares per capita). Only the Stamboliski government in Bulgaria (1919–​1923) can be earmarked with its rigorous efforts to expand rural education, cooperatives, and credit facilities.31 Also, in contrast to their counterparts in Romania, Bulgarian peasants did not migrate to urban areas or overseas but continued to cultivate their farms despite their small size and topographical disadvantages, thereby maintaining their class solidarity.32 It was more difficult in Romania than Bulgaria to convince peasants to give up their autonomy and work for collective farms and factories as wage labourers. Hence, the following two decades were characterized by occasionally rising tensions between

Land Grabbing in Southeastern Europe in Historical Context    621 peasants and the Romanian socialist regime, which arrested more than 80,000 for resisting collectivization.33 Tensions loosened upon rapid industrialization by the 1960s and adoption of semi-​ collectivization, which allowed peasants to retain their land ownership while facilitating them with modern farming equipment. In the beginning of 1960s, private ownership declined by 5%—​save mountainous areas inconvenient for collectivization—​and collectives covered 75% of all arable land in Romania.34 In Bulgaria, where transition was comparatively more peaceful because peasants were convinced to become wage labourers in collective farms through contracts within the so-​called akord system, the arable land was divided among 160 cooperatives, each of which controlled 24,000 hectares.35 At the end of the 1970s, the Bulgarian regime initiated some reforms that decentralized control of state firms in the name of efficiency. Although this so-​called market socialism initiative failed to a large extent, it was successful at least in channelling commercial production from traditional small plots farmed by rural households into the price-​controlled state-​led market.36 Most Bulgarian peasants so firmly adapted themselves to this new lifestyle that as land reforms were initiated in the early 1990s, they resisted to hastily liquidation of collective farms and in large extent gave their electoral support to the former-​communists-​led Bulgarian Socialist Party (BSP).37 In socialist Yugoslavia, the land reform of 1945 expropriated all plots, including Austrian landlords and church property, larger than 25 to 40 hectares, and distributed almost half among landless peasants.38 As a result of land reforms since the early twentieth century, Yugoslavia had become a country of smallholdings, in which more than 90% had their own land and houses. During the first wave of confiscations in 1945, only 11% of the private holdings were affected and 70,000 families were given land. A short period of collectivization between 1949 and 1951 affected 25% of cultivable land, yet then reform discontinued, and by 1957 only about 7.7% of the cultivated area remained part of the socialist sector. The private sector then owned 92.3% of the land and contributed to 94% of agricultural share in the total GDP. However, although the district committees, which managed the expropriated land were disbanded, the land ownership remained limited to 10–​15 hectares.39 In order to deal with the productivity problem inherited in the size of the farmland, agricultural cooperatives, which offered agricultural population technical know-​how, fertilizers, seeds, credit, and marketing services were created. Indeed a kind of socialist economic order in rural areas could be created through those cooperatives, which registered as members at least half of the rural population in the early 1960s.40 Industrialization and mechanization in agriculture wiped off the last remnants of feudal societal structures in rural parts of the country and transformed traditional zadruga-​type self-​consumption families to multifunctional peasant families with young members making contributions to joint household while working in industries except during harvest season. At the onset of socialism, the Yugoslav leadership planned to change the ratio between industrial and rural value of total production to 64:36 by 1951. However, industrialization did not gather the expected pace and surplus of population in rural areas in the following decades, which had actually been thought an asset for rapid industrialization in the beginning, could not be channelled

622   NAZİF Mandaci to clumsily growing industrial sector, thereby creating a disguised rural unemployment.41 Consequently, narrowing employment opportunities—​above 10% unemployment in general—​drove rural population to emigrate—​for instance 790,000 in 1971—​to industrialized Western countries, which suffered labour shortages in the postwar period.42

Post-​S ocialist Period: Another Cycle of Enclosures In Albania, the traditional supremacy of landlords ended with the Hoxha regime’s agrarian reform, which expropriated all land over a certain size—​ total 172,000 hectares—​and distributed it among more than 70,000 landless peasants.43 However, reforms led to serious food shortages, for the peasant masses were not interested in the regime’s expectations of large-​scale production and the state had no sufficient technical equipment to increase the productivity of newly formed state farms.44 The final stage of collectivization began in 1965 and it was finalized with the nationalization of all land in 1976, and until the beginning of the 1980s, little land remained in private use (0.5%) with average 0.3 hectares per capita.45 In the post-​socialist period, despite the opposition of rural nomenclature, decollectivization of abhorred state farms by the Land Law of July 1991 created 400,000 new private farmers with average 3.3. hectares each—​mostly former state farm workers, who were given small parcels of land to till.46 Hence, the total arable land in the country was fragmented into nearly 2 million parcels, most of them too small to be commercially viable.47 The Albanian government did not redistribute the land to its former owners, but distributed it among the rural population. However, land reform could not be implemented in regular way; the state tried but failed to ban the sale of land, to organize cadaster records and consequently to prevent speculative land market and property disputes. Former landlords’ descendants reclaimed and began to fence off the territory as some others rushed for plunder of state farms’ properties. One of the most important outcomes of this transformation was that new private freeholders tuned their small plots to subsistence food production from cultivation of cash crops. Dismantling of state farms led to an excessive unemployment in rural areas despite the fact that production remained labour-​intense.48 In the mid-​2000s, Albania remained predominantly rural as 54% of population lived in rural areas, particularly in the north and half of the labour force of the country was employed in agriculture sector. It was not surprising in a country where there had not been a land market more than thirty years, the immovable property sales were negligible in the early 2000s. Thus, in Albania where the subsistence farming held its sway, not enclosures but rural poverty led to demographic movements. During the Hoxha era free movement of people even in rural areas was seriously restricted; yet the collapse of socialism lifted all barriers to internal immigration and emigration. Dire economic conditions following the end of socialism, due

Land Grabbing in Southeastern Europe in Historical Context    623 to low productivity, outdated technology, and lack of rural credit and insurance markets, drove young male members of households to seek job opportunities in neighbouring Greece and Italy, mostly to diversify economic risks. Departure of the young population drastically shifted division of labour in rural area, particularly increasing working hours of women trying to maintain productivity.49 Following the end of socialism, the Romanian Land Law of 1991 eliminated agricultural cooperatives and returned around 70% of arable land to former proprietors and cooperative workers (around 5 million), disbanded state farms, and converted them into commercial companies, with former owners of their plots becoming shareholders. In the mid-​1990s, state farms enterprises increased by 561 with 160,000 shareholders, covering about 2 million hectares (roughly 15% of all arable land in Romania.50 It was reported that 99.2% of all farms were family subsistence plots (of varying size, between less than a hectare to tens of thousands of hectares); however, since then the proportion of smallholders rapidly dropped as had happened in the nineteenth century, as land began to concentrate in a small clique having financial power and close relations with state bureaucracy. In a short while the newcomers, urban dwellers who conceded to call of the Romanian governments to buy farmland as well as rich estate collectors, grabbed the control of a fifth of the liquidated land of state farms and collectives. However, most of the inexperienced owners preferred to rent or sell their land to intermediaries or collectors. Because the topography of western and southern Romania was very convenient for land mergers and consequently creating large farms, foreigners began to make inroads into agricultural sector despite firm countermeasures by the Romanian government. Before the country’s accession of the EU in 2007, the number of smallholders dropped by 14% while large companies, mostly with Italian co-​owners, which cultivated tens of thousands of hectares increased by 35%.51 Membership in the EU gave fresh impetus to land mergers as the prices since then increased more than twenty times, thereby seriously limiting access to land for ordinary Romanian citizens. At the request of the Romanian government, the EU granted some derogations until 2014, which would limit free movement of capital in the land sector; however, the foreign-​owned land in Romania—​mostly by multinationals such as Rabobank, Generali, ASE Europe, French Limagrain, Guyomarch, Bonduelle, Roguette, had already reached 6.8% of total arable land before this deadline.52 In Bulgaria, although supported by important portion of peasantry, the social democrat government had to liquidate and restore collectives’ plots to their former owners under pressure of the liberals. By the early 2000s thanks to a tug of war between the peasantry, who resisted the removal of cooperatives, and liberals, the liquidation process visibly stalled.53 In 1999 individual farms—​with an average size of 2.6 hectares—​ accounted for 56% of total arable land, whereas collectives and cooperatives continued to cover the rest with an average size of nearly 500 hectares.54 Bulgarian peasants were lucky, for topographic and climatic conditions in Bulgaria were less convenient than in Romania and they were much more successful in showing solidarity to prevent land grabbing by foreign funds and speculators. However, the international land-​use group GRAIN accounted Bulgaria for the countries, which lost the control over 40%

624   NAZİF Mandaci of their farms between 2003–​2010.55 Following EU accession, Bulgaria granted some companies limited liabilities to buy up land, however, as it turned out, although comparatively better organized, Bulgarian small producers lost their capacity to compete with highly subsidized agricultural products from the EU countries and land sales to elite speculators or investors, such as Chinese companies, gathered pace.56 In Yugoslavia under socialism, some large and ‘vertically integrated, output rather than profit driven agrokombinats’ were controlling the whole range of goods and services and enabling transfer of production from farm to final consumer.57 With the collapse of Yugoslavia, a majority of smallholders, now their number inflated with the incorporation of non-​farmer rural residents, remained stuck at subsistence and larger family farms failed in moving to commercially oriented agricultural production due the lack of credit structures. One of the most important implications of this transition from market-​oriented economy was the disappearance of subsidies despite the fact that in the capitalist Western countries agriculture continued to be heavily subsidized. Hence, as experienced in the whole Balkans the initial years of transition saw drastic drop in agricultural output in the former Yugoslav republics too.58 In Serbia agricultural companies were privatized without resolving the ownership problems and, thanks to corruption and mafia activities, enormous tracts of land found their way into the hands of a privileged group of people. For instance, the largest landowners acquired more than 100,000 hectares—​larger than the arable land within the borders of large cities like Novi Sad.59 Despite the ban on sales to foreign entities, outsiders could easily overcome the restrictions by registering their firms as domestic companies with national partners.

The EU Factor, Liberalization of Land Sector, and Artificialization Western Balkan nations lifted the ban on sales upon their signature of the European Stability and Association Agreement (SAA), thereby freeing the hands of foreign investors. The region did not see land grabbing on the same scale as Romania; however, the transition to a market economy affected the agricultural sector in other ways. In the early 2010s only Serbia, which possessed comparatively largest surface of arable land in the western Balkans, lured the attention of Gulf-​Arab agribusiness companies such as Al-​Dahra and Al Rafawed, which announced they would invest in the agricultural sector by buying off some state-​led companies and leasing thousands of acres around Vojvodina.60 However, public pressure on the government pushed the negotiations behind closed doors and transactions transactions, if made, were kept hidden. It was supposed that the transition and opening of trade with the EU would provide primary commodity producers with larger European markets; yet in practice, it resulted in an influx of processed goods and transnational supermarket chains from the industrialized countries.61 It was obvious that the EU-​led reforms omitted the unique conditions of

Land Grabbing in Southeastern Europe in Historical Context    625 rural life in the region; for instance, EU imposed some standards relating to food safety and quality, which placed many smallholders in an awkward position, or neglected the farmers who could not cultivate their land because of uncharted landmines buried in the soil from the civil war in 1992–​1995. Indeed, as follows from the pre-​accession progress reports on Croatia, to the contrary the EU considered the dominance of smallholders and subsistence farming as well as irregularities in cadastral records serious impediments to rural development.62 Drastic changes on the societal cognitive plane and passivity played as important a role as the institutional corruption in the transfer of access and control over strategic resources to local oligarchs.63 This passivity involves public attitudes to enclosure so it cannot be understood well without referring to the dynamics of the current historical context. Currently the regional public sense is challenged firstly by a problem of ‘historic bloc’,64—​as coined by Gramsci—​a widespread view presuming neoliberalism and its principles are unquestionably objective. No doubt, this factor has encouraged the current practices of enclosure, furthermore helping them to launch a new historical epoch by turning land into a fictive financial asset, as elaborated in what follows, favouring beneficiaries abroad. In the whole region transition to free market democracy led to new internal inequalities due to democratic deficit characterized by the bypass of state power in some policy areas, including land relations. Accelerating land grabbing due to EU’s imposing market dynamics in the land sector drove the Romanian and Bulgarian governments to take some measures; yet they faced reprimands and warnings from Brussels. For instance, Romania limited the area sold to foreigners to 100 hectares, made association and/​or employment of Romanian citizens a condition of agribusiness enterprises, forbade offshore companies to buy land, and stalled in upgrading cadastral records.65 Bulgaria also joined Romania in exerting pressure on the Commission to delay the liberalization of farmland market, yet they failed. In November 2013, socialist and nationalist groups in the Bulgarian parliament pushed successfully a decision to extend the prevailing official moratorium on land sales by 2020. The Bulgarian Constitutional Court nullified the decision. In April 2014 this time the Bulgarian parliament amended the law regulating agricultural land ownership and limited sales to persons who had resided in Bulgaria for more than five years. Infuriated with the decision, the EU Commission announced that it would pursue legal action unless Bulgaria stopped violating the founding principles of free movement of capital and align their land regulations with the EU law in two months.66 The irregularities in the EU’s Common Agricultural Policy (CAP) also, particularly those relating to distribution of CAP benefits, helped some privileged groups to establish large-​scale enclosures in Bulgaria and Romania. Data by various studies show that subsidies from the EU concentrated in fewer and fewer hands. For instance in France, with a well-​organized tenure system, 1.2% of beneficiaries received 9% of CAP direct payments, whereas in Romania, where bureaucracy was embroiled in corruption, only 1.1% of beneficiaries received 51.7%, and in Bulgaria 1.1% of beneficiaries captured 45.6% of the subsidies.67 Before membership, the EU granted Romania 200 million dollars for agricultural and rural development, yet this fund largely

626   NAZİF Mandaci went to agribusiness companies rather than smallholders, who lacked collateral or guarantees.68 Furthermore, other founding principles, regarding free movement of labour within the EU seemed to have given momentum to a kind of modern colonization in some parts of Romania. As enclosure raised rural unemployment and led to emigration of the rural population to abroad, mostly to Austria, Spain, and Italy, foreigners, primarily EU citizens followed by Chinese farmers, began to change the composition of the rural ownership and labour force. Romania and Bulgaria had never been colonized by the West, unlike Bosnia to a certain extent under the Habsburg rule after 1878; or Albania as a protégé of Italy in the 1930s.69 However, a large number of Italian farmers in search of low-​cost agricultural land currently resided in Timisioara in western Romania and the fertile Dolj region bordering Bulgaria, and held about 25% of Romania’s whole arable land. Although those foreigners successfully integrated in rural social life here, their economic contribution to local economies is still disputable; for they or the Italian agribusiness companies like Genagricola with large holdings rarely employed the native population.70 Artificialization can be defined simply as the usage of land for non-​agricultural purposes, such as allotting arable land to industrial and urban uses like roads, airports, supermarkets, real estate, tourism enclaves, and leisure parks. As Kay and others argue, land grabbing is ‘just not about the routine functioning of land markets; it also involves the operation of “extra economic” forces’ including financial investors, banking groups, private equity companies, and pension, investment, and insurance funds. By setting up specialized agricultural investment funds under the banner of ‘portfolio diversification’, these investors make use of national subsidies and EU funds to buy and lease arable land to intermediaries with limited time horizons.71 Financialization of land has also led to the appearance of another class of speculators, land collectors, deal brokers, and scammers (arendatori in Bulgarian) who facilitate land transactions—​reportedly related in most cases to corruption.72 As Farmlandgrab bulletins noted, Bulgaria and particularly Romania have rapidly become lucrative destinations for both leading EU, US, China, and Gulf agribusiness companies and also various Western banking groups, and pension and insurance funds, which gravitated toward the more secure land sector after the financial crisis in 2008. For instance, it is reported that the Dutch Rabobank Group’s Rabo Farm Europe, Italian insurance company Generali, and its agricultural branch Genagricola, which currently holds 5,000 hectares of land in Timis and Arad counties in western Romania.73 Denmark’s large commercial labour market pension AP Pension and First Farm, which together control more than 9,000 hectares of arable land in eastern Romania still seek to expand their investments.74 Besides European firms, at the beginning of 2016, the American Southern Harvest Company, a subsidiary of the American investment fund Anholt Services, announced the purchase of 2,700 hectares of farmland in the Botosani region, which expanded land under its control (6,000 hectares) by 45% (Act Media 2016). As for Bulgaria, a considerable extent of foreign direct investment (FDI) in Bulgaria’s agricultural sector came from Gulf countries, Israel, China, and EU countries. By 2016 the German Allianz group held a quarter of the shares in a special fund, which invests in Bulgaria’s agricultural sector. In March 2012,

Land Grabbing in Southeastern Europe in Historical Context    627 the US-​based Black Sea Agriculture Fund invested 1.5 million dollars in northeastern Bulgaria, near the Black Sea, by purchasing 113 hectares of land to being leased back to local farmers.75 According to land speculators, Bulgarian farmland has indeed offered a humble return around 19% annually since 2004; however, Bulgarian land is much cheaper than farmland in the United States (more than 5,000 dollars/​ha in landlocked Kansas compared to 1,850 dollars on average in Bulgaria, where the land also has access to the sea).76

Conclusion In retrospect, although the regime types governing those nations have changed, primitive accumulation practices that harmed the small peasantry were sustained under different banners. Historically, all of the land regimes established in the region, through either externalities or domestic factors, have resulted in unfair distribution of land and generated similar problems of exploitation. Throughout the medieval ages, the rulers engaged in a bitter struggle with feudal elements for the share of surplus as well as the political loyalty of peasantry, for it was a lethal matter of political sovereignty. On the other side, economic peripherization to the Western core turned the region into neat providers of raw material and food in the modern times. During these historical phases, the processes of enclosure developed in varying degrees in accord with the topographical and societal conditions of the societies, as well as geographical proximity to the European capitalist centres. Since the collapse of socialism, southeastern Europe has experienced dramatic changes in land relations, determined by patterns of power relations among the privileged classes, state elite, and peasantry. Just as the collapse of the Ottoman land tenure system in the eighteenth century led to the rise of chiftliks with powerful landlords and bounded peasantry, so too has the liquidation of the collective agriculture of the socialist regimes in the 1990s paved the way for a process in which large portions of arable land became concentrated in the hands of a small group of nomenklatura, tycoons, and foreign agribusiness partners. After 1945 important portion of the region, with the exception of Yugoslavia and later Albania, which relieved itself of becoming a banana republic of the USSR in the 1960s, retained its peripheral position this time within the socialist bloc, which dictated them similar status as less-​developed members of the Comecon. On the other side, ideological priorities of the socialist regimes, like catching up with the industrial and military level of the Western nations gave a coercive character to collectivizations—​or, as criticized by post-​socialist authors, ‘socialist version of capital accumulation.’77 Although lofty goals of socialism were overshadowed by coercive policies, by shattering centuries-​long landowner (bey, boiar, kulak, chiaburi)-​peasant hierarchies, these authoritarian regimes managed to accumulate large amounts of capital and labour force to channel into industrialization, and drastically transformed societies into communities of better educated, secular—​albeit not prosperous—​citizens. However, socialist regimes were not

628   NAZİF Mandaci successful in improving agricultural productivity due to important motivational and technological problems until their demise, and socialist enclosures did not support industrialization as theoretically envisaged and consequently those nations continued to retain their peripheral position to the industrialized West.78 As territoriality loses its meaning, states are no longer as ‘national’ as they were decades ago, and the representations conventionally ascribed to sovereignty are in the process of being remade under different forces. Nowadays the nations of southeastern Europe in many cases voluntarily concede to the processes, which legitimize transformation of the land from a human asset into a financial asset in expectations of fictive gains and rapid development. However, along the last two decades, the EU–​Western Balkans economic integration has revealed a visible dependency on EU. The western Balkans have 73% of their total goods trade with the EU, 75% of the regional countries’ banking system are now owned by Europeans (mainly German, Italian, French, Austrian, and Greek) Bonomi and Reljić (2017, 3), and even some of their national currencies are pegged directly or indirectly to the EU. However, foreign control or investment in agriculture has never reached, for instance, the Romanian proportions. The region, save Romania, has so far remained at the margins of global land grabbing, but its geographical proximity to the EU lured cash-​rich countries like China or the Gulf states, which see the region as a back-​door to lucrative European markets. The return from foreign investments to the national economies is also disputable. For instance, due to the export-​orientation of foreign farmland grabs Romanian agricultural exports doubled in 2013 compared to previous years. However, this economic boom apparently did not benefit Romanian nationals because the poverty and social exclusion rate of the country continued to grow, reaching 42% of its population, thereby making Romania the poorest countries in the EU after Bulgaria Dale-Harris (2015). Romania’s most disadvantaged population live in the northeast, southeast, and southwest of the country, where land grabbing has reached its highest levels. The only advantage the EU membership offers to those countries is the fact that the EU, fortunately, is a supranational platform, which provides access to smallholders in the member countries organizing themselves into an influential pressure group into EU policies.

Notes 1. ‘Serbia and UAE Plan to Establish Agricultural Joint Venture’ (2014), Sloan (2014). 2. ‘Farmer Protests in Serbia: Most Fertile Land Is Given to Arabs’ (2014). The existing legal framework only allowed local tenants to lease the land for three years at €400 per hectare while the new agreement gave the UAE company leasehold for thirty years at €250 per hectare without public bidding. 3. Akram-​Lodhi (2015, 233). Also see Hall (2013). 4. Hairong and Sautmann (2010, 321–​322); Sommerville, Essex, and Billon (2014). 5. De Angelis (2001, 2007). 6. Harvey (2003). 7. Jacoby (2018, 207–​208).

Land Grabbing in Southeastern Europe in Historical Context    629 8. See, for a detailed account of commercial relations in the Eastern Mediterranean, Mango (2009). 9. İnalcık (1977, 85–​87). 10. Setton (1953). 11. Sarris (2010, 39–​40). 12. Moris (1976, 14), Ostrogorsky (1971, 6), Ostrogorsky and Gregorie (1952, 447), Charanis (1953, 415). 13. Bartusis(1990), Treatgold (1997, 680). 14. Macrides (1988). 15. Bartusis (2012, 601), İnalcık (1978). 16. Stoianovich (1953). 17. See Kasaba (1989). 18. See Sadat (1972), Hupchick (2004). 19. See Lampe (1989), McGowan (1997). 20. Gilberg (1979, 83–​85), Enyedi (1967, 358–​359). 21. See Lampe and Jackson (1982). 22. See Pamuk (1987). 23. Friedman (2000, 167–​168); also see Friedman (2004). 24. See Quataert (2005), Chirot (1976). 25. Eidelberg (1974). 26. Giordano (2014, 31–​42). 27. Trouton (1952, 145). 28. Cungu and Swimnen (1999, 607). 29. Turnock (1991, 251–​254). 30. Bideleux and Jeffries (1998, 452–​455). 31. See Neuburger (2013). 32. Ivanov and Tooze (2007). 33. Iordachi and Dobrincu (2009). 34. Chirot (1978). 35. Creed (1995, 536). 36. Meurs and Djankov (2003, 44). 37. Creed (1995). 38. Trouton (1952, 212–​213). 39. Katayanagi (2014, 136). 40. Hoffman (1959, 565). 41. Hoffman (1959, 567–​568), Halpern (1963, 165). 42. Macura (1974). Also see Malačič (1979). 43. Klimov (1956, 79). 44. Wickers (2001, 166). 45. Pita and Osmani (1994, 84). 46. Luthans and Riolli (1997, 63). 47. Bloch (1998, 147). 48. Hall (1996, 185–​186). 49. Carletto, Davis, Stampini, and Zezza (2006). 50. Bordanc (1996, 161–​162), Verdery (1994, 1080–​1082). 51. Bongioanni (2014). 52. Dumas (2016).

630   NAZİF Mandaci 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78.

See Swain (2007). See Noev (2008). Vidal (2014). Duch (2014). Lampietti, Lugg, Celen, and Branczik (2009, 40). Knezevic (2014, 231). Sreckovic (2013). Cabric (2013). Knezevic (2014, 236). Knezevic (2014, 238). Dale-​Harris (2015). See Türkes and Gökgöz (2006). Rigaux (2014), Popescu (2014). Hopkinson (2016). Kay, Peuch, and Franco (2015, 32). Bongioanni (2014). See Fisher (1999). Beperet (2014). Kay et al. (2015, 17–​23). Szocs (2014), Dale-​Harris (2013). Beperet (2014). Fixsen (2016). Razi (2012). Murphy (2014). Medarov (2013). See Dando (1974), Kideckel (1982), Ronnas (1987).

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Chapter 34

C ol onial Leg ac i e s a nd Gl obal Net work s i n Ce ntral Asia a nd t h e Caucasu s Brent D. Hierman

Introduction In the immediate aftermath of the Soviet Union’s collapse, the eight newly independent republics of Central Asia and the Caucasus were confronted with launching multifaceted transitions involving establishing their independent statehood while simultaneously refiguring their political and economic institutions. As a result of the central dissolution of the USSR, independence had come to each of the republics of the union whether they experienced a mass secessionist movement (as in Georgia) or not (as in Kazakhstan). While some of the new polities, like Armenia, could claim to be a re-​establishment of a prior, defunct state, others like Tajikistan and Turkmenistan could not make any claims of prior independent statehood. However, regardless of whether autonomy had been desired or whether a rich history of independence could be referenced, the ethno-​federal structure of the USSR provided each of the states of the region with the trappings of statehood including delimited boundaries, a national language, a legislative body, a public education system, and a political elite. Thus, they all were birthed with the raw material needed to establish themselves as legitimate claimants to the territory that they were to govern over. Economically, however, there was a great deal of disparity between the newly independent republics across the Soviet Union. By design, the Soviet economy fostered regional specialization which exploited variation in natural resources, human capital endowments, and industrial development to efficiently benefit the centralized all-​union economy (Hirsch 2005). Despite regular pronouncements by Soviet leaders

636   Brent D. Hierman about the importance of minimizing inequities between regions, the very logic of the Soviet economy required a distinction between core and peripheral republics in the production of goods. In essence, peripheral republics were in a dependency relationship whereby significant efforts were devoted to producing specific raw materials that were collected by a monopsony purchaser (the Soviet government). These raw materials were then processed and/​or refined in an industrial core, with the proceeds overwhelmingly benefitting the recipient, rather than the producing, republic (Gleason 1991). Of the eight Central Asian and Caucasian Republics, six could be categorized as peripheral (Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan). Only Armenia and Georgia, with their relatively diversified economies, could not be classified as such (Papava 2013; Sarian 2006). Some of the seeds of this economically imperial relationship were sown in the late nineteenth century. Although economic interests were not the main driver behind the Russian Empire’s expansion into the South Caucasus and Central Asia, under imperial control these regions experienced the emergence of extractive patterns. This was especially the case for the development of cotton-​focussed agriculture in Russian Turkestan (predominately in contemporary Uzbekistan) and the oil industry in the Absheron Peninsula (in contemporary Azerbaijan). It was not until the establishment of the Soviet Union, however, that these patterns of extraction were reified and formalized. In this chapter, I outline the development of these extractive infrastructures under the Russian Empire and the Soviet Union in the six peripheral republics just identified earlier and address their legacies. I argue that Soviet-​era patterns of natural resource extraction from the region have been resilient in the post-​independence period. Valuable unrefined commodities such as raw cotton and crude oil have continued to flow out of the region in a similar manner to the Soviet model. Additional exports, including gold and labour migrants, have been added to the outflow. However, major changes have occurred to the direction of transfers from the region. Resources no longer flow solely north to Russia; the establishment of new eastern and western networks, with goods being exported to locations such as China and Europe, have integrated the region into the global economy. Globalization has occurred alongside a basket of liberal economic reforms intended to initiate domestic free markets, deregulate finance, and protect private property. However, these liberalizing economic reforms have been only partially and selectively adopted across much of the region (Cooley and Heathershaw 2017, 10). The spoils of partial and incomplete reform have been captured by kleptocratic regimes and used to preserve and expand the patronage networks which form the backbone of their rule (Hellman 1998; Hale 2015; Engvall 2016). Through the control of revenue generated by the export of raw commodities to developed economies, the region’s autocratic regimes have been able to keep their loyalists in line. In essence, the perpetuation of extractive patterns in Central Asia and the Caucasus has buttressed autocratic rule.

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Colonial Legacies and Global Networks    637

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Figure 34.1  Egalitarian democracy scores, 2000 and 2019. Source: Data from Coppedge et al. (2020).

This dynamic is visualized in Figure 34.1. This figure plots scores from V-​Dem’s index of egalitarian democracy for all eight states in Central Asia and the Caucasus at two time periods: 2000 and 2019. This index captures the degree to which a state provides equal protection of ‘rights and freedoms evenly across social groups’ as well as the degree to which individuals have ‘the basic necessities enabling them to exercise those rights and freedoms, and leading towards an equal potential to influence decision making’ (Sigman and Lindberg 2015, 1). More egalitarian regimes are closer to 1, whereas less egalitarian regimes are closer to 0. The year 2000, rather than 1991, is plotted on the y-​axis to capture dynamics after the initial shock of independence had been settled. This figure demonstrates continuity over time; regimes are in similar positions vis-​à-​vis each other in 2000 as they are in 2019. More importantly, in both years the highest-​ performing states are Georgia and Armenia, neither of which inherited the same extractive institutions as the other states in the region. At the other end of the spectrum are the regimes which inherited economies focussed on the production of cotton (Turkmenistan, Uzbekistan, and Tajikistan) or hydrocarbons (Azerbaijan). Interestingly, Kyrgyzstan and Kazakhstan, whose extractive industries have developed significantly in the post-​independence period score a bit higher than those which inherited their extractive industries.

638   Brent D. Hierman

Russian Imperial Expansion The Russian Empire’s expansion into the South Caucasus and Central Asia was not primarily motivated by economic interests. Instead, geopolitical concerns, most prominently the desire to establish stable frontiers, drove the decision-​making calculus in St. Petersburg to advance south. The specific concerns motivating Russian imperial officials varied, however; in the South Caucasus, rivalry spurred the imperative to project power and later conquer the region, whereas in Central Asia expansion was due to logistical concerns with supplying military forts, not imperial competition. As King writes, the South Caucasus were long recognized as ‘a borderland, a frontier where different peoples, empires, and social systems came into contact’ (King 2008, 22). In the eighteenth century, Russian expansion into this frontier-​zone was initiated to secure the empire’s southern flank against two weakening rivals, the Persian Empire, and the Ottoman Empire (Kappeler 2014, 175). Beginning with naval incursions in the 1720s which resulted in Russia’s (temporary) seizure of the fortresses of Derbend and Baku along the Western Caspian Sea, Russian imperial dominance in the region was established in a series of fits and starts over the next century (King 2008, 25). In 1783, the Georgian Kingdom of Kartli and Kakheti subordinated itself as a protectorate of the Russian Empire. Russia provided limited material support to this protectorate, however, and in 1795 it was invaded by Qajar Persian forces. This invasion prompted the Russian Empire to reassert its military engagement with the region, ultimately resulting in a series of treaties with the Qajar Persians and the Ottoman Empire. These treaties ceded the territories that comprise modern-​day Georgia, Azerbaijan, and Armenia and ensured Russian domination of the South Caucasus (De Waal 2018, 38–​40). Russia’s push into Central Asia is sometimes framed as a parallel case of geopolitical imperial rivalry. According to this school of thought, the Russian Empire’s conquest of the region was spurred by a drive to challenge (or at least to be perceived as a challenge to) British control of India (Hopkirk 1994; Lieven 2002, 210). However, as Morrison has argued, consideration of British India only rarely factored into the decision-​making of Russian statesmen and soldiers responsible for the empire’s expansion (Morrison 2014a). Russia was pulled into the politics of the Central Asian steppe in the eighteenth and nineteenth centuries through the establishment of protectorate relations with nomadic Kazakhs (Levi 2017, 175–​178). But, extending a militarized border to protect their tributaries was unduly challenging and expensive to maintain given the harsh realities of life on the steppe. Thus, according to Morrison, the Russian conquest of Tashkent (the contemporary capital of Uzbekistan) in 1865 was driven by a military need to expand southward into the sedentary zones of the region where fertile land could supply and sustain a line of forts (Morrison 2014b). The timing of the conquest of Tashkent led some analysts to attribute southward expansion to the ‘cotton hunger’ of Russian textile manufacturers who were looking for alternative sources to offset the global shock caused by the American Civil War (Beckert

Colonial Legacies and Global Networks    639 2015, 346). Ultimately, however, advocates for this school of thought have failed to empirically demonstrate that the Russian textile industry had an outsized role in imperial policy, nor have they accounted for the fact that the Russian conquest of the region began a decade before the Civil War (Morrison 2014a). Ultimately, economic considerations were of secondary importance to military concerns in explaining Russian expansion into Central Asia.

Cotton as an Imperial Imperative Although ‘cotton hunger’ did not motivate Russia’s expansion into the sedentary zone of Central Asia, under its control this territory (organized into a single province, Turkestan) was quickly transformed into a cotton supplier for the empire. Cotton had long been grown in Turkestan, but the variety native to the region was not suitable for industrial use. A group of private entrepreneurs supported by the governor-​general of the region, Konstantin von Kaufman, introduced American varieties more appropriate for textile manufacturing in the 1870s and 1880s. The land under cotton in the region drastically expanded with the introduction of these varieties as well as high demand from the metropole. The tsarist-​era cotton-​boom was further enhanced through generous tax breaks that subsidized the production of cotton, as well as the construction of a rail link to Tashkent that reduced shipping costs (Penati 2013). By 1913, Turkestan produced nearly half of the empire’s cotton needs. Unsurprisingly, this boom drastically reshaped the region: almost 20% of irrigated land in the region was devoted to the production of cotton (Loring 2014, 86). As important as tax breaks were to encourage the cotton boom, Penati has shown that they were not the result of coherent planning in St. Petersburg. For instance, the imperial finance minister, Vyshnegradskii, was concerned that the encouragement of Turkestani cotton production would harm state finances through the reduction of tariffs from imported cotton (2013, 773). Other imperial officers feared that the cotton boom was a temporary bubble that, if burst, could result in regional crises (2013, 756–​757). Penati demonstrates that the subsidization of cotton, which was quite costly for the imperial treasury, was implemented because of local Turkestani demands. In effect, the initial expansion of the cotton sector empowered Turkestani actors to pressure the centre for tax breaks, which in turn encouraged even more cotton production (Penati 2013). Ironically, it was under the Soviet Union, which was avowedly anti-​imperialist, that Central Asia’s role as a raw cotton producer was firmly institutionalized and formalized in a top-​down manner. During the civil war, the economy was devastated by the disruption of the flow of raw materials from the periphery to the Russian metropole (Loring 2014, 87). In 1920, Zinoviev, one of the founding members of the Bolshevik Politburo proclaimed: ‘We cannot do without the petroleum of Azerbaijan or the cotton of Turkistan. We take these products which are necessary for us, not as the former exploiters, but as older brothers bearing the torch of civilization’ (Fainsod 1953, 304; see

640   Brent D. Hierman also Shahrani 1993, 127). Despite Zinoviev’s stated intention to bear ‘the torch of civilization’ in exchange for needed raw goods, in the wake of the war, priority was given to reviving the industrial base in the metropole rather than encouraging diverse economic development in the periphery. Within a few years, the logic of the all-​union economy began to take hold. This logic dictated that a ‘natural division of labour’ should be established with economic specializations based upon distinct geographic regions’ access to natural resources, as well as the cultural mores of the population (Hirsch 2005, 74). For much of Central Asia, this naturally meant that cotton was to be emphasized above all other economic investments. By expanding cotton production in Central Asia, the Soviet Union’s overall industrial base would be strengthened, and its fiscal condition would be improved since it would be less reliant on cotton imports (Loring 2014, 87). In the late 1920s, Central Asia’s industrial development was further de-​emphasized when the Soviet Union embarked upon a state-​directed industrialization campaign that reinforced existing economic concentrations; in effect, industrialized regions were further industrialized, whereas raw-​material-​producing regions were not (Pianciola 2017). Although the industrial development of Central Asia was de-​emphasized, concerted efforts were still made to bear ‘the torch of civilization’ to the region. The mass collectivization drive of the 1930s was an explicit, and brutal, effort to modernize the countryside and peasantry of the entire Soviet Union. As a central initiative, party officials were careful to frame collectivization as a decolonization effort that would benefit the rural poor. Despite the widespread violence, rural disruption, and mass deaths that were associated with this process, Kamp and Zanca found that in oral histories, survivors of the mass collectivization process did not describe the construction of collective farms as an externally imposed disruption, but rather as a project in which they actively took part to gain access to promised benefits (Kamp and Zanca 2017). In the post-​Stalin era, collective farms served as an important arm of the Soviet welfare state, ensuring peasant access to education, health care, and culture (Kalinovsky 2018, 178–​181). Regardless of their role in the distribution of welfare, the establishment of collective farms effectively killed any prospects for Soviet Central Asia to develop beyond being a raw material producer. From the perspective of Stalin, the leadership of the newly delimitated republic of Uzbekistan should have remained unwaveringly concerned with maintaining the production of cotton: Teichmann writes that in the 1930s, Stalin ‘reduced his communication to the Uzbek leadership to questions of cotton and collectivization of cotton farmers’ (2007, 507). Even districts that were unsuitable for growing cotton were remoulded by this imperative; fields in northern Kyrgyzstan and southeastern Kazakhstan were responsible for producing the grains which were used to sustain cotton-​growing regions (Loring 2014, 91). The intensification of cotton production in Central Asia remade the landscape. Most notably, mass irrigation projects to enhance the acreage under cotton diverted water from the river systems that fed the Aral Sea. Starved of its water, formerly the fourth-​ largest inland lake in the world began shrinking in the 1960s, leaving behind a devastated ecosystem. Despite their environmental costs, these investments were effective. From

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Colonial Legacies and Global Networks    641

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1980 Tons/Cotton

Figure 34.2  Cotton production in Central Asia and Azerbaijan, 1953–​1988. Source: Data from Gleason (1990).

1913 to 1940, the amount of cotton produced in Central Asia increased by 188.5% (from 646 thousand tons to 1,864 thousand tons). By the 1970s, not only had the Soviet Union achieved autarky in the cotton sector but also it was able to export surplus raw cotton. Figure 34.2 charts the production of cotton in Central Asia and Azerbaijan from 1953 through 1988. This figure also charts the percentage of Central Asian cotton relative to all the cotton produced in the USSR (these data do not include Kazakhstan). As this figure shows throughout this period, nearly all cotton produced in the USSR was grown in Central Asia.

Post-​S oviet Cotton Dependence What was the effect of transforming much of Central Asia into a cotton-​producing colony? Measuring regional disparities of wealth and development in the Soviet Union is made difficult by the nature of the command economy which allocated goods through extra-​market mechanisms. Perhaps the most reliable measure of relative wealth is retail commodity turnover which captures the production and demand for consumer goods at the regional level (Dmitrieva 1992; Hale 2000). By this standard, as Table 34.1 indicates, in 1988 the Central Asian and Caucasian republics were the eight least-​developed republics of the entire Soviet Union. Of these, the heavy cotton-​producing republics of

642   Brent D. Hierman Table 34.1 Least Developed Republics in the Soviet Union, 1988 Republic

Retail Commodity Turnover (000 Rubles per capita)

Georgia

1.13

Armenia

1.09

Kazakhstan

1.07

Kyrgyzstan

0.88

Turkmenistan

0.88

Uzbekistan

0.76

Azerbaijan

0.75

Tajikistan

0.68

Source: Data from (Hale and Taagepera 2002).

Table 34.2 Average Cotton Exports by Country, 1991–​2000 Export amount Average Global (1000 480lb. bales) Rank Uzbekistan

4661.2

Turkmenistan

1086.4

6.3

524.3

11.7

Azerbaijan

316.5

18.2

Kazakhstan

244

21.8

Tajikistan

Kyrgyzstan

61.2

2

38.2

Source: Data from USDA Foreign Agricultural Service (2018).

Turkmenistan, Uzbekistan, Azerbaijan, and Tajikistan represent the most underdeveloped republics of the entire Soviet Union alongside Kyrgyzstan. Once the Soviet Union collapsed, the dependence relationships fostered by the all-​ union economy left these economically underdeveloped new states desperate for hard currency. For cotton-​producing states such as Uzbekistan, the natural solution was to continue with the intense production of raw cotton fibre but now geared towards export rather than internal-​Soviet consumption. Table 34.2, which reports the relative rank of the Central Asian states plus Azerbaijan in global cotton exports in the decade that followed the collapse of the Soviet Union reveals the continuity of raw material production. For every year of its first decade, Uzbekistan trailed only the United States in the

Colonial Legacies and Global Networks    643 total amount of cotton exports. Turkmenistan with an average position of 6.3, was one of the top ten cotton exporters each year of its first decade; while Tajikistan, with an average position of 11.7 was one of the top fifteen cotton exporters in nine out of it first ten years of independence. Dependence on this commodity meant that exports were relied upon without regard to the global price of cotton: for instance, Uzbekistan exported 11.5% more cotton in 1993 than it had in 1991, even as the global price of cotton declined 23.9%. To ensure continuity in export revenue, a core component of the Soviet cotton-​ producing infrastructure, collectivized agriculture, was left in place in Uzbekistan, Tajikistan, and Turkmenistan for decades. These three republics have been laggards in land reform and farm reorganization; private land ownership is not permitted in any of these states, and the process of farm individualization has been incomplete and disjointed. For instance, despite decades of policies aimed at individualizing agriculture, significant clusters of collectivized farms remain in Tajikistan’s cotton-​growing lowlands (Hierman and Nekbakhtshoev 2018). Officially, Tajikistan ended its cotton procurement system and ceased state financing of agriculture in 1996. However, the privatization of credit and cotton markets opened the door to elite capture by well-​placed regime insiders. Thus, although farmers are officially free to plant crops of their choosing, political pressure is often placed upon them through district authorities to grow cotton and to sell harvests at specific ginneries owned by well-​placed individuals (Hofman 2018). Uzbekistan has undergone several waves of farm restructuring. In the mid-​2000s, large farms were successfully fragmented into smaller production units. However, the small farms were not optimized for the existing irrigation networks or machinery access, which threatened cotton yields; thus, around 2008, the government began to once again consolidate farmland to promote large-​scale cotton and wheat farms (Djanibekov et al. 2012). Over this time, the state procurement system remained in place. Under this system, farmers fulfil set production targets, generally growing cotton on around 60% of their land, and the government regulates when seeding, irrigating, fertilizing, and harvesting occurs (Djanibekov et al. 2010). Presidential decrees issued in 2020 have indicated that the state monopolization of cotton exports will cease but it is too early to tell whether this will lead to increased autonomy for farmers. Due to the legacy of an undermechanized agricultural sector, cotton production in Uzbekistan (and Central Asia more broadly) relies on human labour (Pomfret 2002). However, since cotton has been sold to state-​backed monopolies at centrally determined (low) prices, it has been difficult to muster the needed labour for harvesting cotton. As a result, throughout Uzbekistan, local government authorities mobilize state workers (for instance teachers, and medical professionals) as well as young students to pick cotton during the harvest (Swinkels, Romanova, and Kochkin 2016). According to the Cotton Campaign, a watchdog organization concerned with forced labour in cotton production, as of 2012, Uzbekistan forced more than a million children to harvest cotton a year (Responsible Sourcing Network 2012). Quite obviously, apart from the human rights violations, this grossly disrupts both the educational and medical fields each autumn. Similar state-​mandated mobilization of human capital for the cotton harvest occurs in Tajikistan and Turkmenistan.

644   Brent D. Hierman Over the past several decades, most of Uzbekistan’s raw cotton exports have gone to Asian destinations for processing into textiles and apparel. In the mid-​2010s, Bangladesh and China accounted for roughly 80% of Uzbekistan’s cotton exports (Leonardi and Sirtioglu 2017). The bulk of these exports are processed into textiles and apparel before being resold to eventual end-​user markets. A relatively small amount of raw cotton continues to be shipped to the former metropole, Russia, where it is consumed domestically (Responsible Sourcing Network 2012). Uzbekistan’s development of spinning mills over the past decade has increased its capacity to export cotton yarn, predominately to China and Turkey. Collectively, the value of cotton and cotton products exported from Uzbekistan is worth more than a billion dollars each year (Leonardi and Sirtioglu 2017). Similar patterns exist for Tajikistan and Turkmenistan. Much of the value of these exports end up in the hands of regime insiders. Consequently, in Uzbekistan and Tajikistan, the continuity of the cotton export economy has served to entrench autocratic rule. Soviet-​era cotton extraction institutions have been modified in the thirty years of independence, but they continue to link rural lives with the halls of central power. Thus, not only has cotton provided needed hard currency for the regimes to remain solvent but it has also underpinned patronage systems. Regime loyalists are rewarded by securing positions within the patronage system, allowing access to the rents from cotton production with very few benefits trickling down to farmworkers.

International Investments in Hydrocarbons and Mining For the first several decades after the Russian Empire’s conquest of the South Caucasus, oil and natural gas extraction in the Absheron Peninsula in contemporary Azerbaijan continued in much the same way as it had before occupation. Oil that naturally seeped to the surface or could be found in shallow hand-​dug wells was collected in crude buckets to be used primarily for medicinal purposes and for household use. Similarly, natural gas seeps had been long been exploited by residents for household use as well as to fuel Zoroastrian temples (Hastings 2020, 29–​31). Once kerosene emerged as a valuable commodity in the mid-​nineteenth century, the Russian Empire began to focus on exploiting the peninsula’s hydrocarbon wealth; however, it lacked domestic sources of capital to invest in the infrastructure needed to industrialize this sector. With the relaxation of land-​leasing restrictions, foreign entrepreneurs who possessed the needed capital, networks, and risk acceptance were incentivized to make significant investments in the peninsula (Hastings 2020, 37; Sicotte 2017, 50). To get oil to markets, these same entrepreneurs lobbied the Russian Empire for the completion of the Transcaucasian Railway and later spurred the construction of the Transcaucasian Pipeline. As a result of these investments, the oil industry boomed, producing slightly more than half of the world’s oil by the turn of the century (Hastings 2020, 47–​49).

Colonial Legacies and Global Networks    645 Oil wealth transformed Baku and its immediate surroundings into a prize during periods of uncertainty. Near the end of World War I, the British Empire briefly gained control of the city and sought to stabilize its oil industry (Sicotte 2017, 180). A few years later, the Bolsheviks recognized that the capture of the city and environs in 1920 was a crucial step in their efforts against the Whites (Brinegar 2017). During World War II, Nazi Germany viewed the oil of Baku as vital for their campaign against allied powers. In response to the Nazi threat, over three years (1941–​1943) the Soviet Union partially evacuated and shut down the oil industry on the peninsula, capping more than 700 wells (Hastings 2020, 198–​999). Although production resumed in the immediate postwar years, Baku would never again play as prominent a role in the Soviet energy extraction sector; investment and expertise were increasingly directed to Russian oil wells in the Volga and Urals (De Waal 2018, 173). Thereby at independence, Azerbaijan inherited an inefficient and decaying oil extraction industry. Yet, it was imperative to reinvest in this sector, since Azerbaijan lacked an alternative source for foreign currency: unlike Uzbekistan, for instance, its agricultural sector was relatively small, greatly disrupted by its war with independent Armenia, and required significant investment to be internationally competitive (Jones Luong and Weinthal 2010, 307). As a result, foreign investors were almost immediately welcomed back to Baku to spur the revitalization and expansion of the hydrocarbon sector. This resulted in the signing of the so-​called Contract of the Century in 1994. This deal, which was spearhead by British Petroleum to develop three sizeable oil and gas fields, was signed by nine different foreign companies representing six countries and was estimated to be valued at $10 billion at the time of signing. What is especially notable about this deal and subsequent ones is that Azerbaijan retained ownership of its energy reserves. According to Jones Luong and Weinthal, this enabled the state to preserve long-​standing patronage networks that had been intertwined with oil extraction throughout the Soviet era (2010, 307). Thus, the welcoming of foreign investors enabled the regime to affirm its power through the control of valuable energy rents. In comparison to Azerbaijan, Kazakhstan’s energy resources were largely underdeveloped throughout the Soviet period. However, the fact that it is estimated to possess around 3% of the world’s oil reserves made it an attractive target for international investors (Laruelle and Peyrouse 2013, 166). To further spur investment, unlike Azerbaijan it initially permitted the private ownership of extracted petroleum (Jones Luong and Weinthal 2010, 264). These efforts were successful: by 2007, seven enterprises (dominated by major international oil companies like Chevron, ConocoPhillips, and ExxonMobil) were responsible for more than 90% of oil production in the country (Kaiser and Pulsipher 2007). The wealth generated through the privatization of its energy resources enabled the new regime to maintain the regionalized patronage networks that prevailed during the Soviet-​era (Jones Luong and Weinthal 2010). Since the mid-​2000s, Kazakhstan has begun to renationalize portions of its energy sector by establishing first-​buyer rights for the state on any energy assets offered for sale. This has enabled the national oil company, KazMunaiGas (KMG), to establish itself as a vital domestic player (Orazgaliyev 2019). By balancing opportunities for international

646   Brent D. Hierman investors while carving space for KMG, the regime has deftly ensured that oil rents are sufficient to provide for welfare and prestige projects to maintain popular non-​democratic legitimacy, while also ensuring that regime insiders have access to informal rent flows (Junisbai 2010; Groce 2020). International investments and loans developing export routes for gas and oil resources have also flowed into the region. At independence, the inherited infrastructure tied the energy sectors of the new states directly into western Russia. Western oil companies soured on these routes after they ran into difficulties coordinating with the Russian pipeline monopoly, Transneft (Chow and Hendrix 2010). In response, a consortium of private international companies and national oil companies funded the $4 billion Baku-​Tbilisi-​Ceyhan (BTC) pipeline which crossed the Caucasus to the Turkish coast, enabling a million barrels of oil a day (much of it from Azerbaijan) to bypass Russia as it entered the international market. Because of Kazakhstan’s geographic location, most of its oil and gas continues to flow north; a significant portion of this travels through the private Caspian Pipeline Consortium (CPC) pipeline which delivers oil to the Black Sea port of Novorossiysk. Since 2006, it has also exported oil east to China in the China-​Kazakhstan pipeline. This pipeline is expected to eventually reach the Caspian Sea and export as much as 20 million tons per year (Laruelle and Peyrouse 2013). In addition to oil, the region’s significant gas deposits have generated important export revenue. Turkmenistan is particularly reliant on gas exports. Based on World Bank data since independence, natural gas rents have represented more than a quarter of the state’s GDP (26.8%). Exacerbating its reliance on gas, Turkmenistan suffers from a limited number of buyers. Since 2011, the majority of Turkmenistani gas has been exported to China giving the state near monopsony power. While neither state is regularly transparent with pricing data, reports from the region indicate that in 2016, China paid far less for gas from Turkmenistan than it did from any other supplier; it paid $185 per 1,000 cubic meters to Turkmenistan compared to an average of $228 per 1,000 cubic meters to its other suppliers (Eurasianet 2016). Not only is Turkmenistan poorly compensated for its primary export resource, but a significant amount of revenue from these gas sales is believed to service Chinese loans. That these loans were extended to develop the gas fields and construct the pipelines to carry natural gas to China reveals the vulnerability of Turkmenistan’s global position (Pannier 2017). Like Kazakhstani oil reserves, the gold riches of Central Asia were largely unexploited under the Soviet Union (Laruelle and Peyrouse 2013, 199). With independence, however, foreign mining companies sought to strike deals with local governments to gain access to reserves. The most significant of these foreign investments occurred in 1997, when the Canadian company Cameco spent $450 million to begin operating the Kumtor gold mine in Kyrgyzstan. Currently, the mine is fully owned by Cameco’s successor, Centerra. Kyrgyzstan through its state company, Kyrgyzaltyn, is Centerra’s largest shareholder. It is difficult to overstate the importance of this single enterprise to the Kyrgyzstani economy: it generates around half of the state’s industrial capacity, up to one-​third of its exports, and is responsible for around 10% of Kyrgyzstan’s GDP

Colonial Legacies and Global Networks    647 (Mogilevskii, Abdrazakova, and Chalbasova 2015). As such, it represents a particularly lucrative opportunity for rent-​seeking elites (Engvall 2016). Given Kyrgyzstan’s relatively pluralistic political environment, mining in Kumtor and elsewhere has generated a great deal of contention and sparked resource nationalist movements. These movements have voiced concern over the continued exploitation of foreign companies of Kyrgyzstan’s natural wealth and framed the ecological damage and safety violations of these foreign-​based companies as an afront to the Kyrgyzstani people (Fumagalli 2015). Grievances with foreign-​backed mining companies have occasionally led to physical confrontations that have forced the temporary suspension of operations (Putz 2019; Rickleton 2020). Current president, Sadyr Japarov, rose to national prominence by tapping into these local frustrations and demanding that mines be nationalized. Since the revolt that led to his ascendancy in October 2020, Japarov initially attempted to strike a balance between placating international investors and his nationalist supporters. However, he signed a bill in May 2021 which cleared the way for the government to ‘temporarily’ manage the mine and spurring an international arbitration proceeding. Japarov’s apparent initial reticence to alienate foreign investors despite his past nationalist rhetoric underscores the essential role that foreign capital can play in sustaining patronage politics of the region. Unlike the cotton industry in Uzbekistan and Tajikistan, at independence, the hydrocarbon and mining sectors in Azerbaijan, Kazakhstan, Turkmenistan, and Kyrgyzstan were either underdeveloped or decaying. Thus, to produce enough revenue to preserve the patronage networks at the hearts of these newly independent regimes, foreign investment was needed to kickstart these sectors. While the specific rules regarding foreign ownership varied, the development of mineral and hydrocarbon extraction industries across the region provided tremendous opportunities for the enrichment of foreign investors and regime insiders alike. The personalist authoritarian regimes of the three hydrocarbon producing states (Azerbaijan, Kazakhstan, and Turkmenistan) each survived a leadership transition, in part through the wealth generated by oil and gas rents. Resource nationalist movements targeting mining companies have been prevalent in Kyrgyzstan where no single patronage network has been able to fully consolidate control.

Financial and Migrant Flows While the export of raw materials to markets around the globe is an obvious sign of the globalization of the region, it is far from the only one. Since independence, external states have invested in the physical infrastructure of the region. These investments have been pragmatic and instrumental. For instance, the United States invested more than $318 million into Kyrgyzstan to operate a military installation at the country’s main international airport to support the war in Afghanistan (Akylbayeva 2016). Currently, China is the most visible investor, generating significant sovereign debt in recipient

648   Brent D. Hierman countries. Alongside external investments to enhance transportation networks linking the region to the rest of the world, there have also been significant outflows of human labour, and financial wealth from kleptocratic elites. Each of these additional indicators of global connections (Chinese debt, migrant labour, and financial offshoring) is discussed briefly in this section.

Chinese Foreign Debt Central Asia and the Caucasus are critical components for the ‘land belt’ portion of China’s massive Belt and Road Initiative (BRI) which is intended to link China to the Eurasian landmass through improved rail, road, and pipeline infrastructure. To be sure, Chinese investment in the region began well before BRI was announced in 2013; however, in recent years, Chinese foreign direct investment in Central Asia has increased from $8.9 billion in 2013 to $14.7 billion in 2018 (Umarov 2020). With this investment, China has emerged as the most important creditor in the region. As discussed earlier, regarding Turkmenistani debts for the development of gas fields and pipelines, given the limited diversification of many of the region’s economies, servicing sizeable debts has the potential to cause significant economic pain. The two most debt-​ridden countries of the region are also the poorest: Kyrgyzstan and Tajikistan. In both states, debts owed to China represent more than 20% of GDP. This has led to speculation that assets may be traded for loan relief (Umarov 2020). Indeed, despite denials by government officials, some have speculated that Tajikistan granted a silver mine concession to a Chinese company in 2019 as part of a loan forgiveness plan (Najibullah 2019). Concern over China claiming state assets to relieve ballooning debts is widespread in the region. Similar anxiety has been expressed over the prospect of Chinese ‘land grabbing’ agricultural property; however, to date, actual Chinese investment in Central Asian farmland has been minimal. Most of the investment has been limited to Tajikistan, where a few hundred hectares were leased to a Chinese company, Jing Yin Hai (Hofman 2016). In other states, Chinese foreign investment in agricultural land may have been limited out of concern for stirring up nationalist sentiment. For instance, in 2016, a proposed land bill in Kazakhstan that would have permitted longer-​term land leases for entities with up to 50% foreign ownership was scuttled due to protests over the fear that Chinese-​based companies would claim large tracts of arable land (Kudaibergenova 2016).

Remittances and Offshoring A major asset that has been exported from the region in massive quantity is human labour. As Figure 34.3 shows, over a ten-​year period (2010–​2019), Tajikistan and Kyrgyzstan were the two most remittance-​dependent states in the world. For both states,

Colonial Legacies and Global Networks    649

Tajikistan Krygyz Republic Nepal Haiti Lesotho Moldova EI Salvador Samoa Honduras Liberia 0

5

10

15 20 Percent of GDP

25

30

35

Figure 34.3  Average remittances (as % of GDP, 2010–​2019). Source: Data from The World Bank (2020).

migrant labourers accounted for an average of more than 25% of GDP, making migrants their most valuable export. Russia is the largest recipient country for these migrant labourers. Despite widespread xenophobia and discrimination faced by Central Asian migrants in Russia, the state remains an attractive destination; many migrants have at least some knowledge of the Russian language, they can travel to the state visa-​free, and there are numerous air transport links (Lemon 2019). Ironically, throughout the Soviet period, state officials regularly voiced concern that Central Asian villagers were generally reluctant to move to urban areas (Kalinovsky 2018, 177). For many villagers in contemporary Central Asia, dire economic conditions have eliminated the choice to stay behind. While remittances can, and often do, improve the quality of life for migrant-​sending families, the bulk of the money is generally put towards household needs and is not reinvested directly into developing new industries locally (Lemon 2019). At the same time, remittances are associated with inflating the local currency and undermining other exports (Bhutia 2019). Further, the massive outmigration of largely male workers has drastically reshaped life across the countryside and left many women and children vulnerable to exploitation (FIDH 2016). Tajikistan and Kyrgyzstan’s economic reliance on migrant labourers has left these states vulnerable to economic slowdowns in recipient countries. Russia has also exploited this dependence by threatening to send migrant labourers home should the sending countries not toe the proper foreign policy line (Swanstrom 2012).

650   Brent D. Hierman Overall, remittance flows into the region are responsible for keeping many rural poor families afloat. But as essential as these internal flows are for many families, a great deal of the financial rents gained from resource extraction flows out of the region. As Cooley and Heathershaw have demonstrated, the elites of the region have exploited Western financial architecture and offshore companies to ‘hide financial transactions or divert state funds into the accounts of leaders and their cronies’ (2017, 17–​18). In essence, the Central Asian kleptocratic rulers have enlisted the assistance of major international banks and legal advisors to establish and manage foreign shell companies, which in turn prop up their domestic patronage networks. Through these offshore accounts, regime loyalists can launder corrupt assets, which can be returned to the domestic economy disguised as foreign direct investment (Cooley and Heathershaw 2017, 34). Through this process, the kleptocratic regimes simultaneously can consolidate control over the states by squeezing out rivals, while also storing assets for their personal use.

Conclusion This chapter has advanced the argument that the contemporary political economy of Central Asia and the Caucasus cannot be fully understood without considering the legacy of imperial domination, particularly in the six states of the region that were birthed without diversified economies. This legacy is most evident in the continuity of Soviet-​era extractive agricultural institutions. Independence did change these institutions; they were nationalized and refocused to export raw cotton to global markets, but their endurance has ensured that significant portions of the region’s arable land and rural labour remain devoted to cotton production. Even where the contemporary export of raw commodities from the region has expanded beyond Soviet-​era sectors to include previously underdeveloped industries such as gold mining in Kyrgyzstan and oil extraction in Kazakhstan, the general pattern of resource extraction established during the Soviet Union remains. Although its source is now varied, outside capital has been crucial for the development of new extractive industries in the independent states. Furthermore, as in the Soviet era, processing and/​or refining the raw commodities produced in the region has generally occurred elsewhere. In recent years there have been signs that a few of the states of the region may be able to move beyond raw commodity exports. For instance, Uzbekistan has established hundreds of mills producing textiles and/​or cotton yarn to consume raw cotton domestically and has publicly stated that beginning in 2020 it will cease to export lint cotton (Sirtioglu and Strossman 2019). Kazakhstan has also improved its capacity to add value to its own vital commodity through the modernization of its oil refineries. Before this effort, Kazakhstan regularly imported refined oil products such as gasoline from Russia even as it exported tons of crude oil. The modernization of its refineries is intended to produce enough oil products to meet domestic demand and export surplus (Hydrocarbon Processing 2018).

Colonial Legacies and Global Networks    651 Undoubtedly, these developments positively suggest that Kazakhstan and Uzbekistan are vertically integrating their most valuable economic sectors. Their relative wealth has facilitated these efforts, which is why it is unlikely that the poorer states of the region, especially Tajikistan and Kyrgyzstan, will be able to make similar progress. Furthermore, it is ultimately doubtful that these efforts will result in significant liberalization of economic opportunities for most of the populations of either Uzbekistan or Kazakhstan. Rather, it is likely that additional wealth generated through the export of increased-​ value commodities will remain concentrated in the hands of the few. It is also probable that this wealth will be sheltered offshore with the assistance of Western financial institutions. Fundamentally, sweeping changes to the political economy are unlikely as political elites will be careful not to disrupt the very patronage structures from which their power derives. Ultimately, the hardiness of these patronage networks in the successor states of the region may prove the most enduring legacy of the Soviet Union.

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Index

Due to the use of para id indexing, indexed terms that span two pages (e.g., 52–​53) may, on occasion, appear on only one of those pages. Note: Tables and figures are indicated by t and f following the page number

A absolute poverty, 418, 430–​31, 432 absolute rent, 218–​19, 225 accumulation by dispossession (ABD), 20, 71, 312, 505–​6, 509, 615–​16 The Accumulation of Capital (Luxemburg), 2, 48–​52, 107, 389–​90, 392–​93, 515–​16 Acosta, Alberto, 498–​99 Adán, Tomás Terry, 174 Afghanistan war, 158–​59 Africa colonialism in, 17 investment imperialism and, 22 productivity differentials, 271 surplus labour and, 269–​70 African, Caribbean, and Pacific (ACP) states, 208–​9 African National Congress (ANC), 542 Age of Discovery, 16 Age of Empire, 119 aging populations, 269–​70 agrarian labour agribusiness monopolies and, 296 agricultural commodity prices and, 292–​97, 293t, 295t agriculture under imperialism, 286–​89 decolonization and, 290–​92 economic transformations through capitalism, 297–​99 introduction to, 6, 285–​86 neoliberalism and, 290–​97 agrarian surplus, 287–​88 Agreement on Agriculture (AoA), 292–​93 agribusiness monopolies, 296

agricultural commodity prices, 292–​97, 293t, 295t agriculture under imperialism, 286–​89 Albania, 620, 622–​23 Aleys, Colin, 142 Algeria, 498–​99, 500, 502–​3 Allende, Salvador, 161–​62, 274 Alliance of Small Island States (AOSIS), 489 Alternative Information and Development Centre, 544 American Civil War, 176 American Counter-​Revolution (1776), 184–​85 American Southern Harvest Company, 626–​27 Amin, Samir, 77, 251, 457, 540 anarchic system, 118, 120 Angell, Norman, 116–​17 Anglo-​Ottoman treaty of free trade (1838), 158 Anievas, Alexander, 57 anti-​capitalism, 438 Anti-​Capitalist Chronicles (Harvey), 525 Anti-​Dühring (Engels), 391–​92 anti-​elitism, 26 ‘anti-​extractivist’ social movements, 506 anti-​globalization, 314 anti-​imperialism, 2, 25–​28, 301, 439, 541–​49 antipluralism, 26 anti-​systemic resistance, 72 apartheid and southern African imperialism, 539–​41 Aponte Conspiracy (1812), 184 Arbenz, Gutavo, 161–​62 Archer Daniels Midland (ADM), 222 Argentina, 92, 96 Arrighi, Giovanni, 458, 537, 543

656   Index artificialization, 626–​27 Asian financial crisis, 204–​5, 449 Asian tiger countries, 201–​2, 204–​5 Association of Southeast Asian Nations (ASEAN), 450 Atlantic imperialism, 583 Australia, 20–​21, 479–​80, 488–​89 Austro-​Hungarian Empire, 158, 162 authoritarianism, 2, 25, 26, 163, 164, 263, 375–​ 76, 382, 429–​30, 433, 461–​62, 506, 627–​28, 647 autonomous industrialization, 286, 290 average labor term of trade, 467–​69, 468f, 470t average rates of return on foreign investments, 464f, 464–​66, 465f, 466f Azerbaijan, 642–​43, 644–​45

B Baby boomers, 558 Bainimarama, Frank, 487–​88 Baku-​Tbilisi-​Ceyhan (BTC) pipeline, 646 Balfour Declaration (1917), 158 Banaba, 479–​80 Bangladesh, 428, 429–​30 Bangladeshi Krishak Sramik Awami League (BaKSAL), 429–​30 bankruptcy, 54, 91 banks, role in monopoly capitalism, 58–​59, 104 Baran, Paul, 393–​95, 396 Bauer, Otto, 44–​45 Bayer, 291–​92 Belt and Road Initiative (BRI), 10, 525–​26, 648 benevolent philanthropy, 437 Bengal famine (1769-​1770), 17 BEPS (base erosion and profit-​shifting project), 203 Berlin, Isaiah, 164 Bertrand-​Aristide, Jean, 334 Biden, Joe, 450 Big Capital, 105 bilateral agreements, 237, 543 bilateral investment treaties, 208 biocultivation, 326 biodiversity hotspots, 1 Black Lives Matter, 329 Black Sea Agriculture Fund, 626–​27 boiar supremacy, 619–​20

Bosnia, 620 Bourdieu, Pierre, 378 Bowring Treaty, 442–​43 Brady Plan, 201 brain drain, 310 Brazil as capitalist economy, 375 fertility rates, 312–​13 income inequality, 96 internal migration, 179–​80, 270 international trade and, 92 Bretton Woods agreements, 570–​72 Bretton Woods Twins (BWTs), 201, 203–​7 Brewer, Anthony, 46 BRICS countries (Brazil, Russia, India, China, and South Africa), 27, 122–​23, 400–​1, 543, 546, 574t Britain capital export and, 21–​22 currency hierarchy and international trade, 91–​92 economic imperialism, 8 foreign investment, 157–​58 gross capital formation, 102 hegemony of, 459 imperialism of, 162 industrialism in, 285–​86 Jamaica colony and, 175–​76 monopoly capitalism, 58 slavery/​slave trade, 172–​76 Southeast Asian colonialism by, 440–​43, 446 British capitalism, 22, 43, 46, 49–​50, 142, 288, 446, 523, 538 British colonialism, 17, 19 British Free Trade, 49–​50 British North America, 554 British Phosphate Commissioners, 479–​80 Brookings institution, 333–​34 Brunei, 450 Bryant, Dirk, 325 Bukharin, Nikolai, 2, 46, 52–​57, 107, 162, 536 Bulgaria, 620–​21, 623–​24, 625–​27 Bulgarian Socialist Party (BSP), 621 Burma, 442–​43, 447 Butterwegge, Christoph, 384n.4 Byzantine Empire, 155–​56, 617–​18

Index   657 C Calhoun, John C., 16 Callinicos, Alex, 57, 71–​72, 78 Cambodia, 443, 446, 447, 449 Canada. See United States (US) dominance over Mexico and Canada Can Europe Disarm? (Engels), 391–​92 capita gross domestic material product (GDMP), 159–​60 capital British export, 21–​22 export of, 21–​22, 59–​60, 467 fictitious capital, 7, 358–​59, 360–​61, 366 finance capital, 45–​46, 47, 59, 104–​5 free capital mobility, 244–​46 gross capital formation, 102 human capital, 12, 139–​40, 355–​59, 367–​68, 556–​57 industrial capital, 46 interest-​bearing capital, 357–​59 monopoly capital, 253–​54, 462, 463 capital-​ability, 355–​56 capital accumulation accumulation by dispossession, 20, 71, 312, 499–​500, 509, 615–​16 agrarian labour needs, 289 colonialism and, 18 by dispossession, 312 family structure and, 313 geopolitical rivalries, 74 Luxemburg on, 52 Marxist theories of imperialism and, 74 military expenditures role in, 391–​96 neoliberalism and, 305 North African extractivism and, 498–​500 oppression of women, 6 slavery/​slave trade, 173–​76 Southeast European land grabbing, 619–​22 unpaid domestic labour and, 6 capitalism. See also global capitalism; monopoly capitalism anti-​capitalism, 438 British capitalism, 22, 43, 46, 49–​50, 142, 288, 446, 523, 538 cognitive capitalism, 262 colonialism and, 195 competitive capitalism, 52, 53–​54

decolonization and, 107 defined by Arrighi, 458 development of, 575–​76, 576t, 584 economic transformations through, 297–​99 emergence of, 456 export of, 46–​47 finance capital, 45–​46, 47 financialized capitalism, 162 globalization and, 109, 577 global value chains and, 223–​25 Hilferding, Rudolf, 44–​48 ‘immutable law’ of, 62 industrial capitalism, 18, 23–​24, 164–​65, 172–​73, 176, 177–​81, 242–​43 introduction to, 3 late capitalism, 3–​4, 136–​37, 141–​48 looting-​based capitalism, 4 neoliberal capitalism, 8, 124–​25, 186, 329, 355–​56, 508 new properties of, 45–​46 ‘overripe’ capitalism, 59–​60 periodic crisis and, 101–​10 peripheral capitalism, 198 as ‘roundabout’ production, 103 space dimension of, 577 state capitalism, 52, 53–​54, 55–​57 state in a capitalist society, 47 uneven development of, 71 Capitalism and Slavery (Williams), 172–​73 capitalist combines, 60, 61 capitalist economies, 5, 55–​56, 103, 181, 215–​16, 291, 375, 461 capitalist imperialism beyond globalism, 68–​73 civilizing ideology of, 160–​62 introduction to, 4, 153–​54 latest stage of, 163–​65 Phase I of, 155–​56 Phase II of, 156–​59 Phase III of, 156–​59 Phase IV of, 159–​60 Phase V of, 159–​60 slavery in the context of, 4 slavery/​slave trade, 156–​57, 171–​73 capitalist industrialization, 297–​99, 459–​60 capitalist world economy, 54, 120–​22, 123–​24, 174, 177, 181, 467

658   Index capital-​labour relation, 216 capital movements, 5, 70 capital stock availability, 595–​97, 596t Caribbean, 176 Caspian Pipeline Consortium (CPC) pipeline, 646 Caucasus economic imperialism, 7 Cavallo, Domingo, 164 Central Asia and the Caucasus Chinese foreign debt, 648 cotton hunger/​dependence, 638–​44, 641f financial and migrant flows, 647–​50 hydrocarbons and mining, 644–​47 introduction to, 7, 635–​37, 637f remittances and offshoring, 648–​50, 649f Russian Empire, 12, 636, 638–​39 summary of, 650–​51 Charles Deslondes slave insurrection, 184 chemical-​intensive cultivation, 291–​92 Chibber, Vivek, 55 chiftliks (large agricultural estates), 11–​12, 619–​20 child rearing costs, 312–​13 Chilean neoliberalism, 141–​42 Chilean Wallmapu region, 323, 327–​30 China. See also East Asian economic imperialism average labor term of trade, 468f, 469, 470t average rates of return on foreign investments, 464f, 464–​66, 465f, 466f as capitalist economy, 375 capitalist world-​system, 459 domestic stimulation package, 449 as donor to Pacific Island countries, 489 East African railway imperialism of, 524–​29 economic imperialism, 8–​9, 461–​63 fertility rates, 312–​13 food security in, 342 foreign debt and, 648 foreign direct investment and, 22–​23 free trade pacts, 450 GDP of, 108, 268 global financial crisis and, 109 as imperialist centres, 74 income inequality, 94–​95, 96 internal migration, 270 Japanese imperialism and, 459–​60

labour tribute impact, 309 loan-​debt investment, 524–​25 manufacturing production chains, 273–​74 military modernization efforts, 459 modes of capital accumulation, 516–​17 net international investment position of, 463–​64 Opium Wars, 103 patent/​trademark registration, 276 rapid industrialization of, 542–​43 regional trade agreements, 278 settler colonialism by, 20–​21 strikes and protests, 224 surplus labour and, 269–​70 tribute-​trade system and, 460 unequal exchange theory and, 25, 467–​69 urban and rural poverty reduction, 339 US debt to, 109 US hegemony and, 460–​61 Uyghur people of Xinjiang, 26 China Labour Bulletin, 224 China Pakistan Economic Corridor, 433 China Railway and China Civil Engineering Construction Corporation (CCECC), 527–​28 China Road and Bridge Corporation (CRBC), 526 Christian Empire, 156–​57 Churchill, Winston, 15 civil law, 154 civil society activists, 144 Clarion-​Clipperton Fracture Zone (CCZ), 486–​87 Clarkson, Stephen, 553 class divisions in, 245–​46 imperial mode of living and, 383–​84 in India, 428 intranational relations and, 93–​96 North African extractivism and, 506–​8 in Pakistan, 428–​29 transnational capitalist class, 2, 67–​68, 124, 458, 508 working-​class environmentalism, 383 class-​exploitation correspondence principle (CECP), 245–​46 classical agrarian transition, 298

Index   659 climate change, 164–​65, 327, 374 Clinton, Bill, 144–​46 cognitive capitalism, 262 Cold War, 74, 108, 164, 209, 389, 447–​48, 554–​55 collective solidarity, 182 Colombia, 568–​69, 579–​83, 581t, 582t colonialism African colonialism, 17 British colonialism, 17, 19 capitalism and, 195 energy colonialism, 502–​3 famine and, 16–​17, 19 franchise colonialism, 20 genocide and, 16–​17 in India, 17 internal colonialism, 2, 18–​19 introduction to, 2, 155–​56 North African extractivism and, 497 overview of, 16–​18 settler colonialism, 20–​21 slavery/​slave trade and, 18, 272–​73 Southeast Asian colonialism, 440–​43, 446 surplus labour and, 279 unemployment and, 17–​18 colonization atrocities, 197 Columbus, Christopher, 20 Commission on the Limits of the Continental Shelf (CLCS), 485–​87 commodification, 9–​10, 121, 137–​38, 139–​40, 142, 171–​72, 177–​78, 262, 308, 312, 497, 499 commodity glut, 293 commodity prices, 208–​9, 222 Common Agricultural Policy (CAP), 625–​26 commune-​based city states, 153–​54 communism, 26, 103–​4, 573 The Communist Manifesto (Marx, Engels), 26–​27, 55 competitive capitalism, 52, 53–​54 Conable, Barber, 144 Conferences of the Parties to the Framework Convention on Climate Change, 381 Congress for Cultural Freedom, 164 Constantinople, 616–​17 consumerism/​consumer culture, 109, 309–​10, 373, 378 convergence theory (catch-​up theory), 231

Cope, Zak, 77, 78 corporate agriculture, 296 cosmopolitanism, 477 cost efficiency catch-​up, 608–​10 cotton hunger, 638–​41 cotton hunger/​dependence, 638–​44, 641f, 642t Council for Mutual Economic Assistance (COMECON), 25–​26 countries of the core, 217 COVID-​19 pandemic, 1, 126–​27, 135–​36, 223, 224, 263 Cox, John, 482 credit markets, 5, 205, 234, 236, 237, 238, 239, 241–​42, 243, 245, 246 credit rating agencies (CRAs), 200–​1 crime organizations, 313 crimes against humanity, 26 crisis of reproduction, 312–​15 Croatia, 620 cross-​border trade, 274–​75, 292–​93 Cuba, 179–​80 cultural appropriation, 558–​59 currency hierarchy and international trade, 91–​92

D Danish West Indian-​Guinean Company, 174 Danish West Indies, 185 data imperialism, 278 Daudin, Guillaume, 173–​74 Davis, Mike, 341 debt crisis, 143, 200–​1, 202, 203–​4, 205, 273, 501, 545 debt dependence, 200–​2, 522 debt overhang, 522 debt-​traps for farmers, 294 decolonization, 107, 273, 290–​92, 443–​49, 523 deforestation, 1, 325–​27 deindustrialization, 17–​18, 23–​24, 542, 547 de-​materialization, 355 democratic welfare states, 83–​84, 400–​1 Denmark, 185, 626–​27 Department I/​Department II expansion, 107–​8 dependencia school, 198, 200–​1, 272 dependentistas, 198 despondency theories, 476–​77

660   Index Deutsche Ostafrika Gesellschaft, 519–​20 developmentalism in Third World, 437–​38 Discourse on Colonialism (Césaire), 160–​61 Discourse on Free Trade (Engels), 391–​92 discrimination, 18, 20–​21, 186–​87, 254, 306–​7, 308, 310, 502, 648–​49 ‘dis-​enclavization’ of mining, 482–​85 disequilibrium prices, 597–​602, 598t, 599t, 601t dispossession. See accumulation by dispossession Dispute Settlement Body (DSB), 207 dispute settlements, 207–​8, 275, 277–​78 Doha Round, 208 domestic labour, 301, 302–​4 downsize and distribute, 220–​21 Duda, Andrzej, 164 Dupont, 291–​92 Dutch Berbice revolution, 185 Dutch East India Company (VOC), 157 Dutch Rabobank Group, 626–​27 Duvalier, Baby Doc, 342

E East African Community (EAC), 529 East African railway imperialism China and, 524–​29 European surplus capital goods and, 521–​24 German East Africa, 519–​20, 521–​22 introduction to, 7, 515–​17 Madaraka Express, 526–​27 overview of, 517–​20, 518f profit-​seeking railway endeavours, 527–​29 summary of, 529–​30 Ugandan railway, 517–​19, 520, 522–​24, 527, 529 East Asian economic imperialism average labor term of trade, 467–​69, 468f, 470t average rates of return on foreign investments, 464f, 464–​66, 465f, 466f Chinese imperialism, 461–​63 export of capital, 463–​66 future of, 470–​7 1 introduction to, 455–​56 Japanese imperialism in, 459–​60 theories of, 456–​59

unequal exchange theory and, 467–​69 US hegemony and, 460–​61 world-​systems analysis of, 457–​59 Eastern Europe. See social labour recognition in Eastern Europe East India Company, 17 East Timor, 447 ecological footprint, 379–​80 economic determinism, 125–​26 economic development in Central Asia, 639–​40 classical agrarian transition and, 298 in Colombia, 11 dependency school theorem and, 245 in East Africa, 517–​18 foreign direct investments and, 297 foreign subsidiaries and, 22–​23 Global Innovation Index and, 576–​77 in Ireland, 19 of Kanak population, 484 of less developed countries, 242 of non-​capitalist regions, 49 in North America, 555–​57 in North Korea, 461 of periphery economy, 232 population explosions and, 307 socioeconomic development, 17 in Soviet Union, 25–​26 in Taiwan, 468 unequal exchange theory and, 217 US dominance over Mexico and Canada, 555–​56 economic disarticulation, 23–​24 economic division of the world, 60 economic dynamism, 140–​41, 144–​45, 174, 433 economic efficiency, 592, 595, 603, 604t, 605, 613 economic growth agrarian labour and, 285 of China, 471 of East Asia, 471 in feminized sectors, 306–​7 fostered by capitalist policies, 333 impact of military expenditures, 397–​99 investment imperialism and, 22 social reproduction and, 307–​8

Index   661 economic imperialism. See also East Asian economic imperialism; South Asian economic imperialism; women and economic imperialism ‘anti-​imperialist’ discourse, 2, 25–​28 in Britain, 8 Caucasus economic imperialism, 7 in China, 8–​9 defined, 15 international political economy, 3–​7 introduction to, 1–​2, 15 investment imperialism, 21–​23 Japanese economic imperialism, 8, 162, 447, 459–​60 of Pacific Islands, 7 periodic crisis and, 101–​10 theory of, 2–​3 world regions of, 7–​12 economic inequality, 3, 11 economic power, 12, 47, 82, 120, 125–​26, 162–​ 63, 218–​19, 220, 535, 546, 559–​61 economic progress, 171–​72, 298 economic reductionism, 75, 125–​26 economic sub-​primarization, 254 economic surplus, 5, 7, 8, 175–​76, 251, 395, 401, 438, 442–​43, 444–​45 The Economist, 333–​34 eco-​tourism, 326 Edward, Peter, 336 Egypt, 517–​18 ejido communal system, 325–​26 elasticities of demand, 199–​200 embedded liberalism, 139, 142 Emmanuel, Arghiri, 84–​85, 87–​88, 93–​94, 199, 232–​33 energy colonialism, 502–​3 energy-​food crisis, 286 Engels, Friedrich, 26–​27, 55, 154, 391–​92 Enlightenment, 116, 117 environmental degradation, 1, 497, 504 environmentalism of the poor, 506 environmental justice, 314, 506 epidemics, 20 Escobar, Arturo, 324 ethical poverty line (EPL), 336 Ethiopia, 526–​27 Eurocentric Social Darwinism, 438

Eurocentrism, 125, 126–​27, 438 Euromarket borrowing, 200 European Adjustment Programmes (EAPs), 147 European Economic Community (EEC), 208–​9 European Social Democratic, 44–​45 European Stability and Association Agreement (SAA), 624–​25 European surplus capital goods, 521–​24 everyday practices of imperial mode of living, 378–​80 exclusive economic zones (EEZ), 485–​87, 488–​89 exploitation, 6, 82–​88, 86f, 87f, 89–​90 exploitation reference bundles (ERBs), 241 export of labour, 255–​62, 259t, 260f, 261f export-​processing zones (EPZs), 348 extractivism. See North African extractivism and resistance extreme poverty, 333, 336, 342, 347–​48 extremism, 313

F factor endowments, 94–​95, 96 factor price equalization, 243 famine and colonialism, 16–​17, 19 Fanon, Frantz, 176 FAO Food Price Index, 294 fascism, 26, 77 fashion industry, 309–​10 fertility rates, 312–​13 fictitious capital, 7, 358–​59, 360–​61, 366 fictitious services and manufacturing, 221 finance capital, 45–​46, 47, 59, 104–​5 Finance Capital (Hilferding), 44–​48, 59, 104, 536 finance dependence, 200–​2 financial avenues of appropriation, 220–​23 financial fetishism, 356, 357–​58, 359–​67 financialization, 299, 626–​27 financialized capitalism, 162 financial liberalization, 92, 186, 305, 314, 573, 583, 584 Financial Times, 461–​62 The Financial Times, 340–​41 Financial Transaction Tax (FTT), 580

662   Index First World poverty and, 346–​48 First World countries, 337–​38 floating exchange rates, 359–​60 food aid, 290–​91 Food and Agriculture Organization (FAO), 344–​45 food security, 291, 297–​98, 312–​13, 314, 342, 616 food self-​sufficiency, 286, 290, 297 forced cultivation, 287–​88 forced labour, 20, 287–​88, 478 foreign bank investment, 109 foreign direct investment (FDI) agrarian labour and, 298 in Bulgaria, 626–​27 imperialism and, 21, 22–​23, 71 neoliberalism and, 138, 146, 147–​48 new extractivism and, 501, 508–​9 in North America, 559–​60, 560f in South Asia, 414–​15, 418–​21, 426–​27 surplus labour and, 273, 277 forest monoculture, 324 formal imperialism, 15 Foxconn suicides, 224 fracking, 324, 501, 502–​3 France, 21–​22, 119–​20, 159, 162 franchise colonialism, 20 Frank, Andre Gunder, 457 free capital mobility, 244–​46 free credit, 221–​22 free labour, 93, 171–​72 Free State of Congo, 161 free trade, 17–​18, 49–​50, 82–​83, 158, 204, 306, 442 free trade agreements (FTAs), 186–​87, 258, 450 French Desrone system, 180 French Revolution, 116 Friedman, Milton, 163 Friedrich List’s, 204 Front de Libération Kanak Nationale et Socialiste (FLNKS), 483 fundamentalism, 313, 501, 589

G Gafsa Phosphate Company (CPG), 504 Galeano, Eduardo, 323–​24 Gates, Bill, 333–​34

gender discrimination, 306–​7, 308 gendered global division of labour, 309–​12 gender equality rating, 306 gender-​selective abortion, 308 General Agreement on Tariffs and Trade (GATT), 296 generalized monopolies, 251 genocide ‘anti-​imperialist’ discourse, 26 colonialism and, 16–​17 German genocide, 161 of indigenous people, 20, 328 white supremacy and, 438–​39 gentrification, 71, 342 geoculture, 123–​24, 126 geographical expansion, 10, 121, 524–​25 The Geometry of Imperialism: The Limits of Hobson’s Paradigm (Arrighi), 537 geopolitics of Asia-​Pacific region, 485–​88 division of the world, 60–​61 of European railway projects in East Africa, 518–​19 imperialist geopolitical security, 7, 374 investment imperialism and, 22 in southern African imperialism, 544 German Allianz group, 626–​27 German East Africa, 519–​20, 521–​22 German genocide, 161 German Reich in East Africa, 517–​18 Germany birth rates, 270 capital export and, 21–​22 capitalist imperialism, 4 GDP of, 159 imperialism of, 162 monopoly capitalism, 58 Nazi Germany, 20–​21, 106 periodic crisis in, 105 Ghana, 273–​74 ‘ghost acres’ of land, 18 Gill, Stephen, 139, 140–​41, 274 Gindin, Sam, 72–​73, 78 global capitalism imperialism theory and, 73–​77 Lenin on, 61–​62 militarism and, 48

Index   663 neoliberalism and, 136–​37 in North Africa, 9–​10 world-​systems analysis and, 124 Global Care Chain, 313 global credit market. See credit markets global division of labour, 177–​78, 273, 301, 305, 309–​12, 362–​68 global financial crisis (2007-​2009), 109, 126–​27, 135–​36 Global Food Crisis, 294 Global Innovation Index, 576–​77 globalization agrarian labour and, 292 anti-​globalization, 314 capitalism and, 109, 577 Central Asia and the Caucasus, 636 global value chains and, 219 introduction to, 3–​4 neoliberal globalization, 6, 438, 574–​75 neoliberalism and, 141–​48 post-​Cold War Marxist theories of imperialism, 68–​73 world-​systems analysis and, 122–​27 A Global Middle Class Is More a Promise Than a Reality report, 343 Global North globalization in, 144–​45 global value chains and, 213–​23 imperial mode of living, 7, 374–​84 international UE, 242, 243–​44 introduction to, 4, 5 labor aristocracy of, 74 neoliberalism and, 135–​36, 146–​47 super-​profits in, 77 global political economy (GPE), 11, 569 global production networks, 5 Global South emerging economies of, 542–​43 extractivism in, 324 global value chains and, 213–​23 impact of imperialism, 51–​52 imperial mode of living, 7, 374–​84 international division of labour and, 186 international UE, 242, 243–​44 introduction to, 5 neoliberalism and, 135–​36, 143, 146 Pacific Islanders imperialism, 9

primitive accumulation, 499 undervalued goods and services from, 373 working masses in, 77 global value chains (GVCs) capitalism and, 223–​25 financial avenues of appropriation, 220–​23 introduction to, 5, 213–​17, 214f, 215f neoliberalism and, 146 summary of, 225–​26 unequal exchange theory, 217–​20, 219t global wealth chains, 5, 222–​23 Golden Age of Capitalism, 158 Gordon, Alec, 157–​58 grain markets, 106–​7, 222, 294–​96, 297–​98, 307, 521–​22, 620–​21 GRAIN organization, 615, 620–​21, 623–​24 Gramm-​Leach-​Bliley Act (1999), 145 Gramsci, Antonio, 373, 377 grand marronage, 182–​83 Great Asian War, 440, 443–​44 Great Depression (1929-​1932), 106–​7, 145, 286 Greater East Asia Co-​Prosperity Sphere, 444 Great Powers, 60–​61, 63, 104–​5, 118, 160, 536, 540 The Great Surge: the Ascent of the Developing World (Radelet), 333–​34 Greece, 147 green economy, 382 greenhouse gas emissions, 164–​65 Green Revolution, 291–​92, 375, 415, 430–​31 gross capital formation, 102 gross domestic product (GDP) agricultural commodities and, 285, 415–​17 capitalism and, 108 capital stock availability and, 595–​97, 596t of China, 108, 268 cost efficiency catch-​up, 608–​10 country performance measurement through, 590–​91 disequilibrium prices, 597–​602, 598t, 599t, 601t of East Asia, 457 economic efficiency, 603, 604t economic imperialism and, 86, 87 of Germany, 159 of Japan, 86 post-​transitional integration and, 593–​603, 593t

664   Index gross domestic product (GDP) (cont.) process efficiency analysis, 604–​8, 605f, 607t of South Asia, 415–​17, 418–​21 of Southeast Asia, 445 of UK, 159 of US, 109 Group 77, 489 Guatemala, 161–​62 guerrilla movement/​warfare, 185, 447

H Haiti, 339–​41, 342, 348–​49 Hamashita, Takeshi, 458 Hamilton, Alexander, 159 Han Chinese, 20–​21 Handbook of Human Capital (Blair), 357 Hardt, Michael, 68–​69, 78 Harvey, David, 10, 70–​7 1, 78, 139, 271, 463, 517, 523–​24, 525, 543–​44 Hau’ofa, Epeli, 475–​76 Hayek, Friedrich, 163 Heckscher-​Ohlin-​Samuelson (HOS) theory, 231, 233 Heckscher-​Ohlin theorem of factor endowments, 94–​95 Henry VII, King, 159 Hickel, Jason, 335–​36, 344–​45 Highly Indebted Poor Countries Initiative (HIPC), 205–​6 Hilferding, Rudolf, 2, 44–​48, 57–​58, 59, 104, 162, 536 Hirschman, Albert, 553–​54 Hobson, John Atkinson, 21–​22, 51, 162, 536 Hobson-​Lenin hypothesis, 292 Ho Chi Minh, 446 Hong Kong, 455–​56, 464f, 464–​66, 465f, 466f, 468f, 468, 470t How Europe Underdeveloped Africa (Rodney), 516 How We Count Hunger Matters (Lappé et al.), 344 Huichaqueo, Francisco, 328–​29 human capital, 12, 139–​40, 355–​59, 367–​68, 556–​57 humanitarian intervention, 448 human rights violations, 26, 161–​62, 643

Hume, David, 159, 163 hybrid identities, 558–​59 hydrocarbons, 500–​1, 644–​47 hydroelectricity, 324

I illegal workers, 254 ILO’s World Employment Social Outlook (2015), 215–​16 Imider resistance against dispossession, 505–​6 ‘immutable law’ of capitalism, 62 imperialism. See also capitalist imperialism; East African railway imperialism; economic imperialism; Marxist theories of imperialism; southern African imperialism agriculture under, 286–​89 anti-​imperialism, 2, 25–​28, 301, 439, 541–​49 Atlantic imperialism, 583 banishment narrative, 334 centre-​periphery structure of, 499–​500 civilizing ideology of, 160–​62 data imperialism, 278 defined, 15 defined by Lenin, 61 foreign direct investment and, 21, 22–​23, 71 formal imperialism, 15 introduction to, 153–​54 investment imperialism, 2, 15, 21–​23, 93–​94 military imperialism, 577–​78 New Imperialism, 75–​76, 104–​5, 173, 456, 544 of North Africa, 498–​500 North African extractivism and, 498–​500 as policy, 48 present-​day imperialism, 2 of Russia, 162 in Southeast Asia, 443–​44 subimperialism, 27, 540 surplus value theory and, 412–​13, 455–​56, 457, 467 theories of, 162 welfare state imperialism, 438 ‘Western’ imperialism, 25 world-​systems analysis and, 122–​27 Imperialism, the Highest Stage of Capitalism (Lenin), 44, 105, 389–​90, 536

Index   665 Imperialism and World Economy (Bukharin), 2, 46, 52–​57, 536 Imperialism (Hobson), 536 imperial mode of living class and, 383–​84 everyday practices and social structures, 378–​80 introduction to, 7, 373 outline of, 376–​78 relevance of, 374–​76 use value of, 380–​83 import substitution industrialization (ISI) policies, 8, 411, 414–​15 income inequality, 94–​95, 95f, 237, 366, 400–​1, 418 indebtedness, 91, 162, 294, 440, 522, 530 Independent Evaluation Office (IEO), 205 India birth rates, 270 as capitalist economy, 375 children for adoption, 310–​11 class-​state-​imperialism triad, 428 colonialism in, 17 GDMP of, 159–​60 internal migration, 270 peak manufacturing levels, 268 urban and rural poverty reduction, 339 indigenous eco-​cosmologies, 9 Indigenous peoples. See natural resource protection by Indigenous peoples; Pacific Islanders economic imperialism Individual Deprivation Measure, 336 individualism, 302, 620 Indochina, 443 Indonesia, 339, 441, 447 industrial capitalism, 18, 23–​24, 46, 164–​65, 172–​73, 176, 177–​81, 242–​43 industrialization agrarian labour and, 285, 288, 298–​99 capitalist industrialization, 297–​99 in Southeast European, 620–​22 surplus labour and, 279 Industrial Revolution, 4, 85, 101–​2, 116, 172–​73, 285, 288 informal imperialism, 15, 439, 448, 530 informalization, 220 informal labour relations, 5–​6

information technology, 223, 224–​25, 226, 311–​12, 334 Inikori, Joseph E., 173–​74 innovation systems and export of labour, 255–​ 62, 259t, 260f, 261f An Inquiry into the Nature and Causes of the Wealth of Nations (Smith), 101–​2 inside-​out orientation of liberalism, 117–​18 institutionalism, 567–​68 institutionalized wage disparity, 232–​33 integrated liberalism, 570–​7 1 intellectual property rights, 276–​77, 277f intellectual rents, 223–​24 intellectual theft, 201 interest-​bearing capital, 357–​59 interimperialist rivalry, 62, 72 internal colonialism, 2, 18–​19 internal development blockades, 195 internal migration, 179–​80, 270 International Atomic Energy Authority, 164–​65 International Bank for Development and Reconstruction (IBRD), 4, 195, 203–​7 International Comparison Program (ICP), 336–​38 international (equilibrium) price system, 232 International Finance Corporation, 147–​48 International Financial Institutions (IFIs), 141–​42, 143, 146, 147–​48, 200–​1, 205–​6 international investment agreements (IIAs), 275–​76 International Labour Organization (ILO), 185–​86, 267–​68 International Monetary Fund (IMF) Asian financial crisis and, 449 economic imperialism and, 186, 195 financial liberalization, 573 imperialism and, 414, 463–​64 neoliberalism and, 273, 274 OECD and, 583–​84 role of, 4, 203–​7 southern African imperialism and, 545 structural adjustment programmes, 91, 254, 341 technocratic policy agenda, 138 international organizations (IOs), 567–​70, 568t, 573, 583, 585

666   Index international political economy (IPE), 3–​7, 567–​68, 568t International Poverty Line (IPL), 333, 334–​46 international relations (IR) theory, 115–​27 International Seabed Authority (ISA), 487 international trade. See also trade class and intranational relations, 93–​96 exploitation and, 82–​88, 86f, 87f Heckscher-​Ohlin-​Samuelson (HOS) theory of, 231–​32 income inequality, 94–​95, 95f introduction to, 81–​82 political economy and, 88–​92, 92t international trading companies, 222 International Women’s Day, 313–​14 interventionist economic activity, 143–​44 intranational relations, 93–​96 investment imperialism, 2, 15, 21–​23, 93–​94 investor-​to-​state dispute settlement (ISDS), 277–​78 ‘invisible’ labour, 301, 305 Iraqi war, 158–​59 Italy, 4, 153–​54

J Jamaica, 175–​76 The Jamaica Planter’s Guide (Roughley), 178–​79 Japan average labor term of trade, 468f, 468, 470t average rates of return on foreign investments, 464f, 464–​66, 465f, 466f colonial expansion by, 456 economic imperialism, 8, 162, 447, 459–​60 economic recovery in Indonesia, 449 free trade pacts, 450 GDP per capita, 86 net international investment position of, 463–​64 Southeast Asian colonialism, 444 unequal exchange theory and, 467–​69 Japarov, Sadyr, 645 Jatiyo Samajtantrik Dal (JSD), 429–​30 Jessop, Bob, 139 Jevons, W.S., 103

K Kanak people, 482–​85 Kapp, K. William, 498–​99 Kashmir settler colonialism by, 20–​21 Kauanui, J. Kehaulani, 326 Kaufman, Konstantin von, 639 Kautsky, Karl, 44–​45 Kazakhstan, 645–​47 KazMunaiGas (KMG), 645–​46 Kenya, 523–​24, 526–​27 Keynes, John Maynard, 105–​6, 137–​38, 197, 390–​91, 401–​2 Khelifa, Ben, 505 Khouribga mine, 503–​4 Kidron, Michael, 391, 395–​96 Kitching, Gavin, 268–​69 Klein, Naomi, 499 kleptocratic regimes, 636 knowledge economy, 355 Koestler, Arthur, 164 Kohn, Eduardo, 327 Kolko, Gabriel, 446 Korean international trade, 92 Kosovo, 620 Kyrgyzstan, 647, 648–​49

L Laarayes, Oum, 504 labour aristocracy, 2, 67–​68, 77, 93–​94, 157–​58, 218 labour exploitation, 6, 26, 240, 348–​49 labour power innovation systems and export of labour, 255–​62, 259t, 260f, 261f introduction to, 251–​52 new international division of labour, 253–​55 patent applications, 259t summary of, 262–​63 theoretical and methodological considerations, 252–​53 unequal exchange theory, 252–​53 labour surplus, 217, 271 labour tribute, 309 Lahoti, Rahul, 338, 339 laissez-​faire economics, 105, 411–​12 Lamy, Pascal, 208 land expropriation, 16, 20

Index   667 Laos, 443, 446, 449 Lappé, Frances Moore, 344, 345 Lara, Oruno D., 181–​82 La Societe Metallurgique d’Imider (SMI), 505 ‘The Last Frontier Forest: Ecosystems and Economies on the Edge’ (Bryant, Nielsen, Tangley), 325 late capitalism, 3–​4, 136–​37, 141–​48 late industrializing countries, 5–​6, 267–​68, 269, 279n.2, 306–​7 Latin America international trade and, 92 military dictatorships and, 164 productivity differentials, 271 surplus labour and, 268, 269 US relations and, 161–​62 La Via Campesina, 541 Lenin, Vladimir Ilyich Bukharin’s state capitalism and, 55–​56 on capital export, 59–​60, 467 capital export and, 21–​22 economic division of the world, 60 finance capital and, 46, 59 geopolitical division of the world, 60–​61 Hilferding’s theories of imperialism and, 57–​58 imperialism, defined, 61, 456, 462 Imperialism, the Highest Stage of Capitalism, 44, 105, 389–​90, 536 on imperialism, 44, 61–​62, 75–​76, 162, 463–​ 64, 543 Marxist theories of imperialism, 2, 57–​62, 439 militarism and, 389–​90 monopoly capital and, 463 monopoly capitalism, 105 October Revolution, 443–​44 southern African imperialism, 535, 536–​37 white supremacy and, 438–​39 Leopold of Belgium, King, 161 liberal economic reforms, 636 liberal feminism, 302 liberalism. See also neoliberalism embedded liberalism, 139, 142 inside-​out orientation of liberalism, 117–​18 integrated liberalism, 570–​7 1 realism and, 117–​19

world-​systems analysis and, 122–​27 liberalization of trade, 274–​75, 590–​91 Liebknecht, Karl, 51 liquefied natural gas (LNG) projects, 478–​79 List, Friedrich, 159 livestock-​rearing, 286–​87 ‘living space’ (Lebensraum), 20–​21 living standards, 303–​4, 308–​9, 343 loan-​debt investment, 524–​25, 526–​27 Lomé I model, 208–​9 looting-​based capitalism, 4 Loria, Achille, 162 L’Ouverture, Toussaint, 184–​85 Lowy Institute in Sydney, 489 Luxemburg, Rosa, 2, 48–​52, 107, 162, 389–​90, 392–​93, 515–​16

M Macedonia, 620 Macharia, James, 526–​27 Machiavelli, Niccolo, 155 macroeconomics, 163, 231 Madaraka Express, 526–​27 Maddison, Angus, 157–​58, 457 Magdoff, Harry, 447 ‘The Magyar Struggle’ (Engels), 26–​27 Malaya, 446, 447 Malaysia, 92, 449, 450 MANAGEM, 501 Mandel, Ernest, 396 Manifesto of the Communist Party (Marx, Engels), 391–​92 manufactured exported goods, 254 Manufacturing, Maquiladora and Export Services Industry Program (IMMEX), 560–​61 Mapuche peoples, 323, 327–​30 maquiladora industry, 306, 560–​61 marginalized women, 307 marginal utility theory, 103 Marini, Ruy Mauro, 27 Maritime Silk Road, 526 market competition, 105 market failure, 145–​46, 199, 231–​32 marketization of development, 147–​48 market-​oriented reforms, 144–​45 Marles, Richard, 489

668   Index Marx, Karl cheap material needs, 379 Department I/​Department II expansion, 107–​8 general intellect, 255–​56 general law of capital accumulation, 251, 252 interest-​bearing capital, 357–​59 international labour productivity, 232 international trade and, 81–​82, 89 introduction to, 26–​27, 55 labour theory of value, 214–​15, 219 Manifesto of the Communist Party, 391–​92 on periodic crisis, 102–​3, 104 on plantation slavery, 178 price of labour, 362–​65 private property, 154 theory of surplus value, 199 Marxian equilibrium concept, 238 Marxist feminists, 302–​4 Marxist theories of imperialism. See also post-​Cold War Marxist theories of imperialism Bukharin on, 2, 46, 52–​57 capitalist world economy, 52–​54 classical canon of, 44–​45, 63 Free Trade ideologues, 49–​50 Hilferding on, 2, 44–​48, 57–​58, 59 international trade and, 93–​94 introduction to, 2, 43–​44 Lenin on, 57–​62, 439, 462 Luxemburg on, 2, 48–​52 militarism and, 50–​51, 389–​90, 401–​2 unequal exchange theory and, 24, 467–​69 Matsuda, Matt, 475 mature capitalist economies, 213 McMichael, Philip, 341, 376–​77 McVey, Ruth, 445–​46 mechanization of production, 121 Meiji Restoration, 459 Melanesia, 477–​78, 481 MENA countries, 400 Mencer Ni Pewma (2011), 328 Menger, Carl, 103 mergers and acquisitions, 5, 220–​21 Mérida Initiative (2008), 555 Messaoud, Hassi, 502 metropolitan imperialism, 20

Mexican Constitution, 325–​26 Mexican Revolution, 554–​55 Mexico, 96, 312–​13, 554, 558. See also United States (US) dominance over Mexico and Canada migrants/​migration in Central Asia, 648–​50 internal migration, 179–​80, 270 limits on, 270 mistreatment of, 557 Russian labour and, 648–​49 surplus labour and, 270 women’s labour and, 310–​11 militarism/​military expenditures impact on economic growth, 397–​99 impact on income inequality, 400–​1 impact on rates of profit, 399–​400 introduction to, 7, 389–​90 Luxemburg on, 392–​93 Mexico’s adaptation to, 554–​55 permanent arms economy, 395–​96 role in capitalist accumulation, 391–​96 role in economic schools of thought, 389, 390–​91 summary of, 401–​2 underconsumption and, 393–​95 militarism/​military intervention, 25–​26, 48, 50–​51 military imperialism, 577–​78 military industrial complex (MIC), 389, 391, 401 The Militia and Militarism (Luxemburg), 392–​93 Millennium Development Goals (MDGs), 344 mineral extraction, 324 mining, 324, 644–​47 Mnangagwa, Emmerson, 543 Modi, Narendra, 164 monopoly capital, 253–​54, 462, 463 Monopoly Capital (Baran, Sweezy), 393–​95 monopoly capitalism competition and, 73 introduction to, 5 Lenin on, 57–​58, 59 Marxist theories of imperialism and, 52, 55–​56, 57–​58 oppression and, 76

Index   669 periodic crisis and, 104–​5 role of banks, 58–​59, 104 unequal exchange theory and, 218–​19, 220 Monsanto, 291–​92 Mont Pèlerin Society (MPS), 136, 137–​38 Morocco, 9–​10, 498–​99, 500–​1, 503–​5 Mountbatten, Louis, 440 Mozambique, 548 Muggeridge, Malcolm, 164 Multidimensional Poverty Index (MPI), 343–​44 multilateral agreements, 237 multilateral organizations, 147–​48 multinational corporations, 5, 70, 258, 500 multinational enterprises, 144–​45, 307

N National Commission for Enterprises in the Unorganized Sector (NCEUS), 340 National Coordination for the Defence of Unemployed people’s rights (NCDUR), 502 National Defense Authorization, 545 The National Interest, 461–​62 national oppression, 2 National Systems of Political Economy (List), 159 natural resource protection by Indigenous peoples deforestation and extinction, 325–​27 introduction to, 323–​24 Mapuche peoples, 323, 327–​30 plurinationalism and, 330 Nauru, 479–​80 Nauru Local Government Council, 479–​80 Nazi Germany, 20–​21, 106, 161 Negri, Antonio, 68–​69, 78 neoclassical growth theory, 590–​91 neoclassicism and military expenditures, 389, 390–​91 neo-​extractivism, 323–​24 neoliberal capitalism, 8, 124–​25, 186, 329, 355–​56, 508 neoliberal financialization, 360–​61 neoliberal forms of imperialism, 10 neoliberal globalization, 6, 438, 574–​75 neoliberalism. See also liberalism

agrarian labour and, 290–​97 capital accumulation and, 305 capitalist development and, 575–​76, 576t, 584 in Chile, 6 contradictions of, 67–​68 defined, 137–​41 foreign direct investment and, 138, 146, 147–​48 global capitalism and, 136–​37 globalization and, 141–​48 Global North and, 135–​36, 146–​47 Global South and, 135–​36, 143, 146 global value chains and, 146 international political economy and, 567–​68 introduction to, 3–​4, 135–​37 neoliberalism 1.0, 141–​44 neoliberalism 2.0, 144–​46 neoliberalism 3.0, 147–​48 political freedom and, 138 rightwing populism and, 384n.4 in social structures, 6 surplus labour and, 273–​75 in UK, 141–​42 in US, 141–​42 women and economic imperialism, 305–​9 world-​systems analysis and, 122–​27 neorealism, 117–​18 Netherlands, 157–​58, 458–​59 Netherlands East Indies (NEI), 443 Nettl, Peter, 49 New Caledonia, 482–​84, 488–​89 new constitutionalism, 140–​41, 274 New Deal, 106, 163 new extractivism, 501, 508–​9 New Guinea, 477–​78 New Imperialism, 75–​76, 104–​5, 173, 456, 544 The New Imperialism (Harvey), 524–​25 new international division of labour (NIDL), 219–​20 New International Economic Order (NIEO), 141–​42, 208–​9, 273 newly industrializing countries (NICs), 141–​42 The New Yorker, 461–​62 New York Stock Exchange, 105 The New York Times, 461–​62 New Zealand, 479–​80, 488–​89

670   Index Nielsen, Daniel, 325 Nigeria, 310–​11, 339 non-​governmental organizations (NGOs), 117, 507–​8, 615 North, Douglass, 140–​41 North African extractivism and resistance alternatives to, 508–​9 capital accumulation and, 498–​500 class struggles and, 506–​8 defined, 498–​500 Imider resistance against dispossession, 505–​6 imperialism and, 498–​500 introduction to, 7, 9–​10, 497–​98 phosphate, 503–​5 resistance against, 502–​6 unemployed movement, 502–​3 North American Aerospace Defence Command (NORAD), 554 North American Free Trade Agreement (NAFTA), 541, 557, 559–​60, 562 North America’s political economy. See United States (US) dominance over Mexico and Canada North Atlantic Treaty Organization (NATO), 554, 571, 577–​78 North Korea, 461, 463–​64 North-​South Divide Bretton Woods Twins and, 201, 203–​7 deforming Southern countries, 195, 196–​98 finance and debt dependence, 200–​2 introduction to, 195 labour power and, 262–​63 Lomé I model, 208–​9 tax evasion and transfer pricing, 202–​3 trade and unequal exchange, 198–​200 World Tourism Organization and, 201, 207–​8 notional wealth, 285 Nouveaux principes de l’economie politique (Sismondi), 102 Nunn, Nathan, 272–​73

O the occupied forest, 326 October Revolution, 443–​44 Office Chérifien des Phosphates (OCP), 503

Open Veins of Latin America (Galeano), 323–​24 Opium Wars, 103 oppression, 6, 19, 69, 76 Orban, Victor, 164 Ordoliberal tradition, 139 Oregon Treaty, 554 Organization for European Economic Cooperation (OEEC), 570–​7 1 Organization of Economic Cooperation and Development (OECD) Colombia and, 579–​83, 581t, 582t Euromarket borrowing and, 200 human capital and, 357 institutional peculiarities, 570–​73, 572t, 574t international organizations and states, 567–​ 70, 568t introduction to, 11 labour tributes, 309 material capacities of, 574–​78, 575t military imperialism, 577–​78 neoliberal globalization, 574–​75 neoliberalism and capitalist development, 575–​76, 576t norms built by, 578–​83, 579f realigning taxation, 203 space dimension of capitalism, 577 summary of, 583–​85 technological innovation and, 576–​77 Ostrom, Elinor, 140–​41 OTC (over-​the-​counter) contracts, 360 Ottoman Empire, 11–​12, 158, 160, 458, 617, 619–​20, 638 Outsourcing Economics (Milberg, Winkler), 220–​21 overaccumulation crisis, 70–​7 1 ‘overripe’ capitalism, 59–​60 Oxford Poverty and Human Development Initiative, 343

P Pacific Islanders mineral deposits and mining anthropological perspective, 475–​77 compensation and royalties, 476 ‘dis-​enclavization’ of mining, 482–​85 further analysis, 488–​90 geopolitics of, 485–​88

Index   671 imperial formations and, 475–​76 introduction to, 7, 9 Pacific Island Forum (PIF), 487–​89 Pacific Small Island Developing States (PSIDS), 489 Pacific Worlds: A History of Seas, Peoples, and Cultures (Matsuda), 475 Pakistan, 428–​29 palenques, defined, 182–​83 Panitch, Leo, 72–​73, 78 Papua New Guinea (PNG), 478–​79, 481, 486–​87 parliamentarism, 55, 61–​62 patent applications/​registration, 259t, 276 Patent Cooperation Treaty (PCT), 257, 258 Patnaik, Prabhat, 75–​76, 108, 544 Patnaik, Utsa, 75–​76, 440, 544 patriarchal culture, 314 Pearson Report, 200 People’s Republic of China. See China peripheral countries, 69, 198, 217 permanent arms economy, 395–​96 Peters, Carl, 519 petit marronage, 182–​83 Petras, James, 75, 78 petroleum extraction, 324 Philippines, 440–​41, 447, 449, 450 Phillips, Nathaniel, 174 Piñera, Sebastian, 329 piracy, 197 Pleasant Hill plantation, 174 plundering (Beuteprinzip), 195 Pogge, Thomas, 338 political economy, 88–​92, 92t, 500–​1 political freedom, 137–​38 Pol Pot, 447 population growth, 269–​70, 307 Portuguese colonies, 157 post-​Cold War Marxist theories of imperialism global capitalism and, 73–​77 globalist perspective, 68–​73 introduction to, 2, 67–​68 post-​industrial society, 355 Postlethwayt, Malachy, 172–​73 poverty, absolute, 418, 430–​31, 432

poverty metric of World Bank artificial reductions in, 336–​39 case studies, 339–​41 contradictions within, 342 erasing of poverty, 334–​46 extreme poverty, 333, 336, 342, 347–​48 at face value, 343 global inequalities, 349 introduction to, 333–​34 labour exploitation, 348–​49 masking global exploitation, 346–​49 mass eviction as poverty reduction, 341–​42 other metrics for assessing, 343–​46 purchasing power parity, 334–​41, 346–​49 reality of, 334–​36 unequal exchange and, 346–​48 World Bank’s International Poverty Line, 333, 334–​46 Prebisch, Raul, 217–​18 Prebisch-​Singer thesis, 83–​84, 198–​99, 217–​20 predatory extractivism, 509 pre-​industrial world economies, 242–​43 present-​day imperialism, 2 Pridi Phanomyong, 447 primitive accumulation. See also accumulation by dispossession of capital, 102 capitalism and, 323–​24, 325 colonialism and, 18 deforestation and, 326 extractivism and, 504 harm from, 616, 627 imperialism and, 412–​13, 498–​500, 503 income inequality and, 432 introduction to, 9–​12 mass eviction and, 341 militarism and, 50, 323–​24, 392 Principles of Political Economy and Taxation (Ricardo), 101–​2 private property, 154, 287 privatization accumulation by dispossession, 71, 379–​80, 497 in agriculture, 643 anti-​privatization, 314 commodification of services and, 139–​40 ecological degradation through, 9–​10, 499

672   Index privatization (cont.) education cost after, 308 IFI operations and, 146 impact on Indigenous territories, 326 imperialism and, 431–​32, 573 of mineral resources, 485 neoliberalism and, 292, 305, 323 neoliberal restructuring process, 254 political achievement of, 379 public-​private partnerships and, 144–​45 of state-​owned enterprises, 143–​44, 186, 307, 313 wealth through, 645 process efficiency analysis, 604–​8, 605f, 607t production technology, 234–​35 productivity differentials, 232, 268, 270–​72 profitability crisis (1970s), 414 profit rate equalization, 232–​33 progressivism, 118–​19, 121, 125 proletarianization, 121, 220, 313 pronoia institution, 617–​18 prostitution tourism, 311 Prusso-​German Empire, 103 public-​private partnerships (PPPs), 144–​45, 146 Puerto Rico, 179–​80 purchasing power parity (PPP), 334–​41, 346–​49 Purdy, D., 396

Q Qajar Persians, 638 quantitative easing (QE), 147 quilombos, defined, 182–​83

R racism/​racial discrimination, 18, 438–​39, 440 Radelet, Steven, 333–​34 radical feminists, 302–​3 radicalism, 123 railways/​railway imperialism. See East African railway imperialism Ramaphosa, Cyril, 543 Rana Plaza disaster (2013), 224 rates of profit, 58, 87–​88, 216, 390, 397–​401 Räthzel, Nora, 375

Reagan, Ronald, 136, 140–​41, 142, 143 realism, 117–​19, 567 rebellious self-​subjugation, 375 Reddy, Sanjay, 338, 339 Red Nacional de Mujeres en Defensa de la Madre Tierra in Bolivia, 314 reforesting, 326 Regional Comprehensive Economic Partnership (RCEP), 450 regional trade agreements (RTAs), 275–​77, 278 Regla Warehouse Company, 180–​81 Rehabilitate-​Operate-​Transfer (ROT), 527–​28 Rehman, Mujibur, 429–​30 relative rent, 225 Report on Manufactures (Hamilton), 159 reproducible solution (RS), 237–​39, 240–​41 Republic of Serbia, 26 research and development (R&D) activities, 256 return on equity (ROE), 221–​22 Rhodes, Cecil, 535, 537–​38, 542 Ricardian theory of international trade, 232, 306 Ricardo, David, 101–​2, 159 Richardson, David, 173–​74 Rico, Carlos, 562 rightwing populism, 384n.4 ritualization process, 484 Road to Serfdom (Hayek), 163 Robinson, William A., 69 Rodney, Walter, 516 Rodrik, Dani, 269 Roemer, John, 241–​42 Roman Empire, 616–​17 Romania, 376–​77, 620–​21, 625–​27, 628 Romanian Land Law, 623 Roosevelt, Franklin Delano, 106 Roosevelt, Theodore, 440–​41 Roughley, Thomas, 178–​79 Rule of Law, 201–​2, 205, 209, 589 Russia colonial expansion by, 456 fertility rates, 312–​13 imperialism of, 162 migrant labour and, 648–​49 settler colonialism by, 20–​21 Russian Empire, 12, 636, 638–​39, 644

Index   673 S Samuelson, Paul, 233 Schumpeter, J. A., 103–​4 science, technology, engineering, and mathematics (STEM) areas, 260–​61 scientific management in slavery, 177–​81 scientific-​technological maquiladoras, 256–​57 Screpanti, Ernesto, 73–​74 Second British Empire, 285–​86 Second International, 54 second slavery, defined, 179–​80 second-​wave feminist movement, 304 self-​transformation of capitalist societies, 382 September 11, 2001 attacks, 158–​59 Serbian agricultural sector, 615 settler colonialism, 2, 20–​21, 438 sex trade, 301 Sheridan, Richard B., 175–​76 Silicon Valley’s imperial innovation system, 255–​58 Silone, Ignazio, 164 Singapore, 450 Singer, Hans, 217–​18 skill polarization, 94 slavery/​slave trade capital accumulation and, 173–​76 capitalist imperialism and, 156–​57, 171–​73 colonialism and, 18, 272–​73 destruction of, 181–​85 industrial capitalism, 177–​81 introduction to, 4 North-​South Divide and, 197 scientific management, 177–​81 second slavery, defined, 179–​80 surplus labour and, 272–​73 Slovenia, 620 Smith, Adam, 91, 101–​2, 159, 163, 171, 196 Smith, Archibald, 175 Smith, John, 76–​77, 78, 348, 544 Social Democracy, 43, 44–​45 social feminists, 303–​4 socialism, 55, 122–​27, 621–​22 Socialist Federal Republic of Yugoslavia, 26 socialist feminism, 303 Socialist Revolution, 54 socialization process, 484 social labour recognition in Eastern Europe

capital stock availability, 595–​97, 596t cost efficiency catch-​up, 608–​10 disequilibrium prices, 597–​602, 598t, 599t, 601t economic efficiency, 603, 604t introduction to, 11, 589–​90 methodology and data, 592–​93 post-​transitional integration and, 593–​603, 593t summary of, 610–​13 technical efficiency catch-​up, 604–​8, 605f, 607t theoretical underpinnings, 590–​91 socially necessary labour time, 23–​24 social structures of imperial mode of living, 378–​80 social welfare, 305 Société Le Nickel (SLN), 478 Société Minière du Sud Pacifique (SMSP), 483, 484, 485 Societe Nationale d’Investissement (SNI), 505 socio-​ecological transformation, 382–​83 socioeconomic development, 17 Solomon Islands, 477–​78 Sonatrach, 500 South African Rand (ZAR), 337 South America, 7, 16, 20–​21, 285–​86 South Asian economic imperialism class-​state-​imperialism triad, 428–​32 economic performance after 1950, 414–​28 evolution of economies, 430–​32 framework of, 412–​14 introduction to, 7, 267–​69, 411–​12 (See also neoliberal capitalism in South Asia) inward looking and state-​dominated era, 414–​24, 415f, 416t, 417t, 418f, 419t, 420t, 421t, 422f, 422t, 423f, 424f, 425t liberalizing and globalizing, 425f, 425–​28, 427t phases since 1950, 413–​14 summary of, 432–​33 South Asian League, 447 Southeast Asian power competition and exploitation colonialism and structures of, 440–​43 commonalities and modalities of, 437–​40 decolonization, 443–​49 US hegemony, 449–​50

674   Index Southeast Asia Treaty Organization (SEATO), 450 Southeast European land grabbing capital accumulation and, 619–​22 EU-​led reforms, 624–​27 hierarchy and peripherization, 616–​18 introduction to, 615–​16 post-​socialist period, 622–​24 summary of, 627–​28 southern African imperialism anti-​imperialist struggle, 541–​49 apartheid and, 539–​41 introduction to, 7, 10, 535–​36 settler state interventions, 537–​41 theories of, 536–​37 transition to majority rule, 541–​49 Southern countries (SCs). See North-​South Divide South Korea, 449, 450, 460, 463–​64. See also East Asian economic imperialism average labor term of trade, 468f, 468, 470t average rates of return on foreign investments, 464f, 464–​66, 465f, 466f unequal exchange theory and, 467–​69 Soviet Union ‘anti-​imperialist’ discourse, 25–​28 capitalist imperialism, 4 Central Asia and, 635–​36, 639–​44, 642t collapse of, 67, 589, 642–​43 corruption in, 144 foreign direct investment and, 22–​23 internal colonialism and, 19 settler colonialism by, 20–​21 Spanish-​American war, 440–​41 spatio-​temporal fixes, 10, 517, 524–​25 Sri Lanka, 428, 429 stakeholder liabilities, 221–​22 Standard Gauge Railway, 525–​26 Standard Gauge Railway (SGR), 524, 528–​29 standards of living, 16–​17 Stanley, Henry, 161 state capitalism, 52, 53–​54, 55–​57 state capitalist trust, 53 state-​owned enterprises, 143–​44, 186, 307, 313 State Trading Organization (Compañía Nacional de Suminstros Populares, CONASUPO), 296

Stigler, George, 163 Stiglitz, Joseph, 140–​41, 145–​46 Stoler, Ana Laura, 479 structural adjustment lending (SAL), 205, 208 structural adjustment programmes (SAPs), 292, 341 structural functionalism, 116–​17 structural realism, 121 subimperialism, 27, 540 sub-​Saharan Africa, 267–​70, 271, 344 Suez Canal, 517–​18 sugar production, 180–​81 super-​exploitation, 219–​20, 254, 364 super-​profits, 2, 67–​68, 76, 77, 456, 463, 464, 507 surplus labour colonial legacy, 272–​73 data imperialism, 278 early industrializer advantage, 268–​72 intellectual property rights, 276–​77, 277f investor protections, 277–​78 life expectancy increases and, 269–​70 longevity of, 279 migration limits, 270 neoliberal globalization and, 273–​75 new trade and investment agreements, 275–​78 productivity differentials, 270–​72 slave trade and, 272–​73 unemployment/​underemployment, 267–​68 surplus value theory capital-​labour relation and, 226n.6 from China market, 223 financialization and, 220 human capital and, 359 imperialism and, 412–​13, 455–​56, 457, 467 labor power and, 76 labour income and, 360–​61, 364–​66, 367–​68 militarism and, 389–​90, 392, 393–​94 PPP rates, 348 production process and, 357–​58, 457, 521–​22, 544 realised surplus value, 521 social distribution of, 252 unequal exchange theory and, 199, 217, 255, 309, 457, 546, 591 value of labor-​power, 76, 220

Index   675 Sweezy, Paul, 393–​95, 396 system of national accounts (SNA), 303

T Tagore, Rabindranath, 165 Taiwan, 458–​59, 460, 463–​66, 464f, 465f, 466f, 467–​69, 468f, 470t, See also East Asian economic imperialism Tajikistan, 635, 643–​44, 647, 648–​49 Tangley, Laura, 325 Tanzania, 523–​24, 527–​29 Tanzania-​Zambia Railway Authority (TAZARA), 527–​28 tax evasion, 4, 195, 202–​3 Teaiwa, Teresia, 476–​77 technological innovation, 171–​72, 576–​77 territorialization process, 484 tertiarization financial fetishism, 356, 357–​58, 359–​67 global division of labour, 362–​67 human capital and, 355–​59, 367–​68 introduction to, 355–​56 summary of, 367–​68 value in the financialized core, 362–​67 textile industry, 107–​8, 196–​97, 273–​74, 288, 638–​39 Thailand, 92, 442–​43, 449, 450 Thatcher, Margaret, 136, 140–​41, 142 Theory of Economic Development (Schumpeter), 103 third-​wave feminism, 314 Third Way positions, 145–​46 Third World Project, 141–​42 Third World/​Third Worldism consumption patterns, 337–​38 devaluation of products, 108 developmentalism in, 437–​38 European economic growth and, 176 imperialism and, 69 poverty and, 346–​48, 349 socialism and, 126–​27 Thirty Years’ War, 157 Thrifty Food Plan, 338 tımar system, 618 Timorese Liberation Movement, 447 Tomich, Dale, 179–​80

Tonga Offshore Mining Limited’s (TOML), 486–​87 total global wealth, 358 totalitarian ideology, 26 tourism, 9–​10, 324, 558 trade. See also free trade; international trade; slavery/​slave trade average labor term of trade, 467–​69, 468f, 470t cross-​border trade, 274–​75, 292–​93 inequalities in, 1 international trade, 91–​92 investment agreements and, 275–​78 liberalization of, 186, 274–​75, 306, 590–​91 regional trade agreements, 275–​77, 278 Ricardian theory of international trade, 232, 306 sex trade, 301 unequal exchange theory and, 198–​200 trademark registration, 276 Trade Related Intellectual Property (TRIPS) agreement, 201, 208, 275, 276–​77 trade-​related investment measures (TRIMS), 275, 277 tradition-​modernity polarity, 116–​17 trans-​Atlantic print culture, 178–​79 transatlantic slave trade. See slavery/​slave trade transfer pricing, 202–​3 transnational capitalist class, 2, 67–​68, 124, 458, 508 transnational corporations (TNCs) in food regime, 291–​92, 294–​95, 296 global outsourcing by, 467 global value chains and, 219, 221, 223–​25 in Maghreb region, 500–​1 neoliberalism and, 273 trans-​Pacific supply chains, 221 Treaty of Amiens (1802), 184–​85 Treaty of Shimonoseki, 459 tribute-​trade system, 458, 460 Trotha, Lothar von, 161 Troubled Asset Relief Program, 147 Trudeau, Pierre, 561 Trump, Donald, 164, 557 Tucker, Josiah, 163 Tunisia, 498–​99, 500–​1, 503–​5

676   Index Tunisian tourism, 9–​10 Turkmenistan, 635, 642–​43, 646, 647

U Ugandan railway, 517–​19, 520, 522–​24, 527, 529 UNCTAD’s World Investment Report (2013), 215–​16 UN Declaration on the Granting of Independence to Colonial Countries and Peoples, 478–​79 underconsumption, 21, 62, 72–​73, 102, 104, 162, 389–​90, 391, 393–​95, 536 underemployment, 5–​6, 267–​68 undernourished people, 344 unemployment, 17–​18, 267–​68, 502–​3 unequal exchange theory characterization for, 243–​44 class division, 245–​46 class-​exploitation correspondence principle, 245–​46 defined, 457 East Asian economic imperialism, 467–​69 economic environment of, 234–​39 exploitation, general definitions, 239–​46 free capital mobility and, 244–​46 global value chains, 217–​20, 219t international inequality and, 85–​86 international UE, 242–​44 introduction to, 2, 5, 11, 231–​34 labour power and, 252–​53, 261–​62 Marxist theories of imperialism and, 24, 467–​69 monopoly capitalism and, 218–​19, 220 overview of, 23–​25 poverty metric of World Bank, 346–​48 in pre-​industrial world economies, 242–​43 production technology, 234–​35 reproducible solutions, 237–​39, 240–​41 summary of, 246–​47 surplus value theory and, 199, 217, 255, 309, 457, 546, 591 trade and, 95–​96, 198–​200 value theory and, 84 welfare of the representative agent, 235–​37 unequal labour exchange, 591 unequal trade relations, 3 UNICEF, 345–​46

United Kingdom (UK), 141–​42, 159. See also Britain United Nation Commission on Trade and Development (UNCTAD), 275 United Nations Conference on Trade and Development (UNCTAD), 6–​7, 335, 343 United Nations Convention on the Law of the Sea (UNCLOS), 485–​86, 487 United Nations Development Programme (UNDP), 343 United States dollars (USD), 337 United States (US) aggression and usurpation by, 158–​59 capital export and, 21–​22 capitalist imperialism, 4 colonial expansion by, 456 currency hierarchy and international trade, 91–​92 debt to China, 109 expansionism, 554–​55 GDP of, 109 geostrategic power, 448 global financial crisis and, 109 hegemony of, 449–​50, 460–​61 imperialism of, 8, 290–​91, 444, 448–​49, 455 Latin America and, 161–​62 neoliberalism in, 141–​42 policy in Indonesia, 447 settler colonialism by, 20–​21 Vietnam War and, 446 United States (US) dominance over Mexico and Canada cultural appropriation and identities, 558–​59 economic development and, 555–​56 economic power and, 559–​61 expansionism and, 554–​55 human capital and, 556–​57 introduction to, 10, 554 Mexico as North America’s playground, 558 political power and, 561–​62 summary of, 562 UN Millennium Development Goals, 333 unpaid domestic labour, 6, 301, 302–​4 unrequited export surplus, 289 UN Statistical Division, 336–​37

Index   677 UN World Food Programme, 345 Uruguay Round, 207 US Africa Command (AFRICOM), 545 US bourgeoisie, 69 use value of imperial mode of living, 380–​83 usine pays, 484 US Super 301 measure, 207 Uyghur people of Xinjiang, 26 Uzbekistan, 642–​44

V vagabonds, 313 value-​added/​ prices, 213–​17 Value Added Tax (VAT), 580 value/​value theory, 7, 24, 84, 362–​67 Vanuatu, 477–​78 Veltmeyer, Henry, 75, 78 Vietnam, 442–​43, 448, 449, 450 Vietnam War, 446, 461 ‘visible’ commodities, 301

W wage repression, 83 Wallerstein, Immanuel, 115–​27. See also world-​ systems analysis Wallmapu region of Chile, 323, 327–​30 Wall Street Crash (1929), 105 Walras, Léon, 103 Wanel-​Edon Development Association in Nigeria, 314 Warsaw Pact, 589 Washington Consensus, 91, 136, 138, 140–​41, 143–​44, 147, 292, 305, 576t, 580–​83 The Wealth of Nations (Smith), 171 wealth transfer, 379 Weber, Max, 4 The Week, 461–​62 welfare inequalities, 237 welfare state, 314, 429, 438, 640 ‘Western’ imperialism, 25 White, Kyle, 327 white supremacy, 438 Williams, Eric, 172–​73 Williamson, John, 143–​44 Wilson, Harold, 439 women and economic imperialism crisis of reproduction, 312–​15

gendered global division of labour, 309–​12 introduction to, 301 neoliberalism and, 305–​9 oppression of women, 6 unpaid domestic labour, 302–​4 women’s anti-​imperialist movements, 314 women’s movements, 314 women’s rights, 302 Wood, Ellen Meiksis, 69–​70, 78 Wood, William, 172–​73 Woolf, Leonard, 162 working-​class environmentalism, 383 World Bank. See also poverty metric of World Bank economic imperialism and, 186 financial liberalization, 573 globalization and, 69 global value chains and, 364 imperialism and, 414 introduction to, 6–​7 natural gas rents data, 646 neoliberalism and, 138, 143–​44, 147–​48 OECD and, 583–​84 privatizations documentation, 146 railway restructuring projects by, 523–​24 role in mining, 484 southern African imperialism and, 545 structural adjustment programmes, 254, 255 total global wealth, 358 World Bank Africa Transport Unit, 526 World Bank’s International Poverty Line, 333, 334–​46 World Development Reports (WDRs), 146 World Input-​Output Database, 219 World Intellectual Property Organization (WIPO), 257, 258 World Social Forum, 314 world-​systems analysis (WSA) defined, 457 East Asia and, 457–​59 foundational disparities, 116–​22 globalization and, 122–​27 international trade and, 89 introduction to, 3, 115–​27 World Tourism Organization (WTO), 201, 207–​8

678   Index World Trade Organization (WTO) agrarian labour and, 292–​93 establishment of, 541 general intellect appropriation, 258 globalization and, 69 international trade and, 88–​89, 90, 278 introduction to, 4 investment agreements, 275–​76 neoliberalism and, 414 underdevelopment and, 195 World War II, 440, 449, 455, 539, 558

X xenophobia, 77, 254 Xi Jinping, 450, 525

Y Yates, Michael, 341 Yugoslavia, 589, 620–​22, 627–​28 Yugoslav Kingdom, 620

Z Zambia, 544, 545, 547 Zheng Chenggong, 458–​59 Zimbabwe, 539–​40, 548