Imperialism, Industrialisation, Trade and Sub-Imperialism

This is the first part of a series of posts on Imperialism. This first post is a copy of a document I wrote in August 1983 that appeared as IB67 of the Workers Socialist League. Obviously, twenty-six years later, there are aspects of the document today that I would disagree with or change – though surprisingly little. In fact, its something comrades should bear in mind today when quoting huge slabs of Marx’s comments from the 1840’s, that just maybe, as with me now, twenty-odd years later with the benefit of hindsight, further research and further empirical evidence, he too would have changed some of the things he wrote or said earlier!!!! Not just might have done, but did!

The background to the document is important. As a Marxist, the reason I had gone to University was to be able to have the time to study Marxist theory in a way that I was simply not able to do whilst being a worker. I geared all of my studies around achieving that purpose. So, as a Marxist two of the most important areas at the time to study were the economics of the “Socialist” Countries, and the Economics of the Developing Economies, which necessarily entailed a study of the role of “Imperialism”. So I specialised in these particular areas, and in International Economics. The guiding theory for Marxists at the time was Lenin’s theory of Imperialism as set out in his “Imperialism – The Highest Stage of Capitalism”, written in 1916 during the First Imperialist War, and intended as a political perspective both to explain the nature of that War as located in the driving force of Imperialism, and to argue to workers that to avoid a repetition the only solution was the establishment of Socialism. But, even beginning to study the economics of development it soon became apparent that Lenin’s theory was both theoretically unsound – indeed for Lenin, who was usually meticulous in his research, it was uncharacteristically sloppy and subjectivist – but also clearly, empirically disproved, even by the facts at the time he wrote, let alone by subsequent events! Marxists do not hold such previous writings to be Holy Writ, indeed Marx and Engels warned against doing so, but nevertheless this discover was still troubling. Not, because Lenin was in large part wrong, but because 60 years later the Marxist movement was itself still basing itself on a theory that was so clearly disproven. In fact, it was not just Marxists who based themselves on this theory, but a whole swathe of Liberal Left thinking was based upon a version of it too!

It was only some years later when I read Bill Warren’s book “Imperialism: Pioneer of Capitalism”, that I really understand why this was. Reading Lenin’s “Imperialism” again recently I was struck by once again the extent to which what Lenin actually says has been subsequently misrepresented. As Warren says, the pamphlet should probably really be seen as a first draft on Lenin’s part, because many of the ideas are so heavily circumscribed – for example, what he says about Monopoly and parasitism – as to be virtually meaningless. But, using the Marxist method, understanding that ideas are a function of material conditions and have their origins in social roots, it becomes clear why the general tenets have been adopted by that section of Left opinion. That the Liberal Left should adopt the concept that Monopoly is bad is understandable. Their whole raison d’etre is to argue for a return to the golden age of free competition and Free Trade of 19th Century Capitalism, upon which the ideas of bourgeois freedom were founded. Of course, this section of thought does not point out at that Lenin himself in “Imperialism”, even having made heavily circumscribed comments about Monopoly argues that any such attempt to restrict it or turn the clock backwards by anti-Monopoly policies would be wholly reactionary!!!!! The Stalinists, who adopted this position of the Liberals as part of their drive to create Popular Fronts also fail to take on board Lenin’s comments in that regard when they proposed their reactionary “anti-Monopoly Alliances”.

But, this idea of the role of Monopoly is then easily extended on a global scale to suggest that the world economy is dominated by National Economies or “Imperialist” powers who have the same role within it that the Monopolies have towards weaker, smaller companies. Indeed, there is some support for that idea in Marx himself who makes a similar comparison in one of his earlier writings. But, even here, unlike either Marx or Lenin, the epigones, take a one-sided, uni-directional approach. For them, this relationship is a given, fixed in stone for all time. Yet, Marx not only says that “Competition begets Monopoly”, he follows it immediately with “Monopoly begets Competition”! And Lenin, himself in “Imperialism”, although he speaks of the potential for parasitism resulting from Monopoly, immediately says alongside it,

“Certainly, monopoly under capitalism can never completely, and for a very long period of time, eliminate competition in the world market (and this, by the by, is one of the reasons why the theory of ultra-imperialism is so absurd). Certainly, the possibility of reducing the cost of production and increasing profits by introducing technical improvements operates in the direction of change. But the tendency to stagnation and decay, which is characteristic of monopoly, continues to operate, and in some branches of industry, in some countries, for certain periods of time, it gains the upper hand.”

But, as Warren points out all of these extensive caveats put in by Lenin are removed by Stalinism in the late 1920’s. Why? Because Stalinism by then had adopted the policy of “Socialism in One Country”. Its entire pratice and policy from that time onwards was geared to that end, and having given up on the prospects of revolution in the West it saw its best chance as to mobilise as wide an opposition to “Imperialism”, which it saw as its main enemy, the most likely source of attacks on the USSR as its best option. Those elements of Lenin’s theory, which attacked “Imperialism”, therefore, and which opened up the possibility of building an “Anti-Imperialist” alliance with bourgeois-nationalist forces in the colonies i.e. the policy of the Popular Front become its obvious means of achieving that aim, even if the consequence is to remove all of those aspects of Lenin’s theory - not to mention all of those aspects of earlier Comintern policy on the national and Colonial Questions, which rejected alliances with the national bourgeoisie which rejected the idea – that opposed the idea of fighting Monopoly or Imperialism by trying to go backwards, and thereby to turn the working classes away from a class struggle against their own bourgeoisie in favour of an alliance WITH that bourgeoisie against some supposed external threat. In fact, its amazing how similar that idea is to the idea of the Neo-Cons to use such a supposed external threat to achieve exactly the same effect in the developed economies!!!!

Here then is the material conditions, the social roots of the idea of Imperialism and Colonialism taken as good coin amongst large sections of the left, and once again demonstrating the continued effects of Stalinism and Liberalism within the workers movement, derailing the class struggle. What is all the more surprising is the extent to which those ideas continued even after any kind of political basis for them could be maintained. Lenin’s theory of “Imperialism”, was really a theory of Colonialism not imperialism. It was based on the idea that Colonialism had divided the world up that each Colonial power had a Monopoly position in each particular colony. But, the Colonial Revolution put an end to that situation. Not only did it bring political independence to those former colonies meaning they were free to choose their own economic policies, but it meant that the situation of Monopoly was itself ended, and far from a position of Monopoly it meant that there was intense competition BETWEEN the “Imperialist” powers not just to secure markets for their goods within them, but to secure supplies of basic materials, food etc. and increasingly between the multinational companies that raised global economic competition to new heights, to be able to locate their production in these countries, to take account of their plentiful supplies of cheap labour, and potential markets for their products. Far from this period being one that was characterised by the limitations of Monopoly it was marked by a substantial intensification of COMPETITION!

Despite, that unlike Keynes who said “When the facts change, I change my opinions”, the Liberal Left, and those sections of the petit-bourgeois Left influenced by it, stuck with their old dogmas, coming up with increasingly strained explanations to describe the new situation within the old framework. So we were told that although there had been political independence it was not REAL independence because the former colonies remained in a condition of economic dependency on the former colonial powers. This was undoubtedly true for a time, but only because it takes time to change economic relationships, to develop national talents and abilities, and so on. The simple facts of economics and trade showed that the idea that these economies could not develop because of these various dependency relations was simply untrue. The less developed economies continued to grow, to increase their share of trade, and in large part to move forward relative to the richer economies. A fact illustrated by all those former “underdeveloped” economies in Asia and Latin America who were supposed to only be capable of becoming poorer, but which have themselves become significant developed economies themselves!!!

The other background to this, of course, is the fact that these unsound theoretical foundations had led to a whole series of unsound political positions for large sections of the Left when it came to relating to struggles in these countries. It meant adaptation to Third Worldism, and to bourgeois and petit-bourgeois nationalism. It had come to the fore within the WSL the previous year over the Falklands War, for which I had also contributed a number of documents attacking the position of the Thornett faction for precisely these mistakes. Unfortunately, those mistakes continue to dog the positions of the Left today, which is why I think its important to republish these discussions – although I will only be publishing my documents from the time, apart from referring to some of the comments of others.

What I found interesting re-reading this document was in fact its prescience. IN particular, written probably ten years – somebody will now doubt correct me on this – before the term “Globalisation” had been used, the section in the conclusion which looks at the international divisional of labour (a further document will illustrate this even more) was, I think, fairly accurate in describing the developments of the last 25 years. In fact, Martin Thomas criticising this argument wrote in a subsequent Internal Bulletin (IB77 December 1983) that I had argued,

“on the basis of the rise in manufacturing in the LDC’s and the development of new technology, that the trend is towards an international division of labour in which the only jobs in the ACC’s would be jobs like ‘computer programmers, analysts etc’ and in services (finance, health, education, etc). Presumably, the bulk of manufacturing industry jobs would be in the LDC’s. The international income of the ACC’s would be profits, interest and royalties on technology, rather than receipts on manufactured goods.”

Martin, went on to say why he thought this was wrong arguing that “..it would take well into the 21st century for anything like the picture he paints to emerge”. I will deal with that argument in later blogs, but suffice it to say that although I pointed out at the time that this was an exaggeration of what I had said, I the fact is that we are now probably ten years past the stage of globalisation suggested in my document, a stage that has indeed been characterised by the kind of international division of labour it suggested, by China emerging as the new workshop of the world, and by the economies of Britain and the US, in particular being characterised by the kind of shift away from manufacturing and into high-tec, high value added production, and into service industries such as finance and so on, alongside the other type of service industries – the McJobs – suggested in the document!!!!

(Addenda:  In a 2015 document - Later Capitalism - Martin Thomas, criticises Mandel for making the same mistake he had made himself back in the 1980's, but without any acknowledgement of such, or self-criticism.  He wrote,

"The expansion of the "service" sector is now characteristic of a big range of economies, way beyond the most advanced ones: 51% of GDP in China, for example (Financial Times, 6 December 2015).

Mandel registered the "services" expansion which had already happened in western Europe and the USA, but did not see it as an avenue for real expansion of capital. Instead, he described it as a sort of aberration generated by "the availability of large quantities of capital which can no longer be valorised in industry proper" and by "over-capitalisation, or non-invested surplus capitals, set in motion by the secular fall of the rate of profit" (pp.389, 387). So capital developed in service industries only because it found itself unable to do so in "proper" industries? And it was a sort of pseudo-development."
This and subsequent documents will form the backbone, alongside some of the other economic documents such as the Draft document on the World Economy and the documents last year on the Long Wave and the economic crisis, of a new theoretical document on Imperialism titled – “Imperialism – The Most Dynamic Phase of Capitalism”.

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Imperialism, Industrialisation, Trade and Sub-Imperialism

“The bourgeoisie, by the rapid improvement of all the instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e. to become bourgeois themselves. In one word, it creates a world after its own image.”

Marx “The Communist manifesto” p47 Progress Publishers ed. 1977)

Bourgeois and Proletarians

Just as Marx believed capitalism had “rescued a considerable part of the population from the idiocy of rural life” (ibid), so he saw Capitalism playing a progressive role on a world scale rescuing millions from the “idiocy” of the Asiatic Mode of Production (AMP) and “barbarism”. Marx was led to the conclusion that autonomous development could not take place in societies based on the AMP. It required the stimulus of European Colonialism. England had a double role to play in India – one destructive, the other laying the “material foundations of Western society in Asia” (Marx, “The Future Results of the British Rule in India” pp 583-4 Marx Engels Reader, also in Marx “Surveys From Exile” Penguin Ed.) Britain in India In predicting these developments Marx was getting carried away by excessive optimism. In later years seeing the catastrophes caused by Capitalism’s destructive side in the colonies he was forced to modify his judgement so what.

(NB. I would refute this now. The above statement was based on a reading referring to the work of K. Mori ‘Marx and “Underdevelopment”: His thesis on the “Historical Roles of British Free Trade” Revisited’, Annals of the Institute of Social Science, No. 19, University of Tokyo, 1978. In fact, on reading that actual paper later, and other material I was led to agree with Warren that this assertion was clearly false. AB)

While not idealising any past age or the effects of Colonialism, Marx was acutely aware of the tremendous social revolution Britain was creating in Asia. By destroying the inertia of the AMP in the villages and the division of labour inherent in the system, Capitalism was, at the same time, destroying the caste system, which rested on it and thus opening the way to future progress. But,

“The Indians will not reap the fruits of the new elements of society scattered among them by the British bourgeoisie till in Great Britain itself the now ruling classes shall have been supplanted by the industrial proletariat, or till the Hindus themselves shall have grown strong enough to throw off the English yoke themselves.” (ibid.)

It was much the same with China. Marx condemned the greed behind the Opium War, but stressed the progressive nature of Capitalist penetration of the Country. (Marx, “Revolution in China and in Europe” in “Surveys From Exile” Penguin ed.)

Revolution in China and in Europe

Similarly, Engels did not hesitate to hail as “an important and fortunate event for the progress of civilisation” the French conquest of Algeria, the US expansion at Mexico’s expense and the conquest of Central Asia by Russia. (See: F. Engels, Northern Star, 22nd January 1848, F. Engels Deutscher Brussler Zeitung No. 7, 23rd Jan 1848 in Werke Vol. Iv p501, and F. Engels, Letter to Marx in Correspondence 1846-95 – p37.)

Northern Star

It was the dialectical method that allowed Marx to distinguish between the subjective and objective aspects of historical events. He was able to condemn capitalism and colonialism from the point of view of those who suffer while still pointing to them as important progressive forces from the point of view of objective historical movements. Marx always stresses the great historic function of capitalism “forcing humanity without scruple to produce for the sake of production” it constitutes a “transitory historical necessity” in that the victory of productive forces and creation of a world market creates for man “the real basis of a superior structure of society, whose basic principle would be the full and free development of every individual.” Marx was well aware that the chief problem of the new epoch was forging a link between the socialist struggles of the industrial proletariat and the anti-colonial struggle. Whilst the Second International popularised (and vulgarised) Marxism, being riddled with chauvinism, it ignored the struggles against Colonialism. It was up to the early Comintern to address itself to the “National Question.”

Trade and the World Market

The world market, being created, was as Marx pointed out, being created by the already industrialised nations, in particular Britain. The international economy is a fairly recent phenomenon and has only emerged as such over the last 150 years or so. (Kuznets has shown that in 1800 only 3% of world output was traded, but by 1913 this was 33%). Not surprisingly, early bourgeois economists like Smith and Ricardo were concerned to show the advantages of Free Trade (e.g. Ricardo’s Theory of Comparative Advantage). Yet, the process whereby these nations had themselves initially industrialised had little to do with Free Trade (e.g. Britain’s destruction of the Indian textile industry through tariffs on imports etc.)

Relations between imperialist powers and their colonies caused among other things:

a) bias in the structure of production specialisation by country
b) constraints on the geographical pattern of trade flows and,
c) peculiarities in the way colonial areas developed.

It has been argued that to talk of the economies of underdeveloped nations being distorted is meaningless, because it assumes there is some ‘normal’ path of development. Such arguments are not really helpful either for uncovering the relations between imperialism and the ‘third world’ or for understanding why some underdeveloped countries have begun to industrialise rapidly while others have not, or as a means of providing underdeveloped countries with any kind of solution to their problems. But, as Mandel points out,

“The apologists of imperialism sometimes claim that monoculture and monoproduction are the consequences of ‘natural’ conditions in the colonial and semi-colonial countries. This does not fit the facts. Though these countries certainly posssess abundant riches, equivalent riches did not result in monoproduction in England, Canada, Sweden, Belgium, Bohemia, Silesia, the Ruhr etc. Monocultures, far from being ‘natural’ have usually been imported from abroad (notably coffee in Java, Ceylon and Brazil, cotton in Egypt and the Sudan, sugar cane in Cuba etc. The best example in this connection is natural rubber in South-East Asia.”

(Marxist Economic Theory pp 462-3)

Not only was rubber introduced into Malaya, where there were no rubber trees, but the workforce itself was introduced. Moreover, the path of development of all countries which have developed is not hard to trace. It involves a continual reduction in the agricultural population along with increasing labour productivity in agriculture, and an increase in the manufacturing workforce. Manufacture develops along the lines of producing goods with a higher value added content.

In much of the underdeveloped world, at least until recently, the process has been the opposite. Native industry (e.g. textiles) have been destroyed, a high percentage of the population is employed in agriculture and primary production. Even in countries which have developed this legacy is still evident. Australia and new Zealand, for example, in 1964 came within the list of countries which had one commodity making up more than one third of the value of their exports (in this case wool) and primary products accounted for 86% of new Zealand’s, and 83% of Australia’s exports in 1975.

The Colonial Revolution which brought political independence to most of the underdeveloped countries did not provide automatic economic independence from these biases. Indeed, no country can be totally independent of the Capitalist world economy. Yet, the fact remains that some previously underdeveloped countries have managed to industrialise rapidly, and others have not. Theories of dependency, therefore, which virtually rule out the possibility of underdeveloped countries breaking free of total imperialist control, are just the other side of the coin to those which recognise no distortion of the economies of underdeveloped countries.

Economic Dependence and Independence

In reality much depends on how much a country is dependent on trade. This in turn depends on a number of factors. W.A. Lewis suggests (a) its resources, (b) its size and (c) its stage of development. Kindleberger has put forward three propositions in relation to a nation’s resources and its propensity to trade.

a) the narrower or more intensive a country’s resource base, the more it will tend to trade to satisfy its internal wants,

b) the smaller a country in geographic area the narrower its resource base will tend to be, so that the proportion of trade to income will tend to be high,

c) conversely, the larger a country in geographic area, the more diversified or extensive its resource base is likely to be, and the smaller tarde is likely to be as a percentage of income.

But, if a country is to utilise its resource base to indsutrialise it needs capital to create forward linkages. It is precisely that which underdeveloped countries are short of, and which leads them into large external borrowing. (Some of the countries which have developed most successfully have not been large or particularly well-endowed in resources – Taiwan, S. Korea, Singapore – important other factors are involved in their development such as strategic importance for imperialism, and historical factors e.g. entrepots and financial centres such as Singapore and Hong Kong.

Whilst OPEC has been successful in raising its members income, the economies of most OPEC members remain rent based. It is also unique in its success – similar attempts at cartels in sugar, copper and other primary products have totally failed. Despite the protestations of the West against OPEC’s rejection of ‘Free Trade’ they have themselves pursued the same attitude themselves throughout this century.

World Wide Disintegration and Integration

The first serious disintegration of world trade occurred during and immediately faster the First World War. After a brief interlude of freer trade in the early 1920’s, real disintegration and a rapid decline in the importance of trade set in – only 1% p.a. 1913-38. Governments introduced tariffs, quotas and other protective measures to protect their economies. The significance of these measures depends on;

a) the relative domestic importance of trade to economies, and

b) their general international bargaining sovereignty in respect of aggregate world trade,

c) their product bargaining power with respect to world demand and /or supply of a particular product.

Clearly, in a world recession, when such protectionist measures are implemented those countries dependent on monoproduction and monoculture for exports, and in particular exporters of primary products, are in a weak position. (This is clear from the present crisis in OPEC).

The third wave of world wide integration and growth started after WW2 gathering momentum at the beginning of the 1950’s (1953-63 world trade grew by 58.6%, output by 24.7%). It has been centred on the spectacular recovery and rapid growth of all industrial nations, and supported by attempts under the post war hegemony of US Imperialism at international interventionist policies. There are a number of evident features.

1. Institutionalisation

The Bretton Woods Conference of 1944 resulted in a three pronged approach to trade questions. In the trade sphere GATT was set up to supervise reductions in trade restrictions primarily for manufactured goods, although attempts have also been made to establish agreements for a limited number of primary products. In the monetary sphere, the IMF was set up, amongst other things to supervise exchange rate agreements, and because of the hegemony of the US, therefore, the dominant role of the dollar as world currency. It was also to ensure that world trade did not grind to a halt as a result of a shortage of liquidity – something which, with growing inflation and payments deficits, it found increasingly hard to achieve. In the area of investment, the IBRD (World bank) was set up to maintain world investment (subsequently the International Finance Corporation and the International Development Association – affiliate organisations – were set up.) Clearly, what these institutions signified was an attempt, under the hegemony of US Capital – faced with the extension of anti-capitalist regimes in Europe and a growing colonial revolt – to replace the national divisions of Capital, which had resulted in the First and Second World Wars, with a co-ordinated, imperialist response. It also reflected a number of other changes. Firstly, three was a belief, after the experience of WW2, that Keynesianism could save Capitalism from its inevitable crises. Keynesians held responsible positions within these institutions. Secondly, it reflected a change in imperialism itself. Increasingly, it was the giant (usually US) Multinational Corporations (MNC’s) that were the representatives of imperialism. Their links to the domestic state were not at all automatic – indeed on some issues, their interests may clash. Rather than imperialism being a competition of National Capitals, it was developing as a competition of giant MNC’s, who were often as powerful as small states. And, increasingly, they looked to international bodies to carry out the state functions.

2. Regional Co-operation and Customs Unions

In line with the trend described above, customs unions and common markets have merged in Europe, Latin America, Africa and elsewhere. They have had a dual role in terms of rationalising many state economic functions, formerly undertaken by national states, and of conciliating the antagonisms which still persist from the conflicting political interests of the national governments of heir member states. Such changes have also resulted in changes in trade patterns e.g. Britain has shifted much of its trade from the Commonwealth to the EEC.

3. NIC’s and MNC’s

From the early 1960’s, it became apparent that an important structural change was under way in the international economy. Transnational factors were not only speeding up the transmission of economic events from one country to another, they were also changing the motivation behind exchanges.

a) MNC’s located manufacture in underdeveloped countries where a fairly low level of technical know-how allowed cheap labour to be used

b) Competition from NIC’s made the operation of industrialised economies more subject to international pressures and industrial penetration

c) The emergence of Transnational structures in business, banking, technology transfer, behaviour patterns (the demonstration effect) and value systems (Westernisation of the Middle East)

d) OPEC’s price hike in 1973 intensified the dislocation of the international economy that was already under way, having an inflationary effect on costs and deflationary effect on growth.

To meet this there were at first intermittent attempts at ‘world demand management’ through successive, unsuccessful summits. From the late 1970’s, governments abandoned the attempt under pressure of inflation and spiralling Government deficits. Monetarism became dominant not only through Healey, Thatcher and Reagan, but in the IMF.

The world financial and monetary system is in chaos. The dollar is unable to fulfil the role it played after WW2, as world currency, and no other currency is able to replace it. As a result, fixed exchange rates were abandoned with European currencies (except the £) organising themselves into the EMS, which is itself perilously close to collapse. The IMF’s, SDR’s, which were supposed to become world currency or ‘paper gold’ are a total failure. Hence the increase in the price of real gold.

Changes in the Vehicle of Imperialism

Alongside changes in the structure of the orld market there have been changes in the vehicle of imperialism.

1) During the last century it was Merchant Capital which was the pioneer of imperialism, represented by the large trading monopolies like the east India Company and Hudson Bay Company. Kay has argued that it is the operation of merchant capital which explains many of the features of underdevelopment. His main points are:

a) Merchants do not make their profits by revolutionising production, but by controlling markets – the greater the control, the higher the rate of profit.

b) Their effect on the development of the forces of production was ambiguous, acting as the medium through which the law of value enters history yet unable to consummate the process it has set in motion – it was unable to break out of the sphere of circulation.

c) Where in the developed world, merchant capital was a necessary moment in the circuit of Capital, and acted, therefore, within certain limits, in the colonial world, it was the only form of Capital and acted, therefore, in an unrestricted manner. The east India Company, for example, acted as the State.

d) With the development of industrial capital, merchant capital, whilst retaining its independence in the colonial countries, was at the same time, compelled to act as the agent of industrial capital within the world economy. “At one and the same moment it was the only form of Capital, but not the only form of Capital. This apparent paradox is the specifica differentia of underdevelopment, and itsemergence as a historical fact in the course of the nineteenth century marks the beginning of underdevelopment as we know it.” (Kay – “Development and Underdevelopment: A Marxist Analysis” p100)

e) The interest of Industrial Capital in the underdeveloped countries was as a cheap source of raw material and a market for its manufactures. Merchant Capital, which made a profit from buying cheap and selling dear, was, therefore, ideally suited to act as its agent.

f) As industrial capital at home became dominant it was increasingly unable to make its profit from selling raw material and was forced to make its profit through increasingly unequal exchange overseas and industrial capital began to even eat into that.

g) Merchant capital was forced to convert itself into productive capital as a result of this crisis of profits. At the same time productive capital at home suffering a falling rate of profit, was forced to intervene directly in the underdeveloped world beginning a new phase “the inception of a capitalist mode of production proper in the underdeveloped world” (ibid. p124)

2. Also during the last century, following on from merchant capital, investment began to take place by states on infrastructure linked to domestic industrial production (e.g. railways to India). Merchant Capital continues to operate as an agent of industrial capital in raw material (agriculture and mining) production.


3. During this century, the process began of direct involvement of industrial capital into the underdeveloped world via at first large trusts, and more lately MNC’s proper. They have located production of commodities which are in the mature phase of the product cycle, and , therefore, require little technical skill for production in low wage economies.

4. Could anew phase of imperialism be commencing? More and more production in imperialist countries focussing on very high technology products; intellectual production, and export of technology. Additionally, as manufacture is declining as a sphere of employment, services have increased. The imperialist nations are the centre of finance and credit and are able to act as international ‘coupon clippers’.

The Role of The MNC’s

The present stage is that of 3 above with some elements of 4. Giant corporations are nothing new in international trade. They were characteristic feature of the mercantilist period. But, they were like dinosaurs, large in bulk but small in brain. In the 1870’s firms were typically tightly controlled by a single capitalist or family. By the early 20th century the rapid growth of the economy and the great merger movement had consolidated many enterprises into large national corporations engaged in many functions over many regions. Thos large national corporations copied the practice of the railway companies who had established a structure which distinguished field offices from head offices. To meet the needs of a constantly changing market, firms adopted a multi-divisional structure whose decentralisation gives them the flexibility to enter a new market by setting up a new division leaving the old divisions untouched. The new administrative structure and financial strength of US corporations gave them the power to go abroad. Their large size and oligopolistic position gave them an incentive.

Hymer argues that one would expect to find the highest offices of the MNC’s concentrated in the world’s major cities, being the centres of high level strategic planning. Lesser cities will deal with day to day operations and specific local problems. Since business is the core of the city, geographical specialisation will come to reflect the hierarchy of corporate decision making, and the occupational distribution of labour in a city or region will depend on its function in the international economic system. The best and most highly paid administrators, doctors, lawyers, scientists, actors etc. etc. will tend to concentrate in or near the major centres. The structure of income and consumption will tend to parallel the structure of status and authority. The citizens of Capital cities will also be the first to innovate new projects in the cycle of trickle down marketing. In this process the rich and powerful get most votes because they have more money, more ability to experiment, and because they have high status are more likely to be copied. (See Hymer, ‘The Multinational Corporation and the Law of Uneven Development’ in “International Firms and Modern Imperialism” – Penguin)

One effect of this is to reduce the options for development. For example, an underdeveloped country may wish to invest in education to increase its stock of human capital, but the need for high level education in low ranking areas is limited. A country does not become a world centre simply by having a better education system. The effect is an increase in emigration. Another effect on development is on the state’s tax collection capacity. Taxation of MNC’s is limited by their ability to manipulate transfer prices and move their production to another country. The state finds it difficult to extract the surplus from MNC’s necessary for long run development programmes, and for stimulating growth in other industries.

The subsidiaries of MNC’s are typically amongst the largest corporations in the country of operation, and their top executives play an influential role in the political, social and cultural life of the host country. Yet, whatever their title they occupy at best a medium position in the corporate structure, and are restricted to a lower level of authority and decision making. The governments with which they deal tend to take on the same middle management outlook, which is unlikely to develop the kind of imagination needed to apply the policies needed to solve the problems of underdevelopment.

An increasing number of MNC’s are establishing subsidiaries abroad with the purpose of exporting to third countries and to the ‘home’ country. Veritable enclaves for manufacturing goods have been established whose operations are geared almost exclusively to the shifting requirements of the global strategy of MNC’s. As the main outlets for manufactured goods are the advanced capitalist countries (ACC’s) the underdeveloped economies are, as has been stated earlier, exposed to the changes and shifts of the ACC’s economies and trade policies, particularly those of the US. Processing and component manufacture midway within the production process may generate an output for which there is no outlet, other than the parent firm or sub contractor who commissioned the activity in the first place.

MNC’s and The State

When any capital extends beyond its borders the historic link, which binds it to its particular state no longer holds necessarily. Robin Murray identifies 5 possible executors of state functions for the overseas operations of an extended Capital. (See Murray, ‘The Internationalisation of Capital and the Nation State’ – ibid) First, the domestic state may perform these functions directly i.e. in most such cases annexation of territory. Secondly, there may be an arrangement that foreign states structure should perform them, accomplished via positive supplies and threats and sanctions. Thirdly, the extended Capital may perform them either singly or in conjunction with other Capitals. Fourthly, states may already be performing or be willing to perform them on their own accord. Finally, they may be carried out by state bodies in co-operation with each other.

Extended Capital is not homogenous. The interest of the Capital in the types of public function to be performed, and the bodies to perform them will differ, Murray says, according to the following factors;

a) the degree of productive centralisation
b) the stage of overseas company development
c) the forms of international flow
d) the degree of dependence on state partiality
e) the strength of foreign competition

There are some firms whose main concern with respect to their extended Capital is the intra national performance of public functions. Companies which are financially centralised internationally may in effect play off rival states against each other. Other firms interests lie in the international as well as intra national performance of public functions. Murray lists them as:-

a) those principally engaged in servicing foreign markets by trade
b) those with regionally centralised production
c) those operating with an international or regional division of labour in production
d) those concerned with an exchange of goods rather than information or labour
e) those whose domestic governments gave insufficient support in the face of competition

Firms which have expanded primarily as trading concerns have a strong interst in international liberalisation while being still firmly bound to the domestic state. Those firms which have developed an international division of labour in production are more concerned with a co-ordinated execution of international state functions. In a number of trading areas in underdeveloped countries consumer goods manufacturers have distributed specialised plants country by country as a result of or as a guard against local nationalism. The preliminary results of the Harvard Business School Research Programme, says Murray, on their investigations into the product cycle theory of trade suggest that this particular phasing of an international division of labour is not uncommon.

Industrialisation

In the process of modernisation capital formation plays a central role. How much Capital is accumulated depends ultimately, of course, on how much surplus value is created, but other factors are involved. The state has always had an important part ot play in the process of development and capital formation, but never mmore so than for today’s Newly Industrialising Countries (NIC’s). If, as has been suggested above may happen, the state is unable to raise sufficient taxation its power to assist capital formation is reduced, and it is forced to rely on credit, which increasingly has come from commercial banks in ACC’s (Mexico, Brazil, Argentina). Privtae capital is forced into low profit areas or competing with MNC’s, which it is usually unable to do. It is also suggested that the compradore bourgeoisie develops western consumption patterns (the demonstration effect) which leads to a high level of unproductive consumption from surplus value, again reducing capital formation.

On the other hand according to Dasgupta, sectoral studies in developing countries suggest that entrepreneurs are generally high savers, and surveys also show that self employed farmers above a certain minimum tend to have a higher savings ratio than urban people of the same income group. They also have a higher savings ratio than absentee landlords, despite these mostly belonging to higher income groups. If one considers that upper income groups in developing economies are usually characterised by a feudal background and a low savings rate then a loss of power and wealth for such groups would have a favourable effect on aggregate savings, and the potential for capital formation.

For countries with a low initial capital stock, high investment ratios are inescapable, not just for achieving a higher rate of growth, but for making higher future living standards possible. But, it is important that the right investment choices are made. Large amounts of Capital tied up for a long period of time may result not in extended reproduction but a temporary reduction in production.

A programme of industrialisation consists of raising the output of he modern sector, which may consist of both consumer and producer goods. This will increase both the current flow of goods and services and the stock of capital making possible further increases in consumption in the future. A sustained increase in industrial output will require a larger workforce which can be recruited from the ranks of the urban unemployed and from the agricultural sector. At the prevailing low level of wages workers will spend most of their income on food, which has to be obtained from the agricultural sector. Hence there is a problem of transferring food from one sector to another – the ‘marketable surplus’ problem. This problem was at the heart of the industrialisation debate in the USSR in he 1920’s. Preobrazhensky and the Left Opposition argued that a process of ‘primitive socialist accumulation’ was necessary in order to build up Soviet industry. The resources for this accumulation was to come from using the state monopoly to transfer resources from the richer peasants to industry by not reducing industrial prices in line with reduction in costs. Though Stalin and Bukharin opposed this policy, after 1927 it was the policy adopted by Stalin, though on a much more drastic scale, and under less favourable conditions.

The choice of investment decision is important too as Ken Tarbuck illustrated in his article on “Bukharin’s Economics of the Transition Period” in Permanent Revolution No 3 pp 31-2,

“Bukharin’s theory also emphasises the necessity for proportionality for an economy to proceed in an upward and orderly manner. Undue emphasis on long term projects which have a considerable time lag before they become productive could have the temporary effect of contracting total productive output. There seems to be some evidence of this actually happening during the first five year plan in the Soviet Union.”

Planning in an underdeveloped economy is subject to social, technical and institutional constraints, which keep the rate of saving below what is needed for rapid industrialisation. Given the low level of wages nearly all wage income will be spent on consumption. The amount of investable resources available from the modern sector of the economy will vary according to the capital intensity of investment. For example, there may be a choice between starting a project with a large number of workers with relatively little capital per head, or a small workforce with a large capital labour ratio.

According to neo-classical theory, capital and labour are infinitely substitutable for each other. At the other extreme is the view that the number of alternative techniques of producing a given good is negligible. Rather than replace primitive by modern technology, developing countries are advised to develop an intermediate technology more appropriate to their conditions. Research and development for new technology is a costly, capital intensive, and highly uncertain enterprise. Whether developing countries should adopt such a policy is itself an investment planning problem. Experience with intermediate technologies has been discouraging. While showing a lower capital/labour ratio they usually require both more capital and labour per unit of output.

Kay has also raised this question of investment decision in the process of industrialisation in the sphere of employment. In Africa, Kay says, unemployment is growing fastest in those countries with the highest rate of industrial expansion. The immediate cause of the problem Kay argues is the widespread adoption of capital intensive techniques. One explanation for this is that underdeveloped economies which do not produce their own equipment have to import it from ACC’s, which because of a relative labour shortage, equipment embodies highly mechanised techniques. But, Kay argues, that if firms in underdeveloped countries wanted equipment able to make use of plentiful labour it would surely be profitable for Capital in ACC’s to produce it. As firms do choose capital intensive equipment and techniques, therefore, Kay Kay argues, it must be because it is more efficient. Kay seeks to prove this theoretically via a series of manipulations and nuances on Marx’s formulation of the organic composition of Capital, the circuit of productive Capital, and the effect of the rate of turnover on the rate of profit.

Kay’s conclusion is that the logic of accumulation is to reduce the ratio of short term employment to long term employment (i.e. that less labour will be used in the short term, a higher capital labour ratio, but this will result in more labour being employed in he long term, thus creating more value and surplus value.) It pays Capital to adopt this strategy irrespective of relative supplies of labour. To the extent that mechanisation increases productivity and, therefore, the rate of exploitation it is alays potentially a profitable course of action. Kay also like Bukharin, stresses the effect on the rate of turnover. More mechanised techniques will increase the rate of turnover, thus raising the rate of profit. (Kay ibid. Ch.6)

Sub-Imperialism

Marxist analysis is a theory of things in motion. It rejects all notion of absolutes, and static phenomenon. That analysis was extended by Hilferding, Lenin and Luxemburg etc. at the beginning of the twentieth century, to take account of new developments, in the form of theories of what has been termed imperialism. The term is in itself imprecise, but it has, amongst Marxists, been identified with the ideas set out by Lenin in “Imperialism, The Highest Stage of Capitalism”. Lenin’s work was an excellent beginning to an analysis of imperialism, but it was precisely that a beginning. Its major problems stem from the fact that imperialism at that time had not taken full shape (as opposed to the fact that Capitalism, restricted to National boundaries had reached the ‘highest stage’ it could achieve within those boundaries). I have sought to demonstrate that much has changed in the last 60 years in terms of the vehicles of imperialism, and of developments in the world market itself. A Marxist analysis of imperialism, therefore, should start not form how it was when Lenin wrote Imperialism, or of how it is now, but of how it has developed and is developing.

Just as we do not expect any Capitalist firm to simply grow in a linear manner, and for any particular set of firms to remain dominant for eve in a national economy, nor should we expect dominant states to remain dominant, and simply grow stronger, crushing weaker states before them. We have seen how first Britain’s hegemony was challenged by the US, and how US hegemony has now been challenged by Japan, and the EEC. Where a small number of new businesses manage to grow and even challenge established firms, so a small number of weaker, underdeveloped states has grown, not to challenge the large imperialist states, but certainly to be able to negotiate with them on more favourable terms. Bob Sutcliffe has shown the large variation in income and general level of development which exists in the category of “non-imperialist” nations. It is nonsense to lump all these states together, to not recognise the developments which have occurred within them, within the world market, and within imperialism. The concept of sub-imperialism is, therefore, I think a valid one as a means of separating out those states, which are not fully paid up members of the imperialist club, but whose credential are sufficiently good to warrant consideration of their application. Sure, its an imprecise term, but so is ‘imperialism’ – it stems from Marxists dogmatically sticking to 60 year old formulas rather than continually analysing changes in capitalism and the world market.

Some Case Studies

Between 1974 and 1979 Malaysia grew by about 7% a year per head of population. The population has grown about ten fold within the present century, but they have still brought under cultivation only about half their potential fertile land, which can produce food for home consumption or cash crops for export in equal abundance. With only 13 million people it is the world’s largest exporter of no less than five commodities – natural rubber, palm oil, tropical hardwoods, pepper, and tin. Its resources of gas and petrol first brought into exportable production during the first OPEC price rise were in full swing by 1979.

But, more importantly, exports of manufactures have now overtaken rubber in first place. Exports of electrical machinery and appliances doubled between 1977-78.

Malaysia set out 20 years ago with its earnings to establish an industrial sector, via a policy of import substitution, assembling machinery behind high tariff barriers. With less success, it has attempted to build industries based on its raw materials. It has benefited from the transfer to low wage economies of low technology industries, particularly textiles and electrical gadgets. There is no Minimum Wage; 100 dollars a month was the rate for a production worker in 1979. Singapore was the first to attempt this path Malaysia is following, and it is now upgrading its industry and encouraging the low wage firms it no longer wants, to move to Malaysia.

Singapore despite having no natural resources doubled the standard of living between 1970 and 1980. Private car sales increased by 95% in 1977. The top marginal rate of tax is 55% and is strictly levied. Well over a third of a Company’s wage bill is compulsorily set aside for forced saving. After WW2 there wsa no significant investment either in the port or city. The only institution that prospered was the brewery whose output in 1959 formed 75% by value of the island’s manufacturing output. In that year 4% of the island’s labour force was involved in manufacturing. Today, 34% of the labour force is in manufacturing.

Wages are set by the National Wages Council. Since the early 70’s they were set at about 6% above the expected rate of inflation (which in 1976 was in fact negative). Real wages have risen very rapidly. The labour force rose from 726,700 in 1970 to 994,700 in 1978. The number of unemployed in 1970 was 75,800 (10.4%) in 1978 it was 35,700 (3.6%). Wages have, in fact, been rising less than many employers would have been willing to pay. The government has encouraged a high wage economy in order to encourage firms to go upmarket. At the end of 1979, the NWC raised the average wage of a semi-skilled worker (then about 450 dollars a month) by 18%, lower paid workers got rather more, higher paid workers less, and the employers contribution to the state pension scheme was increased from 16.5 to 20.5% of payroll cost. Singapore started by attracting large numbers of foreign firms using lots of labour to do low value jobs. Now the Government is telling these firms to move on. Many are at the end of their 5 year tax holiday and are facing the prospect of paying 40% tax on their profits.

The next stage of the development programme consists of spending large sums on educating and training workers for the new highly skilled jobs. The Government has spent a lot on training colleges and firms are subsidised to provide their own training schemes. Phillips of Holland, Rollei of Germany and Tata of India run training schools jointly with the Government. As the supply of full trained Singaporeans increases the conditions on which foreign firms can get work permits for their managers and technicians are tightened.

Singapore, on the hub of everyone’s communications, refines oil and provides a base for exploring for it. It is now in partnership with Sumitomo moving into petrochemicals too on an island specially reclaimed from the sea for the job. Oil means no just refineries and ship repairing; it means telecommunications, and financial services too, and the more they develop the more they attract other activities not directly arising from oil.

Singapore has been gradually trading upwards, using the growing skills of its labour force to man ever more sophisticated plants, and using its system of selective grants to incoming industry to favour those which add higher value. The multinationals have been happy to go along with this even with the Government policy of jacking up labour costs. Singapore would like to market not just goods, but services and know how and flows of Capital, as it already does for the oil industry in the region. Singapore is after leasing the island of Batam (about twice the size of Singapore itself) from Indonesia for use as an industrial zone under Singaporean managemnt, but using Indonesian labour. It would be used as a location for low wage, high pollution industries. Beyond that, the Singaporeans are after managing projects in Sri Lanka and Bangladesh.

Both Singapore and Malaysia are still obviously dependent to a great extent on foreign firms investing in their countries. At the same time, it is clear that both countries have been able to use such investment to their own advantage too, and have bee able to develop a certain amount of space in their relationship to imperialism. If the ideas elaborated earlier about MNC’s links to their domestic state becoming looser are correct, such tendencies are understandable. So long as the necessary state functions are carried out by the host nation (and in both cases they are) then there is no reason for such multinationals to keep the economies of these countries underdeveloped. Nor, if Kay’s argument about capital intensive production being the most efficient (even with abundant cheap labour) is correct, is their any contradiction in the fact that Singapore is able to ‘trade upwards’. Moreover, Singapore has traditionally played a role as a regional commercial centre. Further development of such services is, therefore, consistent with the type of international division of labour put forward by Hymer.

Before WW2, the main international antagonism was between competing national capitals, resulting in WW1 and 2. Since WW2, imperialism has been faced with an extension of deformed workers states, and of the colonial revolution, with such countries often looking (usually unsuccessfully) towards the Soviet Union for assistance. The policy of NATO since WW2 has been one of containment and roll-back. It has sought to develop regional alliances (e.g. SEATO) where possible or regional policemen (e.g. the Shah’s Iran) where not as a means of halting the spread of “communism”. We have seen that Singapore has “imperialist” ambitions (indeed it already is an exporter of money Capital in its region) in the economic sense of the word as far as Indonesia is concerned. It is also a member of ASEAN.

Talking of the Shah’s Iran and the question of sub-imperialism, Halliday says that Iran was similar to Brazil, the country most often quoted as sub-imperialist. Iran, though, was different in economy (dependent on oil – manufactured goods a small percentage of exports). However, he says there is no necessary relation between political military role and economic relations. For example, Brazil does not export mostly to those countries where it is militarily active. If sub-imperialism is defined as a continuing partial subordination to US imperialism, but regionally autonomous then Iran is sub-imperialist.

Brazil is the country most often quoted as an example of sub-imperialism. The case is usually made out on the basis of its economic development level and military policy. Facts on that have been reproduced elsewhere so I just want to refer to a number of other aspects of Brazil’s economy and politics, which link up with what I have said about sub-imperialism, and the idea of non-imperialist nations having varying amounts of space in their relationship to imperialism.

The ‘Economist’ in a survey on Brazil (may 17th 1980) said,

“Brazil’s present mesh of import restrictions makes it, one opposition leader claims, ‘one of the most closed economies in the world’. Brazil can hardly go on erecting tariff and non-tariff barriers without retaliation”.

Now, if the crude version of imperialism, as an all powerful force controlling the fate of non-imperialist nations is correct, if it dictates the policies of non-imperialist nations and controls absolutely their economies for its own ends, such an arrangement as Brazil’s import controls would be inconceivable; how could it serve its function as a mere market for the surplus production of the imperialist states?

Nor, as with Singapore, does imperialism have it all its won way in Brazil as a location for production. Regulations have been imposed on foreign motor manufacturers that a large percentage of the parts in their cars must be made in Brazil, as a means of preventing MNC’s using it as an assembly line using cheap labour to get round the import restrictions.

Financially too, imperialism is in a cleft stick. The ‘Economist’ in the same article says, “Brazil is no Jamaica, Peru or even Turkey. The very size of its foreign debt gives it a form of muscle. Mr. Delfim Netto knows that Western bankers have so much to lose should anything go seriously wrong with Brazil politically, that they must put up the money in the end. For, if Brazil were to default on its foreign debt there are few effective sanctions that could be brought to bear….

“If pressure from the nationalists in the army or in the opposition threatens to topple the Government, Mr. Delfim Netto may have to go to Brazil’s creditors (or the IMF?) with a penitent smile and point out that, unless they soften the terms of their debt, a fire breathing nationalist may end up in his place.”

Argentina is modern and wealthy. It is the world’s 7th biggest country, and has only 26 million people to share its wealth. The pampas are rated one of the five richest agricultural areas in the world. It’s the second largest beef exporter, could be one of the largest grain producers, and is the fourth largest wine producer. GNP per head in 1980 was 2,000 dollars, four-fifths of its population live in cities, and ninety per cent of them can read. It is self-sufficient in oil, has huge natural gas supplies, massive hydro-electric potential and enormous coal reserves little of it mined as with the precious and other metals it has in abundance. According to a recent census, immigration made Italians the largest national grouping (35%) compared with Spaniards (28%).

Like Brazil, Argentina under Peron attempted to build up (unsuccessfully in the main) its industrial base behind tariff walls. Rather like the corruption and nepotism of the Shah’s Iran, this set up rested on bribes to keep Peron in power, bribes paid for largely from Argentina’s agriculture which suffered as a result. The importance of the role of the State in developing nations’ economies has been mentioned earlier. The State company Fabricaciones Militares employs 15,000 people, invests at least 400 million dollars a year and produces anything from steel to electronic goods, and wires and cables. Its accounts are kept secret so no one knows how much Public money it spends. Since 1976, public investment has been running at about 12&. State spending is needed to exploit Argentina’s resources; in 1979, private investment was only about 8% of GDP. Productivity increased between 1975-8 by more than 50% in the state run oil, water and electric companies, and by more than 10% on things like railways, subways and telecommunications.

A current account deficit of 1.3 billion dollars in 1975 was transformed into a surplus of 650 million in 1976, 1.3 billion in 1977, and 2 billion in 1978. Foreign exchange reserves rose from 2 million dollars in March 1976 to 10 billion dollars 3 years later. The Government in an attempt to stop overseas borrowing as a result of high Argentinian interest rates decided to cut the Balance of payments surplus and to devalue the peso on a monthly basis. Inflation continued to rise at 170% a year whilst the peso was falling by only 40% against the dollar, in effect a large revaluation of the currency. Imports soared whilst exports remained static, and in 1979 the Balance of Payments surplus was down to about 400 million dollars.

Tariffs remain high at around 70% and on cars it is 95%. Many MNC’s have pulled out e.g. General Motors in 1978. Nor did they rush in to take advantage of the foreign investment laws passed in March 1977, which allowed all investors to remit all their profits home, to buy up industries. Between March 1977-9 total new foreign investment was 1.3 billion dollars.

In agriculture, Inta, the Government’s National Institute of Food technology is pushing to make farmers use technological methods. The best producers are highly efficient as are the frigorificos – the giant freezing and packing plants, which export meat around the world, including to Saudi Arabia. The Caucan plant just outside Buenos Aires can process 150 head of beef an hour. They could produce more. The national herd of 57m head could grow comfortably at about 5% a year to 70 million head, just by exploiting existing grasslands. Similarly, grain production could be increased to about 100 million tonnes by the end of the century.

Bob Sutcliffe has pointed also to the fact that Argentina invests abroad. It along with Brazil is sufficiently considered part of the club by America to be asked to send its troops into other South and Central American countries, and as has been pointed out at the time of the Falklands War, was to have been part of the South Atlantic military base on the Falklands, along with Britain, USA and South Africa. But, it does not need instructions from American imperialism to act in an expansionary manner in its own region. Its conflicts with Chile over the Beagle Channel are well known along with its other territorial interests.

Some Conclusions

Marx, writing in the mid 1860’s, had already foreseen the emergence of three different types – the coupon clipping rentiers, the business managers, and financial promoters – emerging from the original capitalist entrepreneurs, with the expanded scale of production and centralisation of Capital in Joint Stock Companies. Those who followed Marx like Lenin and Hilferding thought of the financiers who linked Capital and State power as providing the new dynamic of the system. The outflow of Capital in the 1920’s, the adoption of imperial preference by Britain in 1930, the struggle for middle east soil, and the challenge of Japanese, German and Italian ‘state monopoly finance capital’ and American private monopoly capital to the older capitalist states for markets, sources of raw materials and spheres of investment appeared to justify Lenin’s theory of imperialism.

After de-colonisation and the run down of the sterling balances, income continued to flow into Britain. But, financial power was shifting to large conglomerates who took the place of the financial groups as the accumulators of Capital and vehicle of imperialism. One crucial role for the State is providing economic aid to developing countries. This aid is concentrated in those areas where private investments has been made, as repayment of earlier loans may be in jeopardy (e.g. Brazil). As these MNC’s no longer have the same strong ties to their domestic state they are not interested in the expansion just of e.g. British Capital, but of Capital as a whole. The expansion of Capital in say Brazil is not, therefore, something they see as a threat, any more than the expansion of another British firm.

The development of Capitalism on a world scale is combined and uneven. Different levels of development give rise to different patterns of consumption. Countries can be sequenced as markets for different products according to their standards of consumption, so that monopoly positions in a new product or technique can be maintained. Transport costs and the optimal size of plant can be balanced according to anticipated demand in each area. Production can be distributed between different countries having different cost structures and different ‘risk lives’. According to Dunning, “on current projections some 200 companies will own most of the world’s assets by the turn of the century.”

If these trends continue and the kind of division of labour refered to earlier is extended we may be witnessing the beginning of a new phase of imperialism with new relations and a new structure of trade in the world market. Production is moving increasingly into automation and computerisation. Both Japanese firms and GEC are working on factories free of all labour. Intellectual production will become, therefore, an increasingly important source of value creation for capital. As has been said earlier, educational centres are concentrated in the large cities of the ACC’s. Just as Marx criticised the Physiocrats for not recognising that land had been replaced by Capital as the major source of value creation, so now the emphasis may be moving not away from Capital per se, but from material production towards intellectual production as the only avenue for the employment of labour.

It is inconceivable that everyone in even the most advanced of the ACC’s could be employed as computer programmers, analysts etc. – though many could be employed in very high tech employment – but other areas, already important in ACC’s could develop further – credit/finance, other services especially Health and education. The Tories run down of State provision and encouragement of private provision lay the basis for this expansion for those throughout the world who can pay, whilst the provision for the rest deteriorates. In other words, the major ACC’s could be reduced to the kind of coupon clippers referred to by Marx.

Go To Imperialism and the New International Division of Labour