Wednesday, 3 January 2018

Predictions For 2018 - Part 4

Africa Emerges

Fifty years ago, many people on the Left held a view of the world that was essentially static, more or less preserved in aspic from how things were in 1916, when Lenin wrote his propaganda pamphlet, “Imperialism - The Highest Stage of Capitalism”. It saw the world as divided into two camps, the camp of imperialism, and the camp of the USSR, and its allies. This view of the world as divided into these static blocs, is antithetical to Marxism, whose whole philosophical basis is the dialectic, of an understanding of reality as necessarily contradictory and dynamic, because reality involves a constant state of flux.

The material basis for this static view was two-fold. Firstly, Liberals see profit as arising from unequal exchange, rather than, as Marx explains, following Adam Smith, its source being in production. Liberals see monopoly as an aberration from the normal condition of perfect free market competition. Indeed, if this liberal view, presented by neoclassical economics is followed to its logical conclusion, profit itself must disappear under the pressure of free market competition. So, Liberals, having adopted this neoclassical view of the world, in which value is created by exchange, and profit is created by unequal exchange, are led to explain the Wealth of Nations, not as Adam Smith, David Ricardo, and Marx did, by production of surplus value, and the accumulation of capital, and the ability thereby to continually revolutionise production, and so produce greater volumes of commodities with less capital and labour, and so producing ever expanding masses of surplus value, but by monopoly power, and the ability thereby to engage in unequal exchange with weaker nations.

For Marx, the development of monopolies was not at all an aberration, but a logical development resulting from the very laws of capitalist production, and the consequent centralisation and concentration of capital that arises on the basis of it. For Marx, the development of such monopolies was not something to be resisted, but was to be seen as a fundamental aspect of the development of the productive forces, in a way that creates the very conditions upon which socialism is possible. For Marx, the response to the development of monopoly is not some reactionary and utopian call for the monopolies to broken apart, as the Liberals demand, but for workers to themselves take hold of the socialised production that the monopolies are emblematic of, and to push through them to a more thorough rational production on a national and international scale, in the way that monopolies facilitate in each sector.

Lenin himself recognised this, in Imperialism. Lenin quotes, approvingly, Hilferding's criticism of Kautsky,

““It is not the business of the proletariat,” writes Hilferding “to contrast the more progressive capitalist policy with that of the now bygone era of free trade and of hostility towards the state. The reply of the proletariat to the economic policy of finance capital, to imperialism, cannot be free trade, but socialism. The aim of proletarian policy cannot today be the ideal of restoring free competition—which has now become a reactionary ideal—but the complete elimination of competition by the abolition of capitalism.” 

Kautsky broke with Marxism by advocating in the epoch of finance capital a “reactionary ideal”, “peaceful democracy”, “the mere operation of economic factors”, for objectively this ideal drags us back from monopoly to non-monopoly capitalism, and is a reformist swindle.” (Chapter 9)

Liberals, therefore, basing themselves on that section of small private capitalists, and a view of the world determined by 18th and 19th century free market capitalism, necessarily see monopoly as an aberration, and see it as resulting in the production of super profits as a result of super-exploitation, of smaller capitals, and by extension of weaker economies. Their answer is to call for the small private capitalists to be protected, and for the monopolies to be broken up, and that fits neatly also with their hostility to monopoly organisation of labour in trades unions, and is to call for fair and free trade between nations.

Particularly in the period after WWII, Stalinism had an incentive to promote this notion of the world divided into these two camps. It fitted with its own global strategic ambitions, with the Stalinist parties across the globe acting only as foreign agents of the needs and interests of the Moscow bureaucracy. At a national level, Stalinist parties adopted the reactionary slogan of the “anti-monopoly alliance”, and internationally Stalinists sought to align themselves with the less developed nations, and their usually autocratic and reactionary regimes, on the basis of “anti-imperialism”, and an explanation of the wealth of the industrialised capitalist economies on the basis of a super-exploitation of colonies, and neo-colonies. In place of the scientific analysis of Marx there was placed a crude anti-capitalism, and anti-imperialism.

In the 1970's, there was an upsurge of interest in the ideas of Marx, and along with it went a critique of much of what had passed for Marxism in the post-war period, that had been dominated by the perversions of Stalinism. This critical appraisal not only began to dismantle the perversion of Marxism that Stalinism represented, but it also became clear that any honest evaluation had to conclude that some of the ideas that Lenin had put forward, for example, in Imperialism, did not reflect either the current reality, or even the conditions that Lenin himself was describing in 1916. Lenin himself, was largely not to blame for that, the idea that what he wrote in 1916, describing what he saw as the world at that time, should be preserved in aspic, in the same way, his corpse had been, by the Stalinists in its mausoleum, would have been anathema to Lenin.

The idea that the world was for all time divided into a group of countries that were imperialist, and another group of countries that were doomed to be merely objects of super-exploitation by those imperialist countries would have seemed to be a perversion of the whole of Marx's theory and method to Lenin. The critique of these Stalinist perversions of Marxism went along with the growth of a New Left that also rejected the notion that the world was divided into two camps of imperialism, and the USSR and its allies. It was, for example, clear by the 1970's, and even more clear by the 1980's, that many of the ideas purveyed by the Stalinists and their fellow travellers about super-exploitation, unequal exchange, and “underdevelopment”, simply did not tally with the reality of economic development across the globe, and the idea that countries that were in the camp of the less developed, or “underdeveloped”, were doomed to remain there, certainly did not fit with the observable reality that many of these countries already had experienced some level of economic development, whilst some of the older imperialist states, such as Britain, were in a state of notable relative decline, even compared to some of its former colonies.

In the early 1980's, I wrote about this, and discussed the emergence of economies such as Malaysia and Singapore in Asia, as countries which were among what would later be called the Asian Tiger economies, as well as Brazil and Argentina in Latin America, long before the term BRIC economies had been thought of. The concept of combined and uneven development, of course, explains why such developments are not seen to arise simultaneously, and evenly, across the globe, but, in the 35 years since I wrote those analyses, it has become quite clear that a whole string of formerly unindustrialised economies, across Asia, and in Latin America, have industrialised and developed, shattering the idea that the world is divided into fixed frozen camps of imperialist and imperialist dominated nations.

Yet, as the 1980's progressed, and the working-class across much of the globe went down to defeats, as a new period of long wave stagnation set in, even as the old Stalinist parties dwindled further, and dwindled even faster after the Stalinist regimes collapsed, some of the ideas they had perpetrated, once more began to be advocated by other sections of the Left. Essentially, that Left lost faith in the ability of the working-class to rebuild and reorganise itself, and to fight for its own independent interests. The old crude “anti-capitalism” and “anti-imperialism” became the flag around which this left then attempted to rally, and in doing so, it sought to attach itself to what it saw as more powerful global forces, in the form of various demagogues, and reactionary nationalist regimes solely on the basis of their professed “anti-imperialism.” Whether consciously, or unconsciously, in order to align with those forces the theoretical advances that had been made in the 1970's and 80's, the return to the ideas of Marx that had begun, was abandoned, as once more the ideas of the Mercantilists were restored as an explanation for the Wealth of Nations, and the super-exploitation of less developed economies, and Lenin's Imperialism, that many Marxists had come to reject in the 1970's, and 80's, was again restored, as though being some piece of biblical text, valid for all time, when, in reality, it was not even valid in its own time.

The attempts to make the reality of the world economy fit with the concepts contained in Imperialism, and with the Stalinist/Mercantilist explanations of the wealth of nations, on the basis of super-exploitation, and unequal exchange, have led to the same kind of distortion and mental acrobatics that the Stalinists themselves had to perform in the post-war period, as they tried to reconcile their propaganda about capitalism causing the immiseration of the working-class, with the very obvious rapid rise in working-class living standards, in the developed economies.

More than a decade ago, I noted that the same kind of processes of industrialisation I had discussed in relation to Asian economies, were also starting to appear in a number of African Lion economies. In the last few years, I have been attempting to find time to study economic developments in Africa. A number of constraints on my time have prevented me from doing that to the extent I had intended, but even a cursory look at Africa shows the same pattern of development as occurred in Asia, and Latin America more than 30 years ago. We are now at a stage where a number of African economies are on the verge of becoming “emerging” rather than “frontier” markets, to use the jargon of the investment fund managers.

There have always been a number of African economies such as South Africa and Zimbabwe/Rhodesia that were more like the colonies of America, Canada, or Australia. In addition to being primary product producers, they also had significant industrial production. However, in the last ten years or so, a number of other African economies have undergone significant development too, including increasing levels of industrial development. Economies like Nigeria have experienced rapid growth of GDP, but a large element of that has been a result of its oil production, at a time when global oil prices were high. Other primary product producers such as the DRC also benefited from increasing production of industrial metals, often financed by China, which thereby also provided for its insatiable demand for such materials. However, the economies that are likely to benefit most, are those that have built a more diversified, and industrialised economy. A number of those economies are already seeing production being shifted from China and other Asian producers, in order to take advantage of plentiful supplies of cheap African unskilled labour.

Twenty years ago, the world was singing songs, and organising charity and food supplies for countries like Ethiopia, in the grip of famine. Today, Ethiopia is perhaps the most successful of the developing African economies. For the last ten years, it has experienced economic growth of around 10% p.a., despite the slow growth in the developed world. It is not alone, and is part of a growing number of African economies that are not only industrialising, but coming together to form their own economic bloc, similar to the development of the EU, and other economic blocs in Asia, and Latin America.

One important factor here will be the transformation of agriculture. The problem for agriculture in Africa has never been a problem of food production driven by lack of soil fertility, of drought and so on, still less has it been a problem of overpopulation imposing unsustainable demands on the land. The problem has always been a lack of capital. Marx following James Anderson, demonstrated that, contrary to the catastrophist pronouncements of Malthus, it is always possible to raise land fertility, and output from the land, by increasing capital investment. The problem of African agriculture, as with all other such subsistence peasant farming, is that it is undertaken on too small a scale, and with too little, if any capital.

In TOSV Chapter 9, Marx demonstrates that land of inferior natural fertility is more productive than land of superior natural fertility, where the former has been cultivated for a long preceding period, and where the capital repeatedly invested in it, has thereby become embedded in the land, and become a part of its fertility. In this chapter, Marx gives what is probably the first scientific analysis of the long wave cycle, and its underlying dynamic, arising from these waves of large-scale, long-term, fixed capital investment. He demonstrates that it requires perhaps more than a decade before any such investment in new farms, mines and so on, can raise the level of productivity/fertility of this new production to that of the existing farms, mines and so on. But, once that period has elapsed, the lower cost output of this new production, results in lower market values for primary products. Marx examined this in relation to 50 year periods of agricultural prices from the 18th and 19th century.

Another important aspect of this long-term investment is the role of infrastructure spending. If we think of farms in the US Mid-West, for example, no matter how fertile the land might have been, it could not have produced low-cost output until such time as the transcontinental railway, the St Lawrence Seaway and so on, had been developed to transport the grain etc. to domestic and global markets, and it also required other large-scale infrastructure spending on connecting roads, the building of storage facilities and so on. All of that capital already existed in older industrial and agricultural producing centres. It was already embedded in the level of productivity in those older areas.

This is also an aspect of the law of combined and uneven development. A country like Ethiopia, that undertakes a programme of industrialisation today, has the advantage that it can introduce the latest technologies into the factories it sets up. It can utilise the latest communications technologies, such as mobile phone technology, and Internet communications. But, it can only mobilise the capital to undertake such developments on a limited scale. It is necessary not only to establish such new factories, and so on, but to establish all of the other related infrastructure required for such businesses to operate effectively. This leads to development not only being limited to certain countries within a region that are most favourable to such investment, but also to development within each country itself being highly segmented, with the growth of towns and cities that have received all of this required infrastructure investment, required to support the industrial development, surrounded by large areas of the country that live in rural squalor.

The drain of populations from the rural areas into the towns and cities, also creates a requirement for the old peasant subsistence farming to be replaced by large scale industrial farming. The development of large urban populations in a number of these African economies, creates the potential for agricultural producers in those economies to orientate production to capitalist production neither to meet their own subsistence needs, nor to meet the needs of foreign developed economies. Already, large scale capitalist farming in a number of African economies is showing that development. Traditional types of crop, more suited to the soil and climate conditions are being grown, so as to meet domestic food needs of the towns and cities. 

In Britain, as Marx describes in Capital, the growth of urban populations created a market for agricultural commodities, which made capitalist agriculture possible, which in turn led to peasants being driven from the land, and into the towns, increasing urban populations further. As productivity, profits and capital accumulated faster in industry than agriculture, that created an increased demand for industrial workers, and as rural workers then migrated to the towns and cities in the mid 19th century, in search of those higher paying industrial jobs, that led capitalist farmers to have to introduce new labour saving technologies to overcome the relative labour shortages in agriculture, and rise in agricultural wages. In these industrialising African economies, that latter condition already exists, and as capitalist farms are established, they begin from this standpoint of introducing the latest technologies.

Before some of the most productive land could be utilised in Europe, large scale capital investment was required, to provide drainage, or alternatively irrigation, to clear forests, or level slopes, as well as to build country roads, and other elements of infrastructure. The development of large-scale industrial farming in Africa faces the same requirements. But, as Marx points out in TOSV, wherever such investment takes place at a later stage of development, it benefits from the fact that improvements in technology, increases in social productivity, not only make the fixed capital introduced more effective, but they also make it cheaper, thereby enhancing the potential rate of profit.

Recent technological developments show the way this can be of considerable benefit for agricultural development in Africa. Mobile telecommunications already benefit many farms in Africa, in a large land area, where the cost of establishing land lines would be expensive. And, modern scientific farming, is already benefiting from the use of the Internet, proving farmers with up to date information on market prices, as well as the latest techniques etc. But, the revolution in energy production also benefits African agriculture considerably. One thing that Africa does not lack is sunshine, and the huge advances in solar power generation that have been made, alongside the similar advances in battery technology, means that large capitalist farms can utilise solar power generation and storage, not only for lighting, and so on, but also to power the extraction of water from wells and aquifers, for use in irrigation, as well as powering the irrigation systems itself. The development of graphene, has also led to the development of cheap membranes capable of desalinating sea water, for those areas where fresh groundwater supplies are not available.

The conditions are in place for a number of African economies to enjoy rapid industrialisation and growth over the next decade. Moreover, the development of capitalist agriculture in Africa to meet the needs of its growing urban populations will also create the potential for large-scale cultivation of currently virgin or undercapitalised land. The potential exists for Africa to become in the next twenty years the bread basket of the world.

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