Tag Archive for imperialism


samir amin at WAPE honory member and lifetime achievement

The 11th Forum of WAPE took place from June  17. – 19, 2016 in Patiala, Punjab, India. At this event Samir Amin took part in the Forum and was a main speaker. He also became an honorary member of WAPE and received a lifetime achievement award. Below is his speech given to the event which we reprint with his kind permission.

Lenin, Mao Facing the challenges of history

Samir Amin

Lenin,   Bukharin, Stalin, and Trotsky in Russia, as well as Mao, Zhou Enlai, and Den Xiaoping in China, shaped the history of the two great revolutions of the twentieth century. As leaders of revolutionary communist parties and then later as leaders of revolutionary states, they were confronted with the problems faced by a triumphant revolution in countries of peripheral capitalism and forced to “revise” (I deliberately use this term, considered sacrilegious by many) the theses inherited from the historical Marxism of the Second International. Lenin and Bukharin went much further than Hobson and Hilferding in their analyses of monopoly capitalism and imperialism and drew this major political conclusion: the imperialist war of 1914–1918 (they were among the few, if not the only ones, to anticipate it) made necessary and possible a revolution led by the proletariat.

With the benefit of hindsight, I will indicate here the limitations of their analyses. Lenin and Bukharin considered imperialism to be a new stage (“the highest”) of capitalism associated with the development of monopolies. I question this thesis and contend that historical capitalism has always been imperialist, in the sense that it has led to a polarization between centers and peripheries since its origin (the sixteenth century), which has only increased over the course of its later globalized development. The nineteenth century pre-monopolist system was not less imperialist. Great Britain maintained its hegemony precisely because of its colonial domination of India. Lenin and Bukharin thought that the revolution, begun in Russia (“the   weak link”), would continue in the centers (Germany in particular). Their hope was based on an underestimate of the effects of imperialist polarization, which destroyed revolutionary prospects in the centers.

Nevertheless, Lenin, and even more Bukharin, quickly learned the necessary historical lesson. The revolution, made in the name of socialism (and communism), was, in fact, something else: mainly a peasant revolution. So what to do? How can the peasantry be linked with the construction of socialism? By making concessions to the market and by respecting newly acquired peasant property; hence by progressing slowly towards socialism? The NEP implemented this strategy.

Yes, but…. Lenin, Bukharin, and Stalin also understood that the imperialist powers would never accept the Revolution or even the NEP. After the hot wars of intervention, the cold war was to become permanent, from 1920 to 1990. Soviet Russia, even though it was far from being able to construct socialism, was able to free itself from the straightjacket that imperialism always strives to impose on all peripheries of the world system that it dominates. In effect, Soviet Russia delinked. So what to do now? Attempt to push for peaceful coexistence, by making concessions if necessary and refraining from intervening too actively on the international stage? But at the same time, it was necessary to be armed to face new and unavoidable attacks. And that implied rapid industrialization, which, in turn, came into conflict with the interests of the peasantry and thus threatened to break the worker- peasant alliance, the foundation of the revolutionary state.

It is possible, then, to understand the equivocations of Lenin, Bukharin, and Stalin. In theoretical terms, there were U-turns from one extreme to the other. Sometimes a determinist attitude inspired by the phased approach inherited from earlier Marxism (first the bourgeois democratic revolution, then the socialist   one) predominated, sometimes a voluntarist approach (political action would make it possible to leap over stages). Finally, from 1930–1933, Stalin chose rapid industrialization and armament (and this choice was not without some connection to the rise of fascism). Collectivization was the price of that choice. Here again we must beware of judging too quickly: all socialists of that period (and even more the capitalists) shared Kautsky’s analyses on this point and were persuaded that the future belonged to large-scale agriculture.   The break in the worker-peasant alliance that this choice implied lay behind the abandonment of revolutionary democracy and the autocratic turn.

In my opinion, Trotsky would certainly not have done better. His attitude towards the rebellion of the Kronstadt sailors and his later equivocations demonstrate that he was no different than the other Bolshevik leaders in government. But, after 1927, living in exile and no longer having responsibility for managing the Soviet state, he could delight in endlessly repeating the sacred principles of socialism. He became like many academic Marxists who have the luxury of asserting their attachment to principles without having to be concerned about effectiveness in transforming reality.

The Chinese communists appeared later on the revolutionary stage. Mao was able to learn from Bolshevik equivocations. China was confronted   with the same   problems as Soviet   Russia: revolution in a backward country, the necessity of including the peasantry in revolutionary transformation, and the hostility of the imperialist powers. But Mao was able to see more clearly than Lenin, Bukharin, and Stalin. Yes, the Chinese revolution was anti-imperialist and peasant (anti-feudal). But it was not bourgeois democratic; it was popular democratic. The difference is important: the latter type of revolution requires maintaining the worker-peasant alliance over a long period. China was thus able to avoid the fatal error of forced collectivization and invent another way: make all agricultural land state property, give the peasantry equal access to use of this land, and renovate family agriculture.

The two revolutions had difficulty in achieving stability because they were forced to reconcile support for a socialist outlook and concessions to capitalism. Which of these two tendencies would prevail? These revolutions only achieved stability after their “Thermidor,” to use Trotsky’s term. But when was the Thermidor in Russia? Was it in 1930, as Trotsky said? Or was it in the 1920s, with the NEP? Or was it the ice age of the Brezhnev period? And in China, did Mao choose Thermidor beginning in 1950? Or do we have to wait until Deng Xiaoping to speak of the Thermidor of 1980?

It is not by chance that reference is made to lessons of the French Revolution. The three great revolutions of modern times (the French, Russian, and Chinese) are great precisely because they looked forward beyond the immediate requirements of the moment. With the rise of the Mountain, led by Robespierre, in the National   Convention, the French Revolution was consolidated as both popular and bourgeois and, just like the Russian and Chinese Revolutions, which strove to go all the way to communism even if it were not on the agenda due to the necessity of averting defeat, retained the prospect of going much further later. Thermidor is not the Restoration. The latter occurred in France, not with Napoleon, but only beginning in 1815. Still it should be remembered that the Restoration could not completely do away with the gigantic social transformation caused by the Revolution. In Russia, the restoration occurred even later in its revolutionary history, with Gorbachev and Yeltsin. It should be noted that this restoration remains fragile, as can be seen in the challenges Putin must still confront. In China, there has not been (or not yet!) a restoration.

Since 1947, the United States of America, the dominating imperialist power of that epoch, proclaimed the division of the world into two spheres, that of the ‘free world’ and that of ‘communist totalitarianism’. The reality of the Third World was flagrantly ignored: it was felt privileged to belong to the ‘free world’, as it was ‘non-communist’.   ‘Freedom’ was considered as applying only to capital, with complete disregard for the realities of colonial and semi-colonial oppression.   The following year Jdanov, in his famous report (in fact, Stalin’s), which led to the setting up of the Kominform (an attenuated form of the Third International), also divided the world into two, the socialist sphere (the USSR and Eastern Europe) and the capitalist one (the rest of the world).   The report ignored the contradictions within the capitalist sphere which opposed the imperialist centres to the peoples and nations of the peripheries who were engaged in struggles for their liberation.

The Jdanov doctrine pursued one main aim: to impose peaceful coexistence and hence to calm the aggressive passions of the United States and their subaltern European and Japanese allies.   In exchange, the Soviet Union would accept a low profile, abstaining from interfering in colonial matters that the imperialist powers considered their internal affairs. The liberation movements, including the Chinese revolution, were not supported with any enthusiasm at that time and they carried on by themselves.   But their victory (particularly that of China, of course) was to bring about some changes in international power relationships. Moscow did not perceive this until after Bandung, which enabled it, through its support to the countries in conflict with imperialism, to break out of its isolation and become a major actor in world affairs. In a way, it is not wrong to say that the main change in the world system was the result of this first ‘Awakening of the South’.   Without this knowledge, the later affirmation of the new ‘emerging’ powers cannot be understood.

The Jdanov report was accepted without reservation by the European communist parties and of those of Latin America of that era.   However, almost immediately it came up against resistance from the communist parties of Asia and the Middle East.   This was concealed in the language of that period, for they continued to affirm “the unity of the socialist camp” behind the USSR, but as time went on resistance became more overt with the development of their struggles for regaining independence, particularly after the victory of the Chinese revolution in 1949.   To my knowledge, no-one has ever written the history of the formulation of the alternative theory, which gave full rein to the independent initiatives of the countries of Asia and Africa, later to crystallize at Bandung in 1955 and then in the constitution of the Non Aligned Movement (from 1960 defined as Asian-African, plus Cuba). The details are buried in the archives of some communist parties (those of China, India, Indonesia, Egypt, Iraq, Iran and perhaps a few others).

Nevertheless I can bear personal witness to what happened, having been lucky enough, since 1950, to participate in one of the groups of reflection that brought together the Egyptian, Iraqi and Iranian communists and some others.   Information about the Chinese debate, inspired by Zhou Enlai was not made known to us by Comrade Wang Hue (the link with the journal Révolution, whose editorial committee included myself) until much later, in 1963.   We heard echoes of the Indian debate and the split that it had provoked, which was confirmed afterwards by the constitution of the CPM.   We knew that debates within the Indonesian and Filipino communist parties developed along the same lines.

This history should be written as it will help people to understand that Bandung did not originate in the heads of the nationalist leaders (Nehru and Sukarno particularly, rather less, Nasser) as is implied by contemporary writers.   It was the product of a radical left wing critique which was at that time conducted within the communist parties.   The common conclusion of these groups of reflection could be summed up in one sentence: the fight against imperialism brings together, at the world level, the social and political forces whose victories are decisive in opening up to possible socialist advances in the contemporary world.

This conclusion, however, left open a crucial question: who will ‘direct’ these anti-imperialist battles?   To simplify: the bourgeoisie (then called ‘national’), whom the communists should then support, or a front of popular classes, directed by the communists and not the bourgeoisies (who were anti-national, in fact)?   The answer to this question often changed and was sometimes confused.   In 1945 the communist parties concerned were aligned, based on the conclusion that Stalin had formulated: the bourgeoisies everywhere in the world (in Europe, aligned with the United States, as in the colonial and semi-colonial countries – in the language of that era) have “thrown the national flag into the rubbish bin” (Stalin’s phrase) and the communists were therefore the only ones who could assemble a united front of the forces that refused to submit to the imperialist, capitalist American order.   The same conclusion was reached by Mao in 1942, but only made known (to us) when his New Democracy had been translated into Western languages in 1952.   This thesis held that for the majority of the peoples of the planet the long road to socialism could only be opened by a “national, popular, democratic, anti-feudal and anti-imperialist revolution [the language of the day], run by the communists.”   The underlying message was that other socialist advances were not on the agenda elsewhere, i.e., in the imperialist centres.   They could not possibly take shape until after the peoples of the peripheries had inflicted substantial damage on imperialism.

The triumph of the Chinese revolution confirmed this conclusion. The communist parties of South East Asia, in Thailand, Malaysia and Philippines in particular, started liberation struggles inspired by the Vietnamese model.   Later, in 1964, Che Guevara held similar views when he called for “one, two, three Vietnams.”

The avant-garde proposals for initiatives by the independent and anti-imperialist ‘countries of Asia and Africa’, which were formulated by the different communist groups of reflection, were precise and advanced. They are to be found in the Bandung programme and that of the Non-Aligned Movement, of which I gave a systematic presentation in my L’eveil du Sud (Awakening of the South).   The proposals focussed on the essential need to reconquering control over the accumulation process (development which is auto-centred and delinked from the world economy).

It so happens that some of these proposals were adopted, although with considerable dilutions in certain countries, as from 1955 to 1960, by the governing classes as a whole in both continents. And at the same time the revolutionary struggles waged by all the communist parties of South East Asia were defeated (except in Vietnam, of course).   The conclusion would seem to be that the ‘national bourgeoisie’ had not exhausted its capacity for anti-imperialist struggle.   The Soviet Union also came to that conclusion when it decided to support the non-aligned front, while the imperialist Triad declared open warfare against it.

The communists in the countries concerned were then divided between the two tendencies and became involved in painful conflicts that were often confused.   Some drew the lesson that it was necessary to ‘support’ the powers in place that were battling imperialism, although this support should remain ‘critical’.   Moscow gave wind to their sails by inventing the thesis of the ‘non-capitalist way’.   Others conserved the essentials of the Maoist thesis, according to which only a front of the popular classes that was independent of the bourgeoisie could lead a successful struggle against imperialism.   The conflict between the Chinese communist party and the Soviet Union, which was apparent as from 1957 but officially declared as from 1960, of course confirmed the second tendency among the Asian and African communists.

However, the potential of the Bandung movement wore out within some fifteen years, emphasizing – if it should be needed – the limits of the anti-imperialist programmes of the ‘national bourgeoisies’.   Thus the conditions were ripe for the imperialist counter-offensive, the ‘re-compradorisation’ of the Southern economies, if not – for the most vulnerable – their recolonization. Nevertheless, as if to give the lie to this return imposed by the facts to the thesis of the definitive and absolute impotence of the national bourgeoisies – Bandung having been, according to this vision, just a ‘passing episode’ in the cold war context – certain countries of the South have been able to impose themselves as ‘emerging’ in the new globalization dominated by imperialism.   But ‘emerging’ in what way?   Emerging markets open to the expansion of capital of the oligopolies belonging to the imperialist Triad? Or emerging nations capable of imposing a genuine revision of the terms of globalization and reducing the power exercised by the oligopolies, while reconducting the accumulation to their own national development?     The question of the social content of the powers in place in the emerging countries (and in the other countries of the periphery) and the prospects that this opens up or closes is once again on the agenda.   It is a debate that cannot be avoided: what will – or could – be the ‘post-crisis’ world?

Would the results be better now, when a second ‘Awakening of the South’ is on the horizon?   Above all, will it be possible this time to build convergences between the struggles in the North and in the South?   These were lamentably lacking in the Bandung epoch. The peoples of the imperialist centres then finally aligned behind their imperialist leaders.   The social-democrat project of the time would in fact have been difficult to imagine without the imperialist rent that benefited the opulent societies of the North.   Bandung and the Non Aligned Movement were thus seen as just an episode in the cold war, perhaps even manipulated by Moscow. In the North, there was little understanding of the real dimensions of this first emancipatory wave of the countries of Asia and Africa which, however, was convincing enough for Moscow to give it support.


Book Review: 21st-century imperialism

Seán Edwards

John Smith, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis (New York: Monthly Review Press, 2016)

In 2002 Anne Daly produced a documentary called Race to the Bottom, provoked by a fire that killed fifty-two workers in a garment factory in Bangladesh. John Smith’s book begins with the Rana Plaza disaster in 2013, when another garment factory collapsed and 1,131 workers died. Clearly, the race to the bottom continues. 
The conditions derive from the cut-throat competition between suppliers in Bangladesh and other oppressed countries that is mandated by the transnational corporations in the imperialist countries. The more monopolised the garment industry in the North, the more intense the competition between countries, between businesses and between workers in the global South. Most of the profits accrue to the North. According to an example given in this book, only €0.95 of the price of a H&M tee-shirt sold in Germany for €4.95 stays in Bangladesh. 
Along with other examples of intensified exploitation, smartphone manufacture, and coffee-growing, John Smith connects the outsourcing of production to the lowest-wage economies with the nature of capitalism today. 
The twenty-first century dawned with capitalism—according to most observers in the media—swinging along nicely. The taoiseach of the time, Brian Cowan, cheerfully exclaimed that the era of booms and slumps was over. Only Marxists predicted a crash. (They would say that, wouldn’t they?) 
When the crash came, the economists and the politicians were taken by surprise. They are still thrashing about looking for an explanation, blaming each other, blaming deregulation, blaming rogue bankers, always addressing the superficialities, afraid to look into the abyss: the crisis of capitalism. 
Among the Marxists, Monthly Review Press not only saw the crash coming but described many of its features in advance. It has maintained a spirit of inquiry into the workings of contemporary capitalism, so it is appropriate that it is the publisher of John Smith’s book. This book is strictly about economics, not so much the political and military means of maintaining imperialist hegemony—that would be another book. 
The crash of 2007 was not a surprise; the only surprise is that it was delayed so long, which Smith endeavours to explain. 
One of the responses to the stagnation crisis of the 1970s was the drive to cut costs by moving production to countries with cheaper labour. This was closely associated with increasing financialisation, which the author insists is not a separate phenomenon. Both were facilitated by the advances in information technology. What began as an economic solution has become a pathology. After thirty years, it was fundamental to the new crisis. 
The outsourcing of production, ever seeking cheaper labour power, accelerated up to the crash of 2007: for example, Levi-Strauss, which in the 1960s operated sixty-three factories in the United States, closed its last factory there in 2004. The process was pushed also by the emergence of such retail giants as Walmart, Tesco, and Carrefour—commercial interests coming to dominate manufacturers and growers, at home and abroad. The pressure on suppliers inevitably leads to further pressure on wages. 
According to mainstream economics, the “developing countries” should be catching up with the developed. There is no sign of this happening, however (apart from a few special cases), for a number of reasons. 
The process is controlled by the transnational corporations, whether through direct investment or subcontracting. While there is free movement of capital, there is no free movement of labour. The reserve army of the unemployed and precariously employed is so large, and continues to be reinforced by the displacement of peasants from the land. 
Development is largely limited to the particular activities required by powerful corporations and by commercial and financial interests. It is unusual for a product to be manufactured entirely in one country. For example, transnational companies and their subcontractors operating in China typically assemble articles for export from parts made elsewhere. This keeps control in the hands of the corporation. 
The direct rule of the colonial powers has been more or less successfully replaced by neo-colonialism. Imperialist hegemony is enforced by economic means, in alliance with the local ruling class—not that force, or the threat of force, has been abandoned. Levelling up is just not happening. 
Meanwhile the wages and conditions of workers in the imperialist countries continue to deteriorate, with jobs in production only partly replaced by service employment. They are facing austerity policies imposed by governments and employers. These have so far met with only sporadic resistance, but this may be changing. 
John Smith argues at some length that Marx’s theory of surplus value needs to be interpreted in the global context of contemporary imperialism. As he sums up his argument, “global labour arbitrage—super-exploitation—that is forcing down the value of labour power, is now the increasingly predominant form of the capital-labour relationship.” This he sees as “a defining feature of the neoliberal era,” along with the financialisation with which it is closely associated. He makes the point that financial assets are largely derived from the surplus value extracted from super-exploited workers in low-wage countries. 
Behind the financial crisis of 2007 lay a crisis of production, that is, of capitalism itself, of imperialism. After nine years, no solution has been found. The policy of North American and European governments has been to protect business, keeping share prices up by “quantitative easing” and imposing austerity on working people. They have certainly succeeded in making the rich richer, but the underlying crisis remains, and is spreading to the oppressed countries, which depend on exporting to what is now a stagnant market. 
The return to Keynesian strategies and re-regulation advocated by the left is hardly more promising; nor is the “non-interference” proposed by some on the right. The author argues that there is no capitalist solution to the crisis. There has been, he maintains, an enormous growth in the working class, the industrial working class in particular, which includes women and men, all races and all religions, “more closely resembling the face of humanity than ever before”—a powerful force. 
Either humanity will destroy capitalism, or capitalism will destroy humanity. We are back to Marx: “Workers of all countries, unite!”—never more difficult, never more urgent, never more necessary.

Book Review: The Empire and Ukraine


The recent Manifesto Press book by Andrew Murray The Empire and Ukraine has been well received in the United States.

This review by Joe Jamison appeared at http://mltoday.com

This is a crucial book for antiwar activists in the US and others on the Left to study.   The Empire and Ukraine will be of greatest use to the antiwar movements and solidarity organizations in Britain, but its clear-eyed analysis can strengthen the antiwar movement here, still the main lair of the beast.

The title  would seem to suggest a study of one crisis only – Ukraine — but it offers more. The book sets the Ukraine crisis in a more general context of post-1991 world politics. Andrew Murray proposes a theoretical framework for deciding the question of the differences and similarities between imperialism a century ago and now. Then he expounds the complexities of the case of Ukraine. From the analysis flow recommendations on how the political Left, the labor movement and anti-war campaigns should respond to multiple war dangers.

In 138 pages Murray examines the international setting – the nature of contemporary imperialism, the role of NATO and the European Union, the place of Britain in the world order and the impact of the economic crisis that began in 2008 on world politics – and how they relate to Ukraine.

The two main parts of the book are “21st Century Imperialism”  and “The Ukraine in Five Questions”  There are  also three appendices, “Attacking ‘Stop the War’ – Two Polemics,” “How Imperialism Marks Major Anniversaries,” and “The Georgian War of 2008.”

His section on ideological confusions on the British Left depicts a scene not unlike that prevailing in the US. The bibliography of key works on imperialism could be a syllabus for the self-education of antiwar activists.

1916 versus 2016

How does the imperialism of 2016 different from the imperialism of 1916? Apparently many are taking up this question. Yesterday this reviewer received in an email an advertisement for 21st Century imperialism by John Smith from Monthly Review. There is also a new book from a US Left group, the Party for Socialism and Liberation, 21st Century Imperialism.

“Imperialism ” is one of those words from outside Marxism that Marxism has absorbed and made its own.

The word “imperialism” was first heard  from  the mouths of the imperialists themselves, plunderers such as Cecil Rhodes who carved up what remained of still-unconquered Africa and Asia and loudly defended their piratical gains.

Criticism of imperialism, fueled by opposition to the Boer War (1899-1902) took theoretical shape in the book Imperialism by the liberal British writer J. A. Hobson (1902). In the US, opposition to the Spanish-American War (1898) in which the US seized Cuba, Puerto Rico, and the Philippines, included well-known Americans such as Andrew Carnegie, Mark Twain, and  Samuel Gompers organized in the Anti-Imperialist League. But when Marxism took over  the concept,  word imperialism largely was dropped in  respectable bourgeois discourse, until a few years ago.

Marx anticipated the qualitative change from free competition to monopoly that occurred at the end of 19th century in  his discussion in Das Kapital of the Laws of the Concentration and Centralization of Capital. Marxists such as Hilferding (in Finance Capital, 1910) and Bukharin (in Imperialism and World Economy, 1915) represented the beginning of Marxism’s theoretical absorption of the new reality. Karl Kautsky struggled with it, defining imperialism  as merely a policy of the advanced industrial countries toward the weaker agricultural countries. Kautsky argued that that imperialism is developing into a peaceful “ultra-imperialism” in which transnational capitalism supersedes national-based monopoly capitalism.

Rejecting Kautsky’s faulty formulations and conclusions, Lenin arrived at the classic Marxist understanding in Imperialism, The Highest Stage of Capitalism (1916) seemingly a modest “popular” pamphlet of 130 pages. In fact the pamphlet was the distillation of his Notebooks on Imperialism, which run to over 800 hundred pages and now make up Volume 39 of his Collected Works. Thus several decades of debate preceded Lenin’s famous work.

By defining imperialism as the monopoly stage of capitalism, not a mere policy, Lenin accomplished  the  grafting of the new reality  onto a consistent body of Marxist theory. That does not always happen; nowadays some Marxists all too readily use half-digested terms such as “capitalist globalization ” or “financialization.”

But, Murray argues, too many Marxists have been content to leave the analysis there, as if nothing had happened since Lenin’s  classic writing. Yet there have been obvious changes: the dominant power has changed (Britain in the decades before 1914; the US from 1945-present). The role of the state in capitalism has changed (modest a century ago except in wartime; massive, at all times, now). The main rival, ascending power has changed (Germany challenging Britain in 1914; People’s China challenging the US now)

A century ago, the revolutionary position was to reject both imperialist coalitions. In the First World War revolutionaries waged an uphill battle to convince  the working class to reject  misleaders who sided with “their own” imperialists. Lenin and the Bolsheviks advanced the slogan, “Turn the imperialist war into a civil war.” On the other side of Europe, in colonial Ireland, James Connolly and his Irish Citizen Army declared in the Easter 1916 Rebellion, “We serve neither King nor Kaiser but Ireland.”

Since 1989-91, obviously, the world balance of forces has changed.  The downfall of the USSR has removed the powerful restraint of the socialist camp on imperialism. Some things remain the same.  There is still inter-imperialist rivalry — there always has been — since imperialism emerged.  The law of uneven development of capitalism still persists.

Does the end of socialism in East Europe and the USSR in 1989-81 mean we simply are back to the world of the First World War and before, when two coalitions of imperialist states, one led by Britain and the other led by a rising Germany, vied for supremacy in the world?

Such a stance, Murray argues,  ignores dialectics. The monopoly stage of capitalism (like the competitive stage before it, from which it evolved) is not static. Murray proposes a framework to enable us to see the imperialist system in its contradictory motion, in its development tendencies, in a word, dialectically.

Affirming his essential continuity with Lenin’s analysis, Murray rejects the notion that nothing has changed. He contends that three concepts that came out of the grafting process can shed light on what has changed in the intervening century.

“Three different abstract political “models” could be consistent with this general order and the prevailing balance of economic power – super-imperialism; inter-imperialist rivalry; and ultra-imperialism.

Super-imperialism assumes the world system is dominated by a single imperialist power, which rules all the rest, from lesser imperialist powers down to states which are not really powers at all, even perhaps within their own national borders.

Inter-imperialist competition argues for a continuing struggle for markets, influence and control by several powers, or blocs of powers, within a world system that tries to resolve their antagonisms on a bilateral or multilateral basis, but without either an overarching hegemonic regulator or combined authoritative mediating structures.

Ultra-imperialism postulates the merging of competing imperialisms into one integrated system, somewhat analogous to monopoly capitalist mergers. It differs from super-imperialism in that there is no one power commanding the others, and assumes a radical diminution of the capacity of the nation-state as a point of organization and power for capital accumulation. Lenin used the terms ‘superimperialism’ and ‘ultra-imperialism’ interchangeably – understandably so, since the idea of a single imperial power overwhelming all others, rather than all of them fusing together, was inconceivable 100 years ago.

Here we make a distinction between the drive for undisputed world hegemony by the US (super-imperialism), and the process of the elaboration of institutions and policies which embody the collective interests of world imperialism (ultra-imperialism), closely entwined as these two concepts evidently are.

In reality, since the emergence of modern capitalist imperialism in the late 19th century, the world system has always been a mixture of all three aspects, and it is so today – never has the world order corresponded entirely to one or the other.” [1]

But there is more to say, surely, in evaluating contemporary imperialism. The  still dominant US  is arguably declining, at least in some ways. US  power is ebbing economically and to some extent politically. But in a military sense,  the world is  still living in a Pax Americana . The US is still dominant in global  economic institutions (IMF , World Bank) , though its sway is challenged  by faster growing capitalist states (progressive ones such as Bolivarian Venezuela and some not so progressive such as India) and by People’s China  (with its new Asian Infrastructure Investment Bank, to name only one initiative)

Such states are striving to build up an alternative architecture of international economic relations. Moreover, in 1914 there was no EU. The EU is both a rival and subordinate in relation to the US,  augmenting and sometimes restraining US power.

So what is the new configuration of contemporary imperialism , of the “world system” today? Murray states that elements of all three: “super”, “ultra”, and “inter” are present:

As a number of people have noted in recent times, the unipolar moment in international affairs has passed. Its tombstone will probably read : 1991-2008. A combination of the disasters and defeats of the “war on terror” and the economic crisis of neo-liberalism, together with the bounding growth of Chinese power and the steady returning of strength to the atrophied sinews of Russian authority, have turned the “one superpower” world into something more like “one-megapower” and quite-a-few rising powers planet – all in flat contradiction to the programme of the once-notorious Project for a New American Century which specifically enjoined US administrations to exert every effort to prevent any such pluralism of power emerging. Bush, Clinton, Bush and Obama have all done their best in one way or another, but returning history has proved stronger. [2]

The Cause of the Ukraine Crisis

There is boundless arrogance in US policy toward Russia since the 1990s. US Administrations, of both parties, have dismissed Russian security concerns about invasion from the West, an astonishing position, given the 20th century history of the USSR, with 27 million dead in 1941-45 alone.

The relentless US drive eastward, bringing missiles ever closer to the borders of Russia , forgetting pledges made to the Gobachev leadership in 1990 not to push NATO eastward , is at the root of the Ukraine crisis.

…the crisis has in large measure been provoked by the continuing drive eastward in Europe by the USA and the European Union, the main props and beneficiaries of the post-1991 “new world order”. It is often said, and rightly, that the “unipolar moment” of unchallenged US world domination is passing; nevertheless US power, abetted in this case by the EU, is best seen as undermined and in relative decline, but it remains the only contender for a global hegemonic role. Even as it is troubled in the Middle East, and “pivoting” its immense military resources to the Far East to contain and confront ascendant China, it still looks to incorporate other countries within its zones of control (influence is too kind a word), that is to say, the formal and informal structures of the “New World Order”. [3]

Andrew Murray, calling Putinism a mix of “social conservatism, chauvinism, and nostalgia” but not a “dictatorship,”  [4] He quotes at great length – four pages –  a 2014 Putin speech laying out the logic of the Russian policy on Crimea. This long excerpt makes sense  on this side of the Atlantic. The US public is subjected , perhaps more than a British public, to unceasing demonization of Putin in the corporate media.  Television viewers here will have seen an endless loop  of mocking video footage of Putin  naked from the waist up riding a horse, but they will rarely have been exposed to his actual political views, which are quite rational.

Murray’s detailed summary of Ukraine’s complex history points out that Ukraine’ s borders have always been fluid and contested. He cites this example: before 1914 someone born in the city of Uzhgorod (in western Ukraine) could have lived, by 1992,  in the Austro-Hungarian Empire, the western Ukrainian and then the Ukrainian national republics after World War I, Czechoslovakia ,Hungary, the USSR, and independent Ukraine, “all without moving house.” [5]

Here and there in the impressive summary of Ukrainian history an idea intrudes that one could question. “The collectivization of Soviet agriculture was a trauma from which Soviet society arguably and farm productivity undoubtedly never fully recovered.”  [6] But if collectivized agriculture was not more efficient than private agriculture, where did the surplus come from that paid for rapid Soviet industrialization in 1929-41? It’s an important debate about Soviet history, but a minor flaw, if a flaw at all, in a superb book.

Murray regards US “relative decline,” though real, as potentially reversible, a useful caution. US relative decline has been prematurely predicted before.

The Empire and Ukraine  will educate readers on the reactionary nature of the EU. Even the politically attentive classes in the US have a weak grasp of how central the question of the EU is in the politics of the continent. To be sure, knowledge is better now than it once was. The austerity hell through which Germany and its bankers have put Greece and other weaker states has improved understanding.

Attitudes  to the EU are the fault line of European politics dividing in the Left from the Center. The Left rejects the EU as imperialist and a bulwark of capitalism. Center forces — social democrats of the old and new variety — believe that the EU can be an agency of attaining “Social Europe.” They favor “critical engagement” with the EU.

The book is not for beginners. The reader should know something about foreign policy. Murray ‘s  writing is sophisticated and  passionate. This reviewer found delightful  the many flashes of irony and wit.

Andrew Murray has not only been doing excellent antiwar organizing, but also thinking deeply about antiwar strategy  too.  The depth of his thought  is on display in this luminous book.


[1] The Empire and Ukraine, 13.

{2] Ibid., 108.

[3] Ibid., 3.

[4] Ibid.,  48.

[5 ] ibid., 52.

[6]  Ibid., 57.

The Empire and Ukraine

Manifesto Press, Britain, 2015

Preface by John Foster

ISBN 978-1-907464-13-3, 139 pp.


Imperialism and Capitalism: Rethinking an Intimate Relationship

By Prof. James Petras and Prof. Henry Veltmeyer

Global Research, December 16, 2015


The literature on imperialism suffers from a fundamental confusion about the relationship between capitalism and imperialism. The aim of this paper is to remove this confusion. The paper is organised in three parts.

In Part I we state our own position of the capitalism-imperialism relation. In part II we discuss some major points at issue in the Marxist debate on imperialism. And in Part III we review the changing forms that imperialism has taken in Latin America in the course of the capitalist development process.

The main focus of the paper is on the form taken by imperialism in the current conjuncture of capitalist development, namely extractive capitalism. This conjuncture is characterised by the demise of neoliberalism as an economic model and a growing demand on the world market for energy, minerals and other “natural” resources—the political economy of natural resource development (large-scale investment in the acquisition of land and entailed resources, primary commodity exports). The fundamental dynamics of what we term “extractivist imperialism” are examined in the context of South America, which represents the most advanced but yet regressive form taken to date by capitalism in the new millennium. Our analysis of these dynamics is summarized in the form of twelve theses.

In this essay we are concerned with unravelling the intimate relation of imperialism to capitalism and clearing some confusion surrounding it. There are two major problems in the way these two concepts are often understood and used in the literature. In the liberal tradition of political science the projection of imperial power and associated dynamics are generally disconnected from capitalism and its economic dynamics, reducing imperialism to a quest for world domination based on a lust for power or purely geopolitical considerations by the guardians of the national interest in the most powerful countries. On the other hand, in the Marxist tradition of political economy, among world system theorists of the new imperialism there can be found the opposite tendency in which the institutional specificity of the state as an instrument of class power is ignored, and imperialism is reduced to a purely economic dynamic, essentially confusing imperialism with capitalism.

In this paper we argue that capitalism and imperialism are intimately connected but engage distinct dynamics in the geoeconomics and the geopolitics of capital that need to be clearly distinguished. We advance this argument in the Latin American context, with reference to the capitalist development process and associated dynamics in their temporal and spatial dimensions. But first we engage several points of dispute among Marxists in regard to imperialism. We then trace out the salient features of imperialism at various stages in the capitalist development process in Latin America.

The Marxist Debate on Imperialism: Points of Dispute


Almost all theories of contemporary imperialism, both in its (neo)Marxist and (neo)liberal variants, lack any but the crudest sociological analyses of the class and political character of the governing groups that direct the imperial state and its policies (Harvey 2003; Magdoff 2003; Amin 2001; Panitch and Leys 2004; Foster 2006; Hardt and Negri 2000). The same is true for contemporary theorizing about the imperial state, which is largely devoid of both institutional and class analysis.[1] 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. (Panitch and Leys 2004). As for the shifts in the political and economic orientation of governing capitalist politicians representing the imperial interests of the dominant class, resulting in the formation of links with other capitalists and imperialist centres with major consequences in the configuration of world power, they are glossed over in favour of abstract accounts of statistical shifts in economic measures of capital flows.

Contemporary theorizing about imperialism generally ignores the sociopolitical and ideological power configurations of imperial policy, as well as the role of international financial institutions such as the World Bank in shaping the institutional and policy framework of the new world order, which not only provides a system of global governance but the rules of engagement for the class war launched by the global capitalist class against labour in its different redoubts of organised resistance. The focus of most contemporary and recent studies of the dynamics of imperial power is on the projection of military power in the project of protecting and advancing the geopolitical interests of the United States and the geo-economic interests of monopoly capital in the middle east and other zones of capital accumulation, or on the economic operations of the large multinational corporations that dominate the global economy. In regard to the Middle East the main issue in these studies is the threat presented by radical Islam (and its forces of international terrorism) to accessing one of the world’s greatest reservoirs of fossil fuel as well as the imperialist project of world domination.

As for the multinational corporations that dominate the global economy they are viewed by theorists of the “new imperialism” as the major operational agency of imperial power in the world capitalist system, having displaced the nation-state in its power to advance the project of capital accumulation and the quest for world domination. While theorists and analysts in the liberal tradition continue their concern with the dynamics US foreign policy in the projection of imperial power, and Marxists in the tradition of international political economy and critical development studies continue to concentrate their analysis on the dynamics of state power, the theorists of the “new imperialism” concentrate almost entirely on the globalizing dynamics of monopoly capital.

Nevertheless, the dynamics of imperial power relations are political as well as economic, and do engage the political apparatus of the state. As for the economic dynamics, as theorized by Lenin in a very different context, they derive from the search by capital for profit and productive investments as well as cheaper sources of raw materials and labour and markets. In terms of these dynamics, particularly those that relate to the fusion of industrial and financial capital, the export of capital and the emergence of monopoly capital, Lenin theorized imperialism as the highest form of capitalism, a manifestation of its fundamental laws of development. However, while liberal theorists of imperialism tend to emphasize the political, and to isolate the political dimension of imperialism from its economic dynamics, viewing imperialism purely in terms of the quest for world domination or the pursuit of geopolitical strategic concerns and the national interest, Marxist theorists following Lenin recognize that the imperial state is a critical agency of capitalist development and a fundamental source of political and military power pursued in the service of capital, to ensure its dominion.[2]

From this Marxist perspective imperialism is understood in terms of its connection to capitalism, and the agency of the imperial state system—the projection of state power—in securing the conditions needed for capital accumulation. Not that there is a consensus on this point—on imperialism as the bearer of capital, an agency of capitalist development. William Robinson, for example, expands on the argument advanced by Hardt and Negri (2000) and other world system theorists that the “class relations of global capitalism are now so deeply internalized within every nation-state that the classical image of imperialism as a relation of external domination is outdated” (Robinson 2007, 7).[3] Although what these class relations might possibly be is unclear, as is the question as to what form imperialism takes under these circumstances (the dominion of capital over labour?), Robinson argues that in effect “national capitalist monopolies” no longer need to

“turn to the state for assistance . . . .” The corollary is that the state no longer needs to assume the responsibility for empire-building and the projection of imperial power is no longer concerned with the dynamics of capital accumulation.[4] In Robinson’s formulation “the system of nation-states . . . is no longer the organizing principle of capitalist development, or the primary institutional framework that shapes social and class forces and political dynamics” (Robinson 2007, 8).

Another assumption made by Robinson and shared by other world system theorists of transnational capital and “globally integrated enterprise” is that “if we are to get at the root of 21st century global social and political dynamics” the Marxist tradition of imperialism theory based on the classical statements of Lenin and Hilferding should be discarded. Based on the assumption of a world of rival national capitals and economies, conflict among core capitalist powers, the exploitation by these powers of peripheral regions, and “a nation-state centred framework for analysing global dynamics,” this theoretical tradition is entirely useless, incapable—according to Robinson—of grasping the fundamental contemporary dynamics of capitalist development (Robinson 2007, 6–7).[5]

If, as Robinson contends, capital no longer needs the imperial state does it mean that imperialism will wither away, or does it mean, as argued by Klare (2003, 51–52), that it will take the form of

“geopolitical competition . . . the contention between great powers and aspiring great powers for control over territory, resources, and important geographical positions such as ports and harbours . . . and other sources of wealth and influence.”

Or does it mean what Robinson and some—including Amin (2001), Arrighi (2005), Foster (2003) and others in the torrent of “new imperialism” literature that has appeared since 2001—have suggested or contend, namely that imperialism is advanced primarily, if not exclusively, in economic form via the agency of transnational(ized) corporations that represent an empire without imperialism, as Hardt and Negri would have it, or capitalism beyond imperialism, as Robinson sees it.

In opposition to this rather reductionist view of imperialism, we hold that imperial power is shaped predominantly by the imperial state and its policies that take as a given that what is perceived as in the “national interest” coincides with the concerns and interests, both economic and political, of the capitalist class—or the “private sector,” in the official discourse. Notwithstanding arguments to the contrary, and taking into consideration both its economic and political dynamics and its actual operations (investments, production, sales), imperialism now as before is clearly designed and works to advance the project of capital accumulation in whatever and in as many ways as possible—to penetrate existing and open up new markets, exploit labour as humanely as possible but as inhumanely as needed, extract surplus value from the direct producers where possible, and access as needed or process raw materials and minerals.

Insofar as the capitalist class is concerned the aim and the agenda of its individual and institutional members is to accumulate capital. As for the imperial state and its agents and agencies, including the World Bank and the agencies of international cooperation for security and development, the agenda is merely to pave the way for capital, to create the conditions needed for economic and social development. In neither case is uneven development of the forces of production and its social conditions (social inequality, unemployment, poverty, social and environmental degradation, etc.) on the agenda. Rather, these conditions are the unintended or “structural” consequences of capitalist development, and as such inevitable and acceptable costs of progress that need to be managed and, if and where possible, mitigated in the interest of both security and development.

Under these strategic and structural conditions it is illuminating but not particularly useful to measure the impact of imperialism merely in economic terms of the volume of capital inflows (FDI, bank loans, portfolio investments, etc.) and outflows (profit, interest payments, etc.).[6] This is because imperialism is a matter of class and state power, and as such an issue of politics and political economy—issues that are not brought into focus in an analysis of national accounts. At issue here are not only the structural dynamics of uneven capitalist development (the “development of underdevelopment,” in André Gunder Frank’s formulation) but social and international relations of power and competition between imperial and domestic classes, between officials and representatives of the imperial state and the state in “emerging economies” and “developing societies.”

Under current conditions of rapid economic growth and capitalist development on the southern periphery of the world system, these relations are very dynamic and changing. By no means can they be described today as relations of domination and subordination. In addition, members of the global ruling class (investors, financiers, big bankers, industrialists, etc.) must compete with each other not only in the same sector but in different countries within the world capitalist and imperialist system. This is not only a question of inter-capitalist and intra-imperialist rivalry. It is also a development and political issue embedded in the social structure of the capital-labour relation and the economic structure of international relations within the world system. For example, within the dynamic and changing structure of this complex system of class and international relations officials of the states with a subordinate position in the imperial state system will insist on the transfer of technological, management and marketing knowhow to strengthen the ability of their capitalists to compete and for them to make profit, extract rents and serve their “national interest.”

As for relations of “domination” and “dependence” among nations on the lines of a north-south divide the structure of global production, and international relations of domination and subordination, are dynamic and change over time, in part because the geopolitical and economic concerns of the nation-state subject to imperial power leads to a quest for relative autonomy by state officials and politicians in these countries as well as protection of the national interest. “Developments” along these lines have resulted in qualitative changes in the relations between established imperial and emerging capitalist states.[7] Therefore, theorizing that is focused only on an analysis of inflows and outflows of capital—as if the “host” country was a “blank factor”—or a focus on the structure of global production based on a fixed international division of labour, cannot account for the dynamics of capitalist development in countries and regions on the periphery of the system with those at the centre.[8] Nor can this type of economistic theorizing explain dynamic features of the world capitalist system, for example the shift in economic power from North America and Western Europe towards Asia—China and India, to be precise.

Capitalist Development, Class Struggle and Imperialism

In outlining his conception of Historical Materialism, the foundation of Marxism as a social science, Marx had argued that at each stage in the capitalist development process[9]—the development of the forces of production—can be found a corresponding system of class relations and struggle. For Marx this was a matter of fundamental principle arising out of a fundamental conflict between the forces and relations of production. But he could have added that at each stage of capitalist development can also be found both a corresponding and distinct form of class struggle based on the forces of resistance to this advance, as well as imperialism in one form or the other and distinctly understood as the projection of state power in the service of capital—to facilitate its advance in the sphere of international relations and secure its evolution into and as a world system. That is, the projection of state power in the quest for world domination—to establish hegemony over the world system—is a necessary condition of capitalist development. Capitalism requires the state not only to establish the necessary conditions of a capital accumulation process, but to ensure its inevitable expansion—the extension of the capital-labour relation, and its mechanism of economic exploitation (the extraction of surplus value from the labour of the direct producers)—into a world system.

Lenin had theorised this projection of state power in the service of capital as the most advanced stage in the capitalist development process, which includes a phase of “primitive accumulation” (in which the direct producers are separated from the land and their means of production) and a process by which the small-landholding agricultural producers or peasant farmers are proletarianized, converted and made over into a working class. As Lenin saw it imperialism so conceived (as the “highest stage of capitalism”) featured

(i) the fusion of industrial and financial capital;

(ii) the export of capital in the search for profitable outlets overseas;

(iii) the territorial division (and colonization) of the world by European capitalist powers within the institutional and policy framework of Pox Britannica (the hegemony and dominion of the United States); and

(iv) an international division of labour based on an international exchange of primary commodities for goods manufactured in the centre of the system. These features encompassed an economic dynamic of capital accumulation, but this dynamic and the economic structure of this system evidently required and was secured politically with the projection of state power, including military force.

Lenin astutely identified the fundamental structural features of the world capitalist system at this stage of development. However, it was misleading to characterise it as “imperialism” in that the projection of imperial class-based state power was a distinct feature of capitalism in an earlier phase in the evolution of capitalism as a world system, namely mercantilism, a system in which merchant’s capital was accumulated through the expropriation of natural resources as much as exploitation of labour as well as state-sanctioned and regulated international trade. And imperialism was also a distinct feature and an adjunct to the capital accumulation process in later periods of capitalist development, as discussed below.

Imperialism in an Era of State-led Capitalist Development (1950–80)

In the wake of the Second World War the United States emerged as an economic super-power, in command of at least one half of world industrial capacity and up to 80 percent of financial resources or capital for productive investment. Having replaced Great Britain as the leader of what were then described as the “forces of (economic and political) freedom,” and to counter a perceived potential threat from its Russian war-time ally, now the USSR, which had also emerged from the war as an industrial power but representing an alternative socialist system for expanding the forces of national production, the US led the construction of a capitalist world order in the form of the Bretton Woods system (Bienefeld 2013; Frieden 2006; Peet 2003).

This system included two “international financial institutions”—the International Monetary Fund (IMF) and what would become the World Bank—as well as a General Agreement on Tariffs and Trade (GATT), an institutional mechanism for negotiating agreements in the direction of free trade that would eventually emerge as the World Trade Organisation (WTO). This system provided a set of rules used to govern relations of international trade—rules that favoured the operations and expansion of what had emerged as a complex of predominantly US-based multinational corporations and thus the hegemony of US capital. However, it also provided the institutional framework of a project of international cooperation with the nation-building and development efforts of a large number of countries that were engaged in a war of national liberation and independence from the colonial powers that had subjugated them for so long.

In this context capitalism engaged a process of productive and social transformation—the transformation of an economic system based on agriculture and an agrarian society and social system based on pre-capitalist relations of production into a modern industrial capitalist system based on capitalist relations of production, or wage labour.[10] The basic mechanism of this transformation was exploitation of the “unlimited supply of surplus rural labour” released in the capitalist development of the forces of production in the agricultural sector (Lewis 1954).

This process of capitalist development, and the associated process of productive and social transformation, can be traced out in different countries and regions at different points of time. But the process unfolded in different ways, engaging different forces of change and resistance in the class struggle, in the countries at the centre of the system and those on the periphery. First, in peripheral regions (Latin America and the Caribbean, parts of Asia and Africa) were found countries that were struggling to escape colonial subjugation and imperialist exploitation as well as class rule. Governments in these countries were in a position to choose between a capitalist and a socialist path towards nation-building and economic development, a situation that called for a strategic and political response from the guardians of the capitalist world order.

The response: to assist the development process in these countries—for the states in the developed countries and the international organizations and financial institutions to provide technical and financial assistance (foreign aid, in the lexicon of international development) to the undeveloped and less developed countries on the periphery of the system. In this context it is possible to view the idea and the entire enterprise of international development through the lens of imperialist theory—as a distinct form of imperialism (Petras and Veltmeyer 2005a; Veltmeyer  2005).

There is considerable evidence to suggest that the most powerful states within the institutional framework and system what can now be described as Pax Americana (the hegemony and dominion of the United States) in the post-war era of capitalism began to deploy the idea of development as a means of facilitating the entry into and the operations of capital in peripheral countries…in the development of their forces of production and the accumulation of capital in the process. In this context diplomatic pressure and military force were deployed as required or dictated by circumstance, but only secondarily, i.e., as a strategy and tactic of last resort. Thus the projection of military force to achieve the geopolitical objectives of the imperial state used predominantly by the US state in the 1950s and early 60s to maintain imperial order in its backyard—Guatemala (1954), Cuba (1961), the Dominican Republic (1963, 1965), Brazil (1964), Guyana (1953) and Chile (1973).[11]

After the military coup engineered in Chile this strategy of direct military invention and sponsored military coups gave way to a war by proxy, which entailed the financing of both the policy-making apparatus re social and development programs and the repressive apparatus (the armed forces) deployed by its Latin American allies.

In the same way as the imperialist project of International Cooperation for Development was used in the 1950s and subsequently to discourage those countries seeking to liberate themselves from the yoke of colonialism from turning towards a socialist path towards national development, the US government as an imperialist state resorted to the idea of “development” as a means of preventing another “Cuba” and turning the “rural poor” away from the option of revolutionary change provided by the revolutionary movements that had emerged in Latin America (Petras and Veltmeyer 2007a).

The class struggle at the time (the 1950–60s) assumed two main forms. The first was as a land struggle waged by the peasantry, most of which had been either proletarianized (rendered landless) or semi-proletarianized (forced to take the labour path out of rural poverty).[12] Many of the proletarianized and impoverished peasants, separated from their means of production and livelihoods, chose to migrate and take the development path of labour staked out by the World Bank (2008) and the modernization theorists of “development.”

However, many others chose to resist rather than adjust to the forces of capitalist development operating on them, to join the revolutionary social movements in the form of “armies of national liberation”. But by means of a three-pronged strategy and policy of (i) land reform (expropriation and redistributing land to the tiller), (ii) integrated rural development (technical and financial assistance to the small landholding peasant or family farmer), and (iii) repression (use of the iron fist of armed force hidden within the velvet glove of integrated development) the imperial state, via its allies in the local states, managed to defeat or “bring to ground” the social movements engaged in the land struggle. The one exception was the Revolutionary Armed Forces of Colombia (FARC), which continues to be a powerful force of resistance against the incursions of capital in Colombia to this today.

The second major form of the class struggle at the time had to do with the capital-labour relation, and engaged the working class in an organised labour movement against capital and the state for higher wages and improved working conditions. This struggle was part of a global class war launched by capital in the 1970s in the context of a systemic crisis of overproduction (Crouch and Pizzorno 1978). One of a number of weapons deployed in this war was the power of the state, via its policymaking role, to fatally weaken the labour movement in its organizational capacity to negotiate collective contracts for higher wages and reduce the share of labour in national incomes.

This approach was particularly effective in Latin America, where the imperial state, via the international organisations and financial institutions at its command, was in a position to impose market-friendly “structural” reforms on the labour movement. As a result of these reforms in the capital-labour relation the share of labour (wages) in the distribution of national income in many Latin American countries was reduced by as much as 50 percent.[13] The purchasing power of the average wage in Argentina, for example, was less in 2010—after six years of economic recovery and export-led rapid economic growth—than it was in 1970. The loss in the purchasing power or value of wages was particularly sharp at the level of the government-regulated minimum wage, which the World Bank throughout the 1980s and 1990s tirelessly argued was the major cause of low income, poverty and informalisation in the region. For example, in Mexico, the country that followed the strictures of Washington and the World Bank in regard to deregulating the labour market, from 1980 to 2010, over three decade of neoliberalism, the minimum wage lost up to 77 percent of its value (Romero 2014).

While the imperial state was indirectly engaged in the land struggle via a program of international cooperation that was implemented by the Latin American state but financed by officials of the imperial state, imperialism vis-à-vis the labour movement took the form of an armed struggle against “subversives” (a broad urban coalition of forces of resistance mobilised by the “political left”).

The struggle was led by the armed forces of the Latin American state, particularly in Brazil and the southern cone of south America (Chile, Bolivia, Argentina, Uruguay), although financed by and (indirectly) under the strategic command of the US, and operating within the framework of an ideology and doctrine (the National Security Doctrine) fabricated within the ideological apparatus of the imperial state. By the end of the 1970s this movement had also suffered defeat, its forces in disarray and disarticulated under the combined weight of state repression and forces generated in the capitalist development process. With the defeat of both major fronts of the class struggle and popular movement, with the resurgence of the Right in the form of a counterrevolutionary political movement and an ideology of free market capitalism, the stage was set for a major turnaround in the correlation of opposing forces in the class struggle. Imperialism would have an important role to play in this process.

Imperialism and Capitalism in an Era of Neoliberal Globalization (1980–2000)

Neoliberalism as an ideology of free market capitalism and a doctrine of policy reform in the direction of free market capitalism—“the new economic model,” as it was termed in Latin America (Bulmer-Thomas, 2006)—was some four decades in the making, manufactured by a neoliberal thought collective put together by Van der Hayek (Mirowski and Plehwe 2009). It was not until the early 1980s that the necessary conditions for bringing these ideologues to state power, i.e., in a position to influence and dictate policy, were available or otherwise created. These conditions included an unresolved systemic crisis of overproduction, a fiscal crisis in the North and an impending debt crisis in the South, and the defeat of the popular movement in the class struggle over land and labour.

Under these conditions the imperial state, via its international organizations and financial institutions, mobilized its diverse powers and forces so as to mobilize the forces needed to reactivate the capital accumulation process. The main problem here—from a capitalist and imperialist perspective—was how to liberate the “forces of freedom” (to quote from George W. Bush’s 2012 National Security Report) from the regulatory constraints of the welfare-development state. The solution: a program of “structural reform” in macroeconomic policy (the vaunted structural adjustment program” constructed by economists at the World Bank and the IMF) within the framework of a Washington Consensus (Williamson 1990).

By 1990 all but four major Latin American states had succumbed or joined the Washington Consensus in regard to a program that was imposed on them as a conditionality of aid and access to capital markets to renegotiate the external debt. And in the 1990s, in a third cycle and generation of neoliberal reforms,[14] the governing neoliberal regimes in three of these states—Argentina, Brazil, Peru—had followed suit, generating conditions that would facilitate a massive inflow of productive capital in the form of Foreign Direct Investment (FDI) as well as a substantial inflow of unproductive or fictitious capital seeking to purchase the assets of existing lucrative but privatised state enterprises (Petras and Veltmeyer 2004).

What followed was what has been described as the “Golden Age of US Imperialism” (viz. the facilitated entry and productive operations of large-scale profit- and market-seeking investment capital), as well as the formation of powerful peasant and indigenous social movements to resist the neoliberal policy offensive and protest the destructive impact of neoliberal policies on their livelihoods and communities—movements no longer directed against the big landlords or corporate capital and agribusiness but against the policies of the local and imperial state (Petras and Veltmeyer 2005a, 2009, 2013). By the end of the decade these movements had successfully challenged the hegemony of neoliberalism in the region as an economic model and policy agenda. What resulted was a “red” and “pink” tide of regime change—a turn to the left in national politics and the formation of regimes oriented towards the “socialism of the 21st century (Venezuela, Bolivia, Ecuador) or a post-Washington consensus on the need for a more inclusive form of development—inclusionary state activism (Argentina, Brazil, Chile, Uruguay . . .).[15] The states formed in the so-called “red wave” of regime change constituted a new anti-imperialist front in the struggle against US imperialist intervention—another front to the one formed by the social movements in their resistance and direct action.

Salinas de Gortiari, Bush Senior, Mulroney

At the level of national politics the main issues was US intervention in Latin America affairs, including the funding of opposition groups in Venezuela, the economic blockade against Cuba, and the attempt by the US government to orchestrate a free trade agreement, first between the US and both Canada and Mexico, and then a continent-wide agreement (FTAA, or ALCA in its Spanish acronym). The US regime was successful in the first instance, but failed miserably in the second—having encountered powerful forces of resistance in the popular sector of many states, as well as widespread opposition within the political class and elements of the ruling class and the governing regime in countries such as Brazil.

Both imperialism and the anti-imperialist struggle in this conjuncture of capitalist development assumed different forms in different countries, but Colombia was unique in that the most powerful movement in the 1960s land struggle had never been defeated. With land still at the centre of the class struggle the existence and large-scale operations of what we might term narcocapitalism allowed the US imperial state to move with armed force against the major remaining obstacle to the capitalist development of agriculture in Colombia—to make the countryside safe for US capital—under the façade of a drug war waged by the government against the manufacturers of cocaine and the narco-trafficking. The mechanism of this imperial offensive was Plan Colombia, a US military and diplomatic aid initiative aimed at combating Colombian drug cartels and left-wing insurgent groups in Colombian territory. The plan was originally conceived between 1998 and 1999 by the administrations of Colombian President Andrés Pastrana Arango and US President Bill Clinton, as an anti-cocaine strategy but with the aim of ending the Colombian armed conflict and making the countryside safe for US capital (Vilar and Cottle 2011).

A third front in the imperialist offensive against the forces of resistance in the popular sector involved International cooperation and the agencies of international development. The strategy employed by these agencies was the same as successfully used in the 1960s and 1970s to dampen the fires of revolutionary ferment in the countryside: to offer the dispossessed peasants and the rural poor a non-confrontational alternative to social mobilization and direct collective action (Veltmeyer 2005). The strategy had a different outcome in different countries.

In Ecuador, home to the most powerful indigenous movement in the region—the Confederation of Indigenous Nationalities of Ecuador (CONAIE)—the strategy of ethnodevelopment orchestrated by the World Bank and the IDB resulted in dividing and weakening the movement, undermining its capacity to mobilise the forces of popular resistance (Petras and Veltmeyer 2009). For example, in just a few years Antonio Vargas, President of CONAIE and leader of the major indigenous uprising of the twentieth century, had been converted into the head of one of the most powerful NGOs in the region, with the capacity to disburse funds for local development microprojects and a resulting diminution in the power of CONAIE to mobilise the forces of resistance. By 2007, when Rafael Correa, a left-leaning economist, came to power as the country’s president, the indigenous movement led by CONAIE, was but a shadow of its former self, allowing the political left, in the form of Correa’s Citizens Movement, to push CONAIE and the indigenous movement aside in the political project of a “Citizen’s Revolution.”

The outcome was rather different in Bolivia, a paradigmatic case of anti-neoliberalism and anti-imperialism in the current conjuncture of the class struggle. Whereas the popular movement in Ecuador had been pushed aside in the capture of the instruments of state power by the Political Left, in Bolivia an extended process of class conflict and mass mobilization was the prelude and condition of the Political Left’s rise to power in the form of the Movement Towards Socialism (MAS). The water and gas “wars”, clashes with the military, and the dismissal of several corrupt and neoliberal governments, were all part of a cocktail that allowed for the emergence of a new political “actor” or instrument in the form of MAS, and the rise to power of Evo Morales, which was backed by the “social movements”—that encompassed both communities of indigenous “peasants,” a rural proletariat of landless workers, and diverse sectors of the organised working class (Dangl 2007; Farthing and Kohl 2006; Webber 2010).

Imperialism and Anti–Imperialism in an Era of Extractive Capitalism

The neoliberal “structural reform” agenda of the Washington Consensus facilitated a massive inflow of capital in the form of foreign direct investments directed towards non-traditional manufacturing, financial and high-tech information-rich services, and natural resource extraction.  The 1990s saw a six-fold increase in the inflows of FDI in the first four years of the decade and then another sharp increase from 1996 to 2001; in fewer than ten years the foreign capital accumulated by MNCs in the region had tripled (ECLAC 2012, 71) while profits soared. John Saxe-Fernandez, a well-known Mexico-based political economist, determined that over the course of the decade that the inflow of FDI had netted enormous profits, reflected in the net outflow of US$100 billion over the entire decade of (Saxe-Fernández and Núñez 2001).

Another major inflow occurred in the first decade of the new millennium in the context of a major expansion in the worldwide demand for natural resources and a consequent primary commodities boom in South America (Ocampo 2007). As shown by data presented in Table 1 this boom in the export of primary commodities in the energy sector of fossil and bio-fuels (oil and gas), as well as minerals and metals, and agrofood products primarily affected South America, which led a worldwide trend towards the (re)primarization of exports from the periphery of the system and the expansion of extractive capitalism.

The main targets and destination points for FDI in Latin America over the past two decades have been services (particularly banking and finance) and the natural resources sector: the exploration, extraction, and exploitation of fossil and biofuel sources of energy, precious metals and industrial minerals, and agrofood products. In the previous era of state-led development FDI had predominantly served as a means of financing the capitalist development of industry and a process of “productive transformation” (technological conversion and modernization), which was reflected in the geoeconomics of global capital and the dynamics of capital flows at the time. However, the new world order and two generations of neoliberal reforms dramatically improved conditions for capital, opening up in Latin America the market for goods manufactured in the North (the United States, Canada, and Europe) and providing greater opportunities for resource-seeking capital—consolidating the role of Latin America as a source and supplier of natural resources and exporter of primary commodities, a role that is reflected in the flows of productive investment in the region away towards the extractive industries (see Table 2).

At the turn into the new millennium the service sector accounted for almost half of FDI inflows, but data presented by ECLAC (2012, 50) point towards a steady and increasing flow of capital towards the natural resources sector in South America, especially mining, where Canadian capital took a predominant position, accounting for up to 70 percent of FDI in this sector (Arellano 2010). Over the course of the first decade in the new millennium the share of “resource seeking” capital in total FDI increased from 10 to 30 percent. In 2006 the inflow of “resource-seeking” investment capital grew by 49 percent to reach 59 billion US dollars, which exceeded the total FDI inflows of any year since economic liberalization began in the 1990s (UNCTAD 2007: 53).

Despite the global financial and economic crisis at the time, FDI flows towards Latin America and the Caribbean reached a record high in 2008 (128.3 billion US dollars), an extraordinary development considering that FDI flows worldwide at the time had shrunk by at least 15 percent. This countercyclical trend signalled the continuation of the primary commodities boom and the steady expansion of resource-seeking capital in the region.

The rapid expansion in the flow of FDI towards Latin America in the 1990s reflected the increased opportunities for capital accumulation provided by the neoliberal policy regimes in the region, but in the new millennium conditions for capitalist development had radically changed. In this new context, which included a major realignment of economic power and relations of trade in the world market, and the growth in both the demand for and the prices of primary commodities, the shift of FDI towards Latin America signified a major change in the geo-economics and geopolitics of global capital. Flows of FDI into Latin America from 2000 to 2007 for the first time exceeded those that went to America, only surpassed by Europe and Asia. And the global financial crisis brought about an even more radical change in the geo-economics of global capital in regard to both its regional distribution (increased flows to Latin America) and sectoral distribution (concentration in the extractive sector). In 2005, the “developing” and “emerging” economies attracted only 12 percent of global flows of productive capital but by 2010, against a background of a sharp decline in these flows, these economies were the destination point for over 50 percent of global FDI flows (CEPAL 2012. In the same year FDI flows into Latin America increased by 34.6 percent, well above the growth rate in Asia, which was only 6.7 percent (UNCTAD 2012: 52-54).

The flow of productive capital into Latin America has been fuelled by two factors: high prices for primary commodities, which attracted “natural-resource-seeking investment”, and the economic growth of the South American sub-region, which encouraged market-seeking investment. This flow of FDI was concentrated in four South American countries—Argentina, Brazil, Chile, and Colombia—which accounted for 89 percent of the sub-region’s total inflows. The extractive industry in these countries, particularly mining, absorbed the greatest share of these inflows. For example, in 2009, Latin America received 26 percent of global investments in mineral exploration (Sena-Fobomade 2011). Together with the expansion of oil and gas projects, mineral extraction constitutes the single most important source of export revenues for most countries in the region.

The Geopolitics of Capital in Latin America: The Dynamics of Extractive Imperialism

As noted, a wave of resource-seeking FDI was a major feature of the political economy of global capitalist development at the turn into the first decade of the new millennium. Another was the demise of neoliberalism as an economic doctrine and model—at least in South America, where powerful social movements successfully challenged this model. Over the past decade a number of governments in this sub-region, in riding a wave of anti-neoliberal sentiment generated by these movements experienced a process of regime change—a tilt towards the left and what has been described as “progressive extractivism” (Gudynas 2010).

The political victories of these democratically elected “progressive” regimes opened a new chapter in the class struggle and the anti-imperialist movement, notwithstanding the fact that the wide embrace of resource-seeking FDI, or extractive capital, has generated deep paradoxes for those progressive regimes in the region committed to addressing the inequality predicament and conditions of environmental degradation that are fast reaching crisis proportions as a result of the operations of extractive capital.

Some political leaders and social movements in this context speak of revolution in the context of moving towards “the socialism of the 21st century—Venezuela’s “Bolivarian” revolution, Bolivia’s “democratic and cultural revolution,” and Ecuador’s “citizens’ revolution”—and, together with several governments that have embraced the new developmentalism (the search for a more inclusive form of development), these regimes have indeed taken some steps in the direction of poverty reduction and social inclusion, using the additional fiscal revenues derived from resource rents to this purpose. Yet, like their more conservative neighbours—regimes such as Mexico and Colombia, committed to both neoliberalism and an alliance with “imperialism”—the left-leaning progressive regimes in the region find themselves entangled in a maze of renewed dependence on natural resource extraction (the “new extractivism”) and primary commodity exports (“reprimarization”). Further, as argued by Gudynas (2010), this new “progressive” extractivism is much like the old “classical” extractivism in its destruction of both the environment and livelihoods, and its erosion of the territorial rights and sovereignty of indigenous communities most directly affected by the operations of extractive capital, which continues to generate relations of intense social conflict.[16]

Despite the use by “progressive” centre-left governments of resource rents as a mechanism of social inclusion and direct cash transfers to the poor, it is not clear whether they are able to pursue revolutionary measures in their efforts to bring about a more inclusive and sustainable form of development, or a deepening of political and economic democratization, allowing the people to “live well”, while at the same time continuing to toe the line of extractive capital and its global assault on nature and livelihoods. The problem here is twofold. One is a continuing reliance of these left-leaning post-neoliberal regimes (indeed, all but Venezuela) on neoliberalism (“structural reforms”) at the level of macroeconomic public policy. The other problem relates to the so-called “new extractivism” based on “inclusionary state activism” as well as the continued reliance on FDI—and thus the need to strike a deal with global capital in regard to sharing the resource rents derived from the extraction process. The problem here is that in this relation of global capital to the local state the former is dominant and has the power, which is reflected in the tendency of the governments and policy regimes formed by the new Latin American Left, even those like Ecuador and Peru that have taken a “radical populist form,” to take the side of global capital (the multinational mining companies) in their relation of conflict with the communities that are directly affected by the extractive operations of these companies (see the various country case studies in Veltmeyer and Petras 2014).

Another indicator of the relation of dependency between global extractive capital and the Latin American state is the inability of the latter to regulate the former and the extraordinary profits that are made by the companies that operate in the extractive sector. It is estimated that given very low or, as in the case of Mexico, non-existent royalty rates and the typically lax and low tax regime on the exportation of minerals and minerals—a major factor in the export regime of a number of countries in the region (particularly Chile, Bolivia, Colombia, Peru) —over 70 percent of the value of these minerals and metals on the global market is appropriated by different groups of capitalists in the global production chain. For example, Financial Times reported on April 18, 2013 that from 2002 to 2008, during the height of the primary commodities boom, the biggest commodity traders harvested 250 billion US dollars in profits on their “investments.”[17]

At the same time, given the capital intensity of production in the extractive sector it is estimated that workers generally received less than ten percent of the value of the extracted resources. Typically, the benefits of economic growth brought about by the export of Latin America’s wealth of natural resources are externalised, while the exceedingly high social end environmental costs are internalised, borne by the communities most directly affected by the operations of extractive capital (Clark 2002; Veltmeyer and Petras 2014).

The continued reliance on the neoliberal model of structural reform within the framework of a post-Washington Consensus on the need to bring the state back into the development process, together with the turn towards and a continued reliance on extractive capital (“resource-seeking” FDI), constitute serious economic, social and political problems for Latin American states seeking to break away from the dictates of global capital and the clutches of imperial power. However, the turn of the State in Latin America towards regulation in regard to the operations of extractive capital, as well as the growing popular resistance and opposition to their destructive and negative socioenvironmental impacts of these operations, also constitute major problems for global capital. The difference is that the capitalists and companies that operate in the extractive sector are able to count on the support and massive resources and powers of the imperialist state.

In regard to the issue of regulation the states and international organisations that constitute imperialism have been able to mobilize their considerable resources and exercise their extensive powers to create a system of corporate self-regulation in the form of a doctrine of a Corporate Social Responsibility doctrine (Gordon 2010; MiningWatch Canada 2009).[18] With this doctrine the Latin American states that have turned to or resorted to a strategy of natural resource development have been under tremendous pressure to allow the companies that operate in the extractive sector to regulate themselves.

As for the issue of the resource wars and social conflicts that have surrounded the operations of extractive capital, particularly in the mining sector, over the past two decades the imperial state has come to the rescue of extractive capital time and time again. In this regard the Canadian state has been particularly aggressive in its unconditional and relentless support of the Canadian mining companies that dominate foreign investments in the industry—accounting as they for upwards of 70 percent of the capital invested in this subsector in Latin America.[19]

The support of the Canadian government for these companies, via diplomatic pressures exerted on Latin American governments in favour of corporate social responsibility, financial support and assistance in overcoming the widespread resistance to the extractive operations of Canadian mining companies in Latin America, has gone so far as to place the entire apparatus of Canada”s foreign aid program at the disposal of these companies (Engler 2012; Gordon 2010; Webber 2008).

Conclusion: Theses on the Imperialism of the 21st Century

The conclusions that we have drawn from our analysis of economic and political developments in Latin America over the past two decades can be summed up in the form of twelve theses:

1.The dynamic forces of capitalist development are both global in their reach and uneven in their outcomes. Furthermore the capital accumulation process engages both the geo-economics of capital—the advance of capital in time and place—and the agency of the imperial state in facilitating this advance: the geopolitics of capital.

  1. Class analysis provides an essential tool for grasping the changing economic and political dynamics of imperial power in the various conjunctures of capitalist development. It allows us to trace out different stages in the development of the forces of production and the corresponding relations of production and dynamics of class struggle. These dynamics, which we have traced out in the Latin American context, are both internal and international, implicating both the capital-labour relation and a north-south divide in the world capitalist system.
  2. Whereas in the 1980s imperialism was called upon to remove the obstacles to the advance of capital and to facilitate the flow of productive investment into the region in the new millennium it has been called upon to assist capital in its relation of conflict with the communities directly affected by the operations of extractive capital, as well as cope with the broader resistance movement.
  3. The shift in world economic power in the new millennium, and the new geoeconomics of capital in the region, have significant implications for US imperialism and US-Latin American relations, reducing both the scope of US state power and the capacity of Washington to dictate policy or dominate economic and political relations. This is reflected inter alia in the formation of CELAC, a new political organisation of states that explicitly excludes the United States and Canada, the two imperial states on the continent.
  4. The new millennium, in conditions of a heightened global demand for natural resources, the demise of neoliberalism as an economic model and a number of popular upheavals and mass mobilizations, released new forces of resistance and a dynamic process of regime change.
  5. The centre-left regimes that came to power under these conditions called for public ownership of society’s wealth of natural resources, the stratification and renationalization of privatized firms, the regulation of extractive capital in regard to its negative impact on livelihoods and the environment (mother nature), and the inclusionary activism of the state in securing a progressive redistribution of wealth and income. As in the 1990s, the fundamental agency of this political development process were the social movements with their social base in the indigenous communities of peasant farmers and a rural proletariat of landless or near-landless workers. These movements mobilized the forces of resistance against both the neoliberal agenda of “structural reform” in macroeconomic policy, the negative socio-environmental impact of extractive capitalism, and the projection of imperial power in the region.
  6. These forces of change and resistance did not lead to a break with capitalism. Instead some of “centre-left” regimes took power and, benefitting from high commodity prices, proceeded to stimulate an economic recovery and with it an improvement in the social condition of the population (extreme poverty). But the policies of these regimes led to the demobilization of the social movements and a normalization of relations with Washington, albeit with greater state autonomy. In this context Washington in this period lost allies and collaborator clients in Argentina, Brazil, Uruguay, Bolivia, Venezuela and Ecuador—and, subsequently faced strong opposition throughout the region. However, Washington retained or regained clients in Panama, Costa Rica, Honduras, Colombia, Peru, Mexico and Chile. Of equal importance the centre-left regimes that emerged in the region stabilized capitalism, holding the line or blocking any move to reverse the privatization policy of earlier regimes or to move substantively towards what President Hugo Chávez termed “the socialism of the 21st century.”
  7. The fluidity of US power relations with Latin America is a product of the continuities and changes that have unfolded in Latin America. Past hegemony continues to weigh heavily but the future augurs a continued decline. Barring major regime breakdowns in Latin America, the probability is of greater divergences in policy and a sharpening of existing contradictions between the spouting of rhetoric and political practice on the political left.
  8. In the sphere of military influence and political intervention, collaborators of the US suffered major setbacks in their attempted coups in Venezuela (2002, 2003) and Bolivia (2008), and in Ecuador with the closing of the military base in Manta; but they were successful in Honduras (2009). The US secured a military base agreement with Colombia, a major potential military ally against Venezuela, in 2009. However, with a change in the presidency in Colombia, Washington suffered a partial setback with the reconciliation between President Chávez and Santos. A lucrative 8 billion US dollars trade agreements with Venezuela trumped Colombia’s military-base agreements with Washington.

10.It is unlikely that the Latin American countries that are pursuing an extractivist strategy of national development based on the extraction of natural resources and the export of primary commodities will be able to sustain the rapid growth in the context of contradictions that are endemic to capitalism but that are sharper and have assumed particularly destructive form with extractive capitalism.

11.The destructive operations of extractive capital, facilitated and supported by the imperial state has generated powerful forces of resistance. These forces are changing the contours of the class struggle, which today is focused less on the land and the labour struggle than on the negative socio-environmental impacts of extractive capital and the dynamics of imperialist plunder and natural resource-grabbing.

12.The correlation of forces in the anti-imperialist struggle is unclear and changing, but it is evident that the United States has lost both power and influence. Taken together these historical continuities argue for greater caution in assuming a permanent shift in imperial power relations with Latin America. Nevertheless, there are powerful reasons to consider the decline in US power as a long-term and irreversible trend.

James Petras taught Sociology at Binghamton University

Henry Veltmeyer  teaches development studies at the Universidad Autónoma de Zacatecas

politicaleconomy.ie interview with Ernst Herzog and Richard Corell


Both authors are scholars of political economy and members of the World Association for Political Economy (WAPE). As freelance researchers and journalists they publish also in left-wing papers (like KAZ or Junge Welt) in the FRG. In the World Review of Political Economy (Pluto Journals) they have published: “Financial and Currency Crisis Undermines the Euro and National Sovereignty”, Summer 2011; “Where Will the Euro-crisis Take US To: Germany´s Third Attempt?” (Together with Stephan Müller), Spring 2012 and “Subprime Crisis and Marx´s Theory on Ground Rent”, Summer 2014.

Full interview on PDF here Interview with Ernst Herzog and Richard Corell

Q: You quote Lenin on a United States of Europe being impossible or reactionary. Well it exists now so what do you make of the European Union and how do you define it?

A: Today we can say that the more the United States of Europe become a real possibility, the more reactionary they become.

After two world wars, after the foundation of the European Coal and Steel Community, after the foundation of the EEC and finally the European Union (EU), in 1998 there began a currency union between several of the EU member states. The introduction of the euro currency is based on a temporary compromise of the ruling classes of the monopoly bourgeoisies of France and the Federal Republic of Germany (FRG). The intention is:

  • To strengthen their position against the US and Japan
  • To share out together the Eastern parts of Europe after the crush of the USSR (Russia, part of Europe is excluded from the EU by the imperialists)
  • To oppress small capitalist nations in Western Europe
  • To also oppress any resistance by the European peoples and the working-class
  • To make a stand against socialist China

We call this alliance reactionary, backward-looking and hostile to any social and democratic progress. It attempts to preserve, defend and indeed strengthen capitalism, a socio-economic system which is obviously past its time.

Eastern European states, annexed to the EU after 1989 including the German Democratic Republic, as well as smaller capitalist countries affiliated to the EU, are economically dependent on EU imperialist states because of their size and their own national industrial and banking system, as yet not fully developed. While French and German imperialism endeavour to strengthen their dominant position through the EU and to create, for example, an “economic government” of European countries, those states are becoming increasingly dependent politically. Their national sovereignty is increasingly endangered. In this context, to make a clear difference between nations which oppress other nations and those nations which are oppressed is manifestly sensible. Yet the European Union is neither a new nation nor a new state. It is, in fact, the agency of historically notorious imperialist states in Europe—a temporary alliance with developing major internal contradictions.

The obvious contradiction between oppressor and oppressed nations is concretely demonstrated in the manner in which EU member states Greece and Ireland were dealt with after the outbreak of financial and economic crises.

Q: You emphasise the role of the State as a key structure in the system and describe it is a ‘state of usurers’.  What do you mean by this?

A: Writing “Imperialism, the Highest Stage of Capitalism,” in 1916, Lenin develops the term “rentier state” or “usurer state.” “Imperialism is an immense accumulation of money capital in a few countries… Hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e. people who live by ‘clipping coupons’, who take no part in any enterprise whatever, whose profession is idleness.” Imperialist states become rentier states in which a perpetually growing part of the bourgeoisie lives by lending money, or in other words by investing money, buying and selling bonds and shares, gaining interest and dividends, and the world “has become divided into a handful of usurer states and a vast majority of debtor states.” “The rentier state is a state of parasitic, decaying capitalism.” The cause thereof is:

The surplus value extracted from the working class within the capitalist countries finds lesser fields for being reinvested in productive manner, in industrial and rural production. It exists as money-capital in the hands of the rich eager for interest, after all for fixed income on the highest possible level. They have the banks, their consultants and their governments to guarantee an effortless and riskless life. This development encroaching on those countries makes them living more and more from fixed income, from the tributes or the rents they gain with different forms of credits, loans, bonds, shares and other forms of fictitious capital from outside their countries. The development of a so-called service society based on a tremendous deindustrialisation in the last four decades proves well Lenin’s concept of the usurer state.

The imperialist state, still existing in the form of a national state and not able to overcome this form, has the task to secure the dominant role of the monopoly bourgeoisie internally against the working class and to safeguard the interests of the monopolies externally against the imperialist competitors. After the financial crisis 2008 the rentiers (investment banks, hedge funds, etc. with the rich families behind them) used the governments and the state apparatus to pass on their losses to the working people.

Q: Marx’s theory on ground rent has renewed relevance in the context of the crisis today. What is the connection between the monopoly of land ownership in Marx’s time and the monopoly of land/housing today?

A: Marx was the first economist who developed a general “theory of ground rent”. This theory, reflecting the relationship between the three classes (labourers, capitalists and landowners) of bourgeois society, is valid for all capitalist relations of production, also today. Marx underlines: “With a correct conception of rent, the first point to arise was of course that it does not originate from the land but from the product of agriculture, that is, from labour, from the price of the product of labour, for instance of wheat; in other words, from the value of the agricultural product, from the labour applied to the land, not from the land.”

With his theory of the ground rent Marx has developed a profound theory of monopoly. He shows some consequences of this exclusive power of disposal of parts of the planet.

Since Marx`s times, capitalism has changed into monopoly capitalism.

Besides the monopoly of land ownership, which came into existence with the capitalist system, since the last third of the 19th century, monopolies have developed in the sectors of industry, trade and finance.

Under monopolist-capitalism, superseding capitalism with freedom of competition, monopolies come into existence in industry, bearing features previously subject to private property. They represent obstacles to non-monopolistic capital penetrating their markets. They can realize prices exceeding the value and realize monopolistic profits, above average rate of profit. They impose a tribute on society chargeable to the working class, the petty bourgeoisie and the non-monopolistic bourgeoisie. By their ambition to rule world-markets, monopolies stamp down the autonomic development of bourgeoisies and capitalism in many countries worldwide too. To safeguard their rule, monopolies form an alliance with semi-feudal big landowners in the less developed countries in the same way as they did in imperialist countries before. The monopolists of industry and banks, the financial oligarchy, form an alliance with the big landowners; even so the contradictions between them are not sublated. In dominating the access to land they can decide whether a piece of land is used or not used for building houses or whether wells of crude oil or other sources of raw materials are exploited or not.

Insofar the survival of the monopoly on private property of land is closely related to the survival of the financial capital and both contribute to increasing parasitism and decay of imperialism. At the same time however, contradictions between the factions of monopolists are not overcome, as soon as it concerns the share of the tribute, or the prey, and the transfer of losses resulting of crises.

Since the time of Marx these contradictions have increased, prices for housing in cities grew exorbitant, a growing number of humans are living in slums, land grapping takes place in big dimensions, wars about raw materials are on the increase as well as debt bondage for a growing number of people by mortgage loans, etc. These mortgage loans and their financialisation played a major role in the development of the 2008 crisis as described in our article in WRPE, (World Review of Political Economy; Vol. 5, Nr. 2, Pluto Journals),

Q: You draw interesting connections between finance capital, low interest rates, the price of land and the underdevelopment of peripheral countries today. Can you explain this?

A: Though, unworked land has no value, because it is not a product of human labour, it is the object of buying and selling. The reason for that is the historic transformation of land into private property. Buying and selling of land creates per se not a cent in favour of land fertility, new machinery, or jobs. On the contrary buying and selling deprives resources of productive use.

For the owner of the ground, price for land is principal rent for a certain period of use. The principal amount of rent must at least yield the same rate of return, as the rate of return of savings deposits for the same amount of money would deliver.

“It follows, then, that the price of land may rise or fall inversely as the interest rate rises or falls if we assume ground rent to be a constant magnitude” (Marx). The price of land is all the higher, the higher the rent and the lower the interest rate.

If the interest rate by tendency approaches zero— and the real interest rate (adjusted by the rate of inflation) had this tendency since the nineteen eighties—price for land tends to go to infinite and this is regardless whether ground rent has  the form of rent, lease or other forms. The same principle also explains why Warren Buffet and others were on solid ground at first glance, thus negating the risk of decreasing prices for land as a result.

The tendency of price of land to rise is also supported by other facts. Beside the “growing demand for shelter” Marx states “. . . agriculture becomes relatively less productive in relation to the industrial product the value of the agricultural product rises and so increases ground rent”. Similarly, the like has to be considered for the building industry which, in spite of important technical achievements, is still relatively underdeveloped (low organic composition of capital) and contributes therefore to an increasing rent.

The financial capital penetrates the sphere of landed property and ground rent more and more. The main connecting piece thereby is the institute of mortgage and the instrument of mortgage loans. These allow increasing control of landed property and access to land by the financial capital. After the expropriation of land in the present imperialist countries in former decades; in the period of “globalisation” the banking system and the mortgage loans were used by the financial capital to export capital in underdeveloped countries. This led to expropriation of farmers, small industries and parts of the national bourgeoisies in those countries by the take-over of agricultural land, mines and wells of resources and building sites in Asia, Africa, South America, etc. by multinational companies. In most of these cases the borrowers could not serve their loans after diverse crises broke out (currency, prices for raw material, etc.) triggered by speculations of the financial capital in those countries. Then the financial capital took over to extract more surplus value from those countries.

Q: How does Germany fit into this within the Eurozone?

A: To become a world power again, Germany pursuit mainly three goals. First goal was reached through the annexation of the GDR in 1989/90. Second goal was, to expand its influence to the eastern countries (former part of the Warsaw Pact); this happened by exporting goods and capital to those countries and through their integration into EU. And thirdly it tries to become the leading power within the EU to make a stands against the US and the US$.

Making large-scale dealings in real estate in the former GDR and former Warsaw Pact countries, taking over the important parts of their banking system and using the well-trained industrial workers from the GDR to dump the wages domestically, German imperialism developed new strength with the consequence that the German business models are becoming more unbalanced and hazardous.

As the US-investment banks had socialised the risks of MBS and CDOs by securitisation, rating and selling this bonds to banks and investors all over the globe; also German banks were involved in this crisis from 2008 on heavily. While Deutsche Bank was part of the party issuing those AAA rated but then defaulting bonds; other German banks – as well as most banks in the EU – were hit massively by those losses and are under the guarantee of the state. The row about sharing the losses was intensive. Neither the German banking system nor that of the EU has properly recovered from this. Still governments and media are forced to tell different versions about the same facts. While Irish people know that their government (by issuing guarantees for the banks and, under the pressure of the Troika, paying back the speculative money to the big US, German, French and British investors) has saved also the German banks; in Germany, people are told Germany had saved the Irish State and banks. Germany is the main power using its influence on the ECB to put on the losses of the crisis to the smaller European countries and to the working people in the EU.

Also, contradictions between the German imperialism and the US imperialism have increased since the outbreak of the crisis.

Q: Is it not overdramatic to suggest this is Germany’s third attempt to become a world power?

A: The question here is, how could German imperialism, after it had missed out during the sharing of the world between the Great Powers in the 19th century and after it had tried 1914 in the First World War to push through a redistribution of the world for its own benefit according to its economic strength and how could it to a day 65 years after its defeat by May 8th 1945 climb in such a position again (being the leading power in “solving” the Euro-crisis). Where does the power, where does the strength of financial sources result from? How did German tycoons succeed after their defeat 1945 not only to survive, under protection of the dominating capitalist power US, but also to soar into a leading imperialist power again?

On the one hand they could use the contradiction between the socialist and the capitalist camp, which developed after 1945 into cold war. On the other hand the crippled German financial oligarchy could profit on the fact that the French imperialists had get under US-hegemony too and wanted to get rid of US supremacy again. Together with the US the German tycoons perused the split of Germany and of Europe by introducing the Marshall-plan, European Steel and Coal Community and the EEC. In coalition with France they transferred the EEC into the EU to dominate Europe und to rival with the US.

The basis for the present position of German imperialists during this period was that its capital accumulation was growing faster as those of their competitors that is to say, they have been forced and they are forced to make higher profits.

Starting from scratch 1948 without government debt, more modern production facilities and lower wage costs German Imperialism became the strongest power in Western Europe from the 1970s on. As mentioned before, the annexation of the GDR and the expansion to the East later strengthened the German position enormously.

Currently, the result is that the US is still the most powerful imperialist state which has the largest economy, based on, by far, the  biggest military potential. However, it has become more difficult to force its will on the other capitalist countries. In the present development the US will continue to lose influence as leading power of the capitalist world.

We want to try to answer your question with another question. Which alternative has an imperialist country like Germany, driven by its big monopolies – which are in need of markets and raw materials to realise profits – as to take this path to become a world power again? What is different to the situation of the first and the second attempt?

Behaving like an imperialist world power can be seen in the handling of the Greek debt crisis, dictating austerity policy for all EU-countries a. s. o. As Germans we know what aspirations for supremacy meant to our people and for other peoples. That is why we try to reveal the truth on this new attempt and to fight against it together with all true patriots.

Karl Marx Was Right

Global Research, June 01, 2015

Karl Marx exposed the peculiar dynamics of capitalism, or what he called “the bourgeois mode of production.” He foresaw that capitalism had built within it the seeds of its own destruction. He knew that reigning ideologies—think neoliberalism—were created to serve the interests of the elites and in particular the economic elites, since “the class which has the means of material production at its disposal, has control at the same time over the means of mental production” and “the ruling ideas are nothing more than the ideal expression of the dominant material relationships … the relationships which make one class the ruling one.” He saw that there would come a day when capitalism would exhaust its potential and collapse. He did not know when that day would come. Marx, as Meghnad Desai wrote, was “an astronomer of history, not an astrologer.” Marx was keenly aware of capitalism’s ability to innovate and adapt. But he also knew that capitalist expansion was not eternally sustainable. And as we witness the denouement of capitalism and the disintegration of globalism, Karl Marx is vindicated as capitalism’s most prescient and important critic.

In a preface to “The Contribution to the Critique of Political Economy” Marx wrote:

No social order ever disappears before all the productive forces for which there is room in it have been developed; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself.

Therefore, mankind always sets itself only such tasks as it can solve; since looking at the matter more closely, we always find that the task itself arises only when the material conditions necessary for its solution already exist, or are at least in the process of formation.

Socialism, in other words, would not be possible until capitalism had exhausted its potential for further development. That the end is coming is hard now to dispute, although one would be foolish to predict when. We are called to study Marx to be ready.

The final stages of capitalism, Marx wrote, would be marked by developments that are intimately familiar to most of us. Unable to expand and generate profits at past levels, the capitalist system would begin to consume the structures that sustained it. It would prey upon, in the name of austerity, the working class and the poor, driving them ever deeper into debt and poverty and diminishing the capacity of the state to serve the needs of ordinary citizens. It would, as it has, increasingly relocate jobs, including both manufacturing and professional positions, to countries with cheap pools of laborers. Industries would mechanize their workplaces. This would trigger an economic assault on not only the working class but the middle class—the bulwark of a capitalist system—that would be disguised by the imposition of massive personal debt as incomes declined or remained stagnant. Politics would in the late stages of capitalism become subordinate to economics, leading to political parties hollowed out of any real political content and abjectly subservient to the dictates and money of global capitalism.

But as Marx warned, there is a limit to an economy built on scaffolding of debt expansion. There comes a moment, Marx knew, when there would be no new markets available and no new pools of people who could take on more debt. This is what happened with the subprime mortgage crisis. Once the banks cannot conjure up new subprime borrowers, the scheme falls apart and the system crashes.

Capitalist oligarchs, meanwhile, hoard huge sums of wealth—$18 trillion stashed in overseas tax havens—exacted as tribute from those they dominate, indebt and impoverish. Capitalism would, in the end, Marx said, turn on the so-called free market, along with the values and traditions it claims to defend. It would in its final stages pillage the systems and structures that made capitalism possible. It would resort, as it caused widespread suffering, to harsher forms of repression. It would attempt in a frantic last stand to maintain its profits by looting and pillaging state institutions, contradicting its stated nature.

Marx warned that in the later stages of capitalism huge corporations would exercise a monopoly on global markets. “The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe,” he wrote. “It must nestle everywhere, settle everywhere, establish connections everywhere.” These corporations, whether in the banking sector, the agricultural and food industries, the arms industries or the communications industries, would use their power, usually by seizing the mechanisms of state, to prevent anyone from challenging their monopoly. They would fix prices to maximize profit. They would, as they [have been doing], push through trade deals such as the TPP and CAFTA to further weaken the nation-state’s ability to impede exploitation by imposing environmental regulations or monitoring working conditions. And in the end these corporate monopolies would obliterate free market competition.

May 22 editorial in The New York Times gives us a window into what Marx said would characterize the late stages of capitalism:

As of this week, Citicorp, JPMorgan Chase, Barclays and Royal Bank of Scotland are felons, having pleaded guilty on Wednesday to criminal charges of conspiring to rig the value of the world’s currencies. According to the Justice Department, the lengthy and lucrative conspiracy enabled the banks to pad their profits without regard to fairness, the law or the public good.

The Times goes on:

The banks will pay fines totaling about $9 billion, assessed by the Justice Department as well as state, federal and foreign regulators. That seems like a sweet deal for a scam that lasted for at least five years, from the end of 2007 to the beginning of 2013, during which the banks’ revenue from foreign exchange was some $85 billion.

The final stages of what we call capitalism, as Marx grasped, is not capitalism at all. Corporations gobble down government expenditures, in essence taxpayer money, like pigs at a trough. The arms industry with its official $612 billion defense authorization bill—which ignores numerous other military expenditures tucked away in other budgets, raising our real expenditure on national security expenses to over $1 trillion a year—has gotten the government this year to commit to spending $348 billion over the next decade to modernize our nuclear weapons and build 12 new Ohio-class nuclear submarines, estimated at $8 billion each. Exactly how these two massive arms programs are supposed to address what we are told is the greatest threat of our time—the war on terror—is a mystery. After all, as far as I know, ISIS does not own a rowboat. We spend some $100 billion a year on intelligence—read surveillance—and 70 percent of that money goes to private contractors such as Booz Allen Hamilton, [which] gets 99 percent of its revenues from the U.S. government. And on top of this we are the largest exporters of arms in the world.

The fossil fuel industry swallows up $5.3 trillion a year worldwide in hidden costs to keep burning fossil fuels, according to the International Monetary Fund (IMF). This money, the IMF noted, is in addition to the $492 billion in direct subsidies offered by governments around the world through write-offs and write-downs and land-use loopholes. In a sane world these subsidies would be invested to free us from the deadly effects of carbon emissions caused by fossil fuels, but we do not live in a sane world.

Bloomberg News in the 2013 article “Why Should Taxpayers Give Big Banks $83 Billion a Year?” reported that economists had determined that government subsidies lower the big banks’ borrowing costs by about 0.8 percent.

“Multiplied by the total liabilities of the 10 largest U.S. banks by assets,” the report said, “it amounts to a taxpayer subsidy of $83 billion a year.”

“The top five banks—JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc.—account,” the report went on, “for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits. In other words, the banks occupying the commanding heights of the U.S. financial industry—with almost $9 trillion in assets, more than half the size of the U.S. economy—would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.”

Government expenditure accounts for 41 percent of GDP. Corporate capitalists intend to seize this money, hence the privatization of whole parts of the military, the push to privatize Social Security, the contracting of corporations to collect 70 percent of intelligence for our 16 intelligence agencies, as well as the privatization of prisons, schools and our disastrous for-profit health care service. None of these seizures of basic services make them more efficient or reduce costs. That is not the point. It is about feeding off the carcass of the state. And it ensures the disintegration of the structures that sustain capitalism itself. All this Marx got.

Marx illuminated these contradictions within capitalism. He understood that the idea of capitalism—free trade, free markets, individualism, innovation, self-development—works only in the utopian mind of a true believer such as Alan Greenspan, never in reality. The hoarding of wealth by a tiny capitalist elite, Marx foresaw, along with the exploitation of the workers, meant that the masses could no longer buy the products that propelled capitalism forward. Wealth becomes concentrated in the hands of a tiny elite—the world’s richest 1 percent will own more than half of the world’s wealth by next year.

The assault on the working class has been going on now for several decades. Salaries have remained stagnant or declined since the 1970s. Manufacturing has been shipped overseas, where workers in countries such as China or Bangladesh are paid as little as 22 cents an hour. The working poor, forced to compete with the labor of those who are little better than serfs in the global marketplace, proliferate across the American landscape, struggling to live at a subsistence level. Industries such as construction, which once provided well-paying unionized jobs, are the domain of nonunionized, often undocumented workers. Corporations import foreign engineers and software specialists that do professional work at one-third of the normal salary on H-1B, L-1 and other work visas. All these workers are bereft of the rights of citizens.

The capitalists respond to the collapse of their domestic economies, which they engineered, by becoming global loan sharks and speculators. They lend money at exorbitant interest rates to the working class and the poor, even if they know the money could never be repaid, and then sell these bundled debts, credit default swaps, bonds and stocks to pension funds, cities, investment firms and institutions. This late form of capitalism is built on what Marx called “fictitious capital.” And it leads, as Marx knew, to the vaporization of money.

Once subprime borrowers began to default, as these big banks and investment firms knew was inevitable, the global crash of 2008 took place. The government bailed out the banks, largely by printing money, but left the poor and the working class—not to mention students recently out of college—with crippling personal debt. Austerity became policy. The victims of financial fraud would be made to pay for that fraud. And what saved us from a full-blown depression was, in a tactic Marx would have found ironic, massive state intervention in the economy, including the nationalization of huge corporations such as AIG and General Motors.

What we saw in 2008 was the enactment of a welfare state for the rich, a kind of state socialism for the financial elites that Marx predicted. But with this comes an increased and volatile cycle of boom and bust, bringing the system closer to disintegration and collapse. We have undergone two major stock market crashes and the implosion of real estate prices in just the first decade of the 21st century.

The corporations that own the media have worked overtime to sell to a bewildered public the fiction that we are enjoying a recovery. Employment figures, through a variety of gimmicks, including erasing those who are unemployed for over a year from unemployment rolls, are a lie, as is nearly every other financial indicator pumped out for public consumption. We live, rather, in the twilight stages of global capitalism, which may be surprisingly more resilient than we expect, but which is ultimately terminal. Marx knew that once the market mechanism became the sole determining factor for the fate of the nation-state, as well as the natural world, both would be demolished. No one knows when this will happen. But that it will happen, perhaps within our lifetime, seems certain.

“The old is dying, the new struggles to be born, and in the interregnum there are many morbid symptoms,” Antonio Gramsci wrote.

What comes next is up to us.

Interview with Zoltan Zigedy

Politicaleconomy.ie is delighted to have interviewed US communist and political economy blogger Zoltan Zigedy.

Full text of the interview is available here Interview with Zoltan

Politicaleconomy.ie interview with Zoltan Zigedy


1 – A crisis erupted with the collapse of Lehman Brothers in 2008 but this had been brewing for some time. Can you briefly explain how you view the crisis?

Economists and pundits alike– caught watching an event unfold that simply could not happen– portray the 2007-2008 collapse as a singular event, an accident brought on by an unlikely coincidence of human failings.  Of course that perspective masks the inherent, systemic flaws of the capitalist system.

The seeds of the current crisis were planted many decades earlier. The intense global competition resulting from the post-war revival of the European and Asian economies, replete with new technologies, engaging new principles of industrial organization, and flooding global markets with innovative products, placed enormous pressure on the rate of profit. The implicit Cold War labor contract– support US, NATO, and SEATO policies, maintain labor peace, and receive compensation at least in step with productivity and costs of living– pressured capitalist profits from below.

The stagnation of the 1970’s resulted.

Capital found a solution: mount an all-out war on workers and their wages. The slash and burn Thatcher and Reagan axis restored profitability (and the celebration of its rewards) by feverishly jacking up the rate of exploitation.

The collapse of Eastern European socialism added new markets and cheap labor to the favorable conditions for profit-making. Not surprisingly, the loss of a real-world beacon of socialism proved profoundly demoralizing to the labor movement. Many Western Marxists turned to navel-gazing or the “rethinking” of the socialist project.

Without filling in the details, the hyper-accumulation of this triumphalist era stretched the bounds of available productive and safe investment opportunities. Thus, began the explosion of financial exotica (and financial “profits”!) to absorb the glut. On the investment side, this took the form of venture capital and dot.com initial public offerings at the end of the 1990’s; risky speculation inflated an enormous bubble of virtual value and unsecured debt. As we know, that ended badly.

Since 2001, capital has sought to rally and sustain profitability. The collapse of 2007-2008 shows that it is not possible without speculative brinksmanship and courtship of hazard. That seems to me to still be the case.

2 – There is some debate amongst Marxists about the development of capitalism post WW11 and the traditional understanding of the declining rate of profits versus financialisation and super-profit/under-consumptionist theories. Are these theories conflicting or can we reconcile the declining rate of profit with financialisation and monopolisation and concentration of wealth?

A. Post-war Marxists, both in the socialist countries and in the West, fell under the influence of Keynes, locating the principal contradiction of capitalism in the stagnant (or declining) purchasing power of the working class (underconsumptionism).  This was a convenient and appealing explanation for crisis, but, unfortunately, it doesn’t fit the facts, misrepresents the accumulation process, and encourages a turn towards social democracy.

Marxist economists were unjustifiably impressed with the “success” of pump priming in stemming the seemingly unstoppable economic collapse of the Great Depression. While, what came to be called “Keynesian” policy may have slowed, even stopped the bleeding, it didn’t heal the wound. But many Marxists reasoned– mistakenly– that if force-feeding consumption halted further collapse, then the crisis was caused by insufficient consumption.

Neither the Great Depression nor the current crisis were preceded by any consumption shock, an event, if it had occurred, that would have given some credence to an underconsumptionist explanation of crisis. On the other hand, the crises did cause a shock to consumption, a major factor in amplifying and extending the course of crisis. So the facts would seem to suggest that the underconsumptionists actually conflate cause with effect.

The relatively long post-war period without a major systemic crisis (1945-1972) further seduced far too many Marxists into acknowledging the success of Keynesian policy prescriptions. By crediting the perceived stability of the capitalist system to the welfare state support of consumption, they concluded that failing consumption was the demonstrated explanation of capitalist crisis. The severe and lengthy decade of stagflation that followed should have cast some doubt on that too easy conclusion.

B. The 2007-2008 crash spawned a renewed and welcome interest in the tendency-of-the-falling-rate-of-profit explanation of systemic capitalist crisis.  Outside of the Marxist mainstream, Henryk Grossman and Paul Mattick,  were often-isolated voices supporting this explanation which drew largely from Marx’s account in volume III of Capital. While we owe them much for keeping this theory out of the dustbin, they developed it in a mechanical, formalistic way alien to Marx’s method. And the new generation of advocates, largely academic Marxists, have unfortunately followed this road. They fail to understand that tendency laws– like  the tendency of the falling rate of profit– are not logical demonstrations, but descriptions of social and economic forces that shape the course of a social structure’s (in this case, capitalism’s) trajectory.

The great value of the rate-of-profit explanation is that it locates the cause of crisis at the main spring of the capitalist production process: accumulation. It insists that the ultimate cause of malfunction must and will be found in the ultimate element that powers capitalism as an economic system: profit.

In my view, a robust explanation of capitalist systemic crisis can only emerge by beginning with the crucial role of the rate of profit, the determinant that keeps the capitalist class in the reproduction game or, as the system stumbles, out of the game and on to the side lines. I believe that a comprehensive contemporary explanation of the nature of capitalist crisis is yet to appear, though I have offered modest sketches in my writing.

C. “Financialization” is not an explanation of the crisis. Instead, it is too often merely a characterization (like its sibling, “globalization”), a handy descriptor of an aspect of the current crisis. No one would accept “atomization” as a worthy explanation of what happens in an atomic reaction. Nor should we accept “financialization” as more than a neologism useful in indicating that some kind of financial shenanigans played a role in the present crisis. My own view is that “speculation” and “risk taking” better capture the financial dimensions of the ongoing crisis for those needy of a concise handle.

When pressed to unpack financialization to reveal an explanatory theory, its advocates reference familiar developments: deregulation,  the growth of financial institutions, their penetration of non-financial corporations, their development of new and and exotic schemes and instruments, etc. But these developments, in most cases, have been unfolding since Lenin’s time. Moreover, there is no obvious link between these developments and the onset of economic crisis. That link is easily provided by declining profitability, however. One need look no further than Countrywide, Washington Mutual, Merrill Lynch, and Lehmann Brothers to see how speculation and risk-taking eviscerate profits and generate an economic retreat and panic.

Can there be a synthesis of three contestants for a Marxist theory of crisis?

I think not. But there are aspects of each that should inform a Marxist theory of crisis. No adequate Marxist theory can fail to address financial innovation and the peculiar status of financial profit; it must pay particular attention to the amplifying effect of debt. And the one-sided class struggle plays an undeniably important role by generating hyper-exploitation, the consequent super-accumulation, and the resulting abundant capital in search of the elusive return. That said the tendency for capitalism to generate downward pressure on the rate of return remains the centerpiece of any adequate theory of capitalist crisis.

3 – We hear much being made of a US recovery but you describe it as ‘slug-like motion’, what is the real state of the US economy today?

The US economy is in the doldrums. It lacks momentum to escape the doldrums, and it remains precariously afloat. It remains afloat because willingly or unwillingly the rest of the world accepts a part of its burden. The PRChina continues to purchase enormous quantities of US debt, along with Japan. It remains afloat because the rest of the world has yet to challenge the dollar as the global means of exchange, allowing it to weaken or strengthen according to the needs of the US economy. It remains afloat because the US sets the rules of trade, commerce, and exchange to its own benefit. That’s the reward for imperial domination.

Domestically, the US economy is on the life support system that economists call “the wealth effect”. That is, economic activity is founded on the subjective sense of well-being fostered by stock market increases and increases in the value of homes. Both increases today have little or no connection to market realities. Of course, the wealth effect only applies to those owning homes and financial assets.

The rest rely on stagnant wages and benefits and assuming debt (household income is at the same level as 1990). Capital continues to wring every drop of value from US workers. A comrade recently computed that the starting wage of an autoworker at a unionized (UAW) shop, adjusted for inflation, is commensurate with that of a Ford worker in 1914, a moment when Henry Ford “generously” raised the wages of the workers so that they could buy his Model T’s.

Going forward, the prognosis is no better than continuing stagnation. A shock, possibly reverberating from the EU, Brazil, China, or Japan, could yet rock this shaky stability. Moreover, there are many signs that pre-collapse financial  practices are again stretching the bounds of rationality.

4 – You have compared the period we are in to the 1930’s and have challenged the notion that the New Deal investment brought about a recovery pointing to the role WW2 played instead. Do you see war is a policy tool being used today and what are you concerns about this?

William Z Foster, a US Communist writing early in the Cold War period, developed the idea of military Keynesianism. The value of his work– minimized and neglected because of intellectual anti-Communism– was to expose the connection between militarism and government economic policy. For the US ruling class, the idea of “pump priming”, fiscal intervention through the public sector, was much more appealing if it were rendered through spending on open ended contracts with military corporations and armaments rather than spending on human welfare. The former gave government revenue to corporations, the latter some alms to the people.

That same ruling class drew important lessons from the thirties and forties: the most complete recovery from the Great Depression was accomplished swiftly by Hitlerite German militarism. And the US economy only began to recover vitality with the military buildup leading to US entry into World War II.

After the fall of the Soviet Union, there was much talk of a “peace dividend” and a radical reduction of military spending in the US.

It didn’t happen– a fact that surely demonstrates that militarism is inextricably embedded in US economic policy since there was no and could be no serious threat to US security in the immediate aftermath of the Cold War.

Nonetheless, the lap dog media machine has been conjuring up new enemies  in order to keep the US public from objecting to militarism. Interestingly, one can observe public opinion shift from skepticism to consent over the course of the constant monopoly media war campaigns.

In part, the bizarre anti-Russian campaign, the demonizing of Putin, is only rational in the framework of an economic explanation of militarism. The US expects to spend over a trillion dollars during the next three decades modernizing its nuclear weapons program. This can solely be justified to the public by inventing threats from a nuclear power. Nuclear weapons are not necessary against men in sandals with AK-47s, rocket propelled grenades, and improvised explosive devices. But Russia has nuclear weapons.

The liberal magazine, The Nation, recently documented the financial ties between retired military leaders and the armaments industry. The same ex-admirals and generals exposed in the article are omnipresent in the US media, posturing as experts on foreign policy while sounding the call for confrontation and aggression.  They serve as the transmission belt of militarism to the public and the governing bodies.

It is no mystery why we live under the constant threat of violence and war.

5 – How do you define the system globally? There is much talk of neo-liberalism and finance capitalism or financialised capitalism but how do you best understand it?

It is easy to fall into the trap of taking a snapshot of the global capitalist system and drawing hasty conclusions, of announcing a new stage, a new trend, a new era… Certainly that makes for a provocative, but quickly outdated, article or book or garners appearances on talk radio shows. Over the last several decades we’ve been treated to new intellectually fashionable buzz words such as “neo-liberalism”, “globalization” or “financialization”, portentous theories like the decline of the nation-state, and sheer nonsense like Hardt and Negri’s Empire. Fortunately, they, and their ilk, only distract; they seldom persist.

Rather than take that tantalizing bait, I will note some important trends. The last three decades have been marked by significant changes in the international division of labor. A veritable revolution in logistics along with political changes in Eastern Europe and the PRChina integrated new armies of workers into the global capitalist system. Together, these developments ushered in a shift of manufacturing to far flung, low wage areas. Accompanying this shift has been the rise of finance, insurance, real estate and services in those countries experiencing a decline in manufacturing. This new division of labor fostered a dramatic growth in the global rate of profit, a level of profitability that has now run its course.

Labor markets in previously low wage areas are now tightening while the crisis and unemployment have slammed workers’ compensation in the formerly high wage countries. Global wage convergence is the ultimate, predictable outcome of labor market competition without restraint or protection.

Those workers from formerly extreme low wage areas (PRC, India, Brazil, etc.) who have had a taste of a better life, now and want more.

Those workers who have been devastated in the vise of international competition and crisis-induced unemployment want to restore and improve their standard of living.

Standing in the way of winning these demands is a still resilient, resourceful capitalist system; and frequently standing in the way of fighting for these demands are complacent institutions and leaders– union leaders, politicians, and political parties– that are ill-serving workers in the twenty-first century.

Fanciful expressions and speculative theories only obscure the fact that the logic of capitalism and imperialism, capital’s international manifestation, still rule in the twenty-first century.

 6 – Globally, the system is objectively in crisis on many fronts , yet in the ‘west’ it’s politically and cultural hegemony remains unchallenged in any serious way. Is it still a case of progress will likely come from the periphery within Imperialism?

Unquestionably, the struggle against imperialism, particularly in the Middle East and in Latin America, has occupied center stage and has posed more of a challenge to ruling elites than has the anti-capitalist struggles in the West. Even more disappointing is the absence in the West of a formidable anti-imperialist movement– an anti-war, anti-interventionist movement– in solidarity with Middle Eastern and Latin American anti-imperialism. This is not a particularly noble chapter in the history of the Western left.

Any thoroughly objective assessment of capitalism today will reveal stark vulnerabilities. It will challenge the sustainability of the shaky global economy, question the viability of the corrupted, undemocratic political system, and abhor the vulgarity and nihilism of bourgeois culture.

Still, the goal of replacing capitalism with a profoundly more just and democratic system appears far off. Some have given up on the task, retreating to incrementalism or accommodation, believing unrealistically that we can gradually or surreptitiously undermine capitalism. Still others have visions of nineteenth century utopias, cooperative communities coexisting with monopoly capital. Free market theocracy has bred a generation disposed to worship the gods of individualism and spontaneity as instantiated on the left by anarchism. In short, left politics in the West churn in a cauldron of wildly idealistic and misguided ideology.

Of course this is frustrating, especially for students of history and the workers’ movement.

Disillusionment and confusion are not new to the socialist project. One-third of the Communist Manifesto is devoted to exposing the dead-end roads and far-fetched ideologies that Marx and Engels contested in their time.

Lenin scathingly recorded the dismal condition of the Russian left after the failed 1905 revolution. Should we be surprised, after the history-altering dismantling of European socialism nearly twenty-five years ago, that much of the Western left has yet to find its bearings?

And yet, as Lenin’s example shows so well, it is precisely when there is widespread political disarray that Marxism (and Leninism) are so desperately needed to bring clarity and unity to the anti-capitalism struggle.

I think we are in such a moment.