Notes on the imperialism of our era

Posted: October 23, 2015 in Political Views

The following article by Maziar Razi was first published in Marxist Reveival No. 2.

The world capitalist economy and the economic dependence of the rest of the world

The objective roots of imperialism

In the earlier period, while industrialising their economic base, and based on the needs and the crisis of the period, capitalism in the European countries attempted to export manufactured commodities to other countries of the world. As a result of these steps, the primary accumulation of the ‘Third World’ was blocked. In the modern period, changes were observed in the development of capitalism: the change from competitive capitalism to monopoly capitalism. This process, in turn, caused important changes in the ‘peripheral’ countries. As the processes of primitive accumulation of capital on the world scale process of capitalist reproduction became dependent on the reproduction of capitalism in the ‘metropolitan’ countries and the expansion of the international division of labour, gradually the ‘national’ economies in all countries of the world became dependent on the capitalist world market. In fact, from then on the social production in the underdeveloped countries was at the service of strengthening capitalist production needs in the metropolitan countries. This meant that the normal backwardness of the peripheral countries became a permanent underdevelopment coupled with economic dependence.

The causes of changes in capitalism were such that, because of the centralisation and concentration of capital in the metropolitan countries, the control of the main sectors of production were in the hands of powerful ‘trusts’. Thus, competition in various sectors of capitalist production gradually decreased and thus ‘price wars’ were replaced with ‘maintaining stable prices’. With this method, monopoly capitalism, gained ‘surplus profits’ in addition to the average profit rate. Increases in surplus profits in some production sectors by a specific number of capitalists (who had no control over total production) naturally lead to saturation and over production within those sectors. And that, in turn, led to a decline in profit rates (the inherent contradiction of capitalism). In other words, capitalism faces an ‘excess of capital’ and therefore the phenomenon of ‘wandering’ capital appears in society. In order to gain further profitability or ‘staying alive’ this capital must either be used in other areas of production or be put into action in a new market. Obviously with the centralisation and concentration of capital after a while the internal markets become saturated. European capitalism is thus put in a position that in order to resolve its crisis it now attacks the markets it invaded before (looting and the export of manufactured commodities) in a different way (mostly capital export). The modern invasion of the European countries is synonymous with huge leaps in the organic composition of capital. The massive increase in fixed capital shows itself as the second ‘industrial technological revolution’ (using electrical power instead of steam engines, the use of the internal combustion engine, etc.). In other words, unlike in the previous period (the capitalism of free competition) industry in department II (machinery that produces consumer appliances) has a significant role in the recent period (monopoly capitalism), whereas in the previous period department I (machinery that produces machines) had a determining role. This process leads to a strong tendency for the rate of profit to fall.

In such a crisis-ridden situation in the capitalist countries (in which there is generalised commodity production) there are three solutions available to capitalism: (1) Increasing the profit rate (and the surplus value) through increased exploitation of the workers; (2) Imposing more competition between capitalist firms (in favour of monopolies and to the detriment of others) and (3) Expansion and finding untapped markets in other parts of the world. Of course, monopoly capitalism, which has recently come to power, puts the first solution into effect by limiting workers’ wages and starting wars, thus raising exploitation levels. However, workers’ struggles and their organised resistance will limit the raising of surplus value through this channel. The second way, competition between capitalists and the strengthening of monopolies (to the detriment of other capitalists) within the borders of a country, also has its limitations. That is because this method was effective as long as the number of monopoly companies was low. With the increase of these sectors, their total profitability will become less and less. That is because in the production process the total surplus value will be divided among many more monopolies.

Therefore in this era the third option becomes the only source for raising profit rates for monopoly capitalists. It is here that the initial seeds of the world imperialist system are formed. The crisis of over accumulation of capital in the metropolitan countries makes this process inevitable.

Imperialism and the export of capital to the backward countries

In the late 19th century, due to the concentration and centralisation of capital, along with the pace of advancement of technology monopoly capitalism was faced with two objective and continuous crises. First, in addition to the periodic crises of capital overaccumulation (which has existed during all eras of capitalism), monopoly capitalism was also faced with a constant crisis of capital overaccumulation. Because of the concentration and centralisation of capital, capitalists are faced with capital accumulation which has lost its profitability. In other words, the capital used in commodities is of ‘low value’. In addition, the competition between capitalists that led to the bankruptcy of some of them exacerbates this crisis. For the first time in the history of capitalism a permanent crisis caused by overaccumulation of capital arose. Second, a crisis of overproduction of commodities in department I also occurred. The market for machinery produced in department I (locomotives, cranes, railways, etc.) in the metropolitan countries became saturated.

Therefore, to solve this dual crisis, the objective need of monopoly capitalism focuses on the export of capital and its manufactured commodities. However, this is synonymous with cheap raw materials for the metropolitan countries. Undoubtedly, access to cheap raw materials could reduce the crisis of overaccumulation. In this period, the ‘fixed’ (raw materials) share of circulating capital increases, and the variable part of fixed capital (machinery) is reduced due to the overaccumulation crisis. Therefore, the insane incursions of capitalism into other countries of the world can be seen. The export of excess machinery to these countries hits two birds with one stone. First, the overaccumulation of capital and machinery in the metropolitan countries decreases, and on the other hand, the same capital and machinery are used to obtain cheap raw materials from other countries of the world. In this era the ‘looting’ of countries of the world takes place in another way (and much deeper than before). All production in this period is aimed at the metropolitan markets, since the markets of the periphery countries, due to blows from the previous era, were not prepared to absorb the commodities produced in their own country. Thus imperialism appeared on the international scene and, together with it, the backwardness of other parts of the world became fixed and permanent. Also, the establishment of imperialism meant a new division of the backward countries between the European countries.

If the era of ‘free competition’ capitalism was characterised by the destruction of traditional industries in the peripheral countries and controlling the markets of circulating commodities (but without blocking the processes of independent capital accumulation); in the era of imperialism, in contrast to the period before, the independent processes of capital accumulation in the peripheral countries are completely stopped and bankrupt artisans become low-wage ‘workers’ in the raw materials industries of the imperialists. Naturally, the new situation leads to intensified backwardness in the periphery and strengthening of the major economic sectors in the metropolitan countries. At this stage, the local capitalists lost their independence and began to serve imperialism. Due to the lack of a material economic base for the ‘healthy’ development of capitalism, they turned into a bunch of fraudsters, thieves, gangsters and usurers. Therefore the rise of imperialism in these countries not only did not lead to ‘bliss’ and ‘happiness’ but, on the one hand, retained the ancient relations and, on the other hand, increased backwardness and installed a state composed of a number of fraudsters at the top. Establishing and strengthening of backwardness in these countries was tied to economic links with the metropolitan countries. Plans to transform the peripheral countries (or capitalist investment in them) in preparation for benefiting from these collapsing economies were on the agenda of the imperialists. Thus, in this era the needs of imperialism did not only rely on looting and exporting consumer commodities (though these actions would continue), but were based on the reconstruction of the periphery economies, and was concentrated on economic planning aimed at solving the crisis in the metropolitan countries. Naturally the extraction of raw materials and developing economic intervention in these countries was not compatible with maintaining the former relations. For example, to accelerate work in Iran the modernisation of transport, such as railways and modern drilling equipment, had to be used to access the oil (though the old relations still remained).

At the political level, for total control over the internal market of the peripheral countries, imperialism needed local state power. In this period, a permanent military presence and guaranteeing the dependence of the local powers on imperialism was necessary to make the internal markets safe. The control of raw material sources had to be guaranteed in this way. However, competition between the imperialist states for access to markets and raw materials of the peripheral countries began. The imperialist wars over grabbing the raw material sources with the support of the dependent states intensified. Imperialist wars, coups and conspiracies against the peripheral countries have roots in the objective needs of imperialists in this era. The cause of wars between the European powers was that in the metropolitan countries, although in this period capital investors remained focused on the national level, but the overaccumulation of capital dragged them to the international level. At the national level powerful financial oligarchies and capitalist trusts took shape and the nation state served them. As a result, disputes and competition between international monopolies over the division of the world was promoted to disputes between the imperialist powers.

Thus imperialist interventions led to a special, unusual and complex situation in the peripheral countries. A complex combination of pre-capitalist, semi-capitalist and capitalist relations of production that through exchange relations with world capitalism, brought the productive forces of capitalist society under the control and domination of the world market, and preserved as such, leading to permanent economic crisis and therefore resulting in a constant social and political crisis. The indicator of this unusual situation is the existence of military dictatorships that suppress mass explosions, where the masses form their struggle not only around democratic demands but also question the whole existence of the sick and distressed capitalism system.

Imperialism since Lenin

In order to organise an international revolution it is obvious that the nature of present day imperialism must be analysed. Unfortunately most Marxist political organisations at the international level have not gone further than Lenin’s pamphlet, Imperialism: the Highest Stage of Capitalism, in their analyses. Obviously we, as a revolutionary Marxist tendency, will not be able to come to a precise understanding of the developments of contemporary imperialism, especially its relationship with the peripheral countries, and developments in the growth of capitalism in these countries, if we rely solely on this pamphlet. Hence, initiating an international debate about the roots of the recent developments in the imperialist system is essential.

Imperialism is the moribund stage of monopoly capitalism or “late capitalism”. The classical period of imperialism ended with the First World War. Since then the world capitalist system has faced a deep crisis. The crisis of the world system is characterised by the outbreak of revolutions and destructive wars. The First and Second World Wars; the revolutions in Russia, China, Cuba, and widespread workers’ strikes across the world; workers’ revolts in Spain, Italy and France, all reflect the decline in the world system (1917-1970). Imperialism, which attributed all the crises and wars to the Soviet Union and Eastern European countries, with the collapse of the Soviet Union and “East Block” promised “peace” and harmony. But the past years have shown that imperialism cannot survive economically without provoking wars and killing people in other parts of the world. The intervention in Yugoslavia, the invasions of Afghanistan and Iraq (from 1992 to the present) correspond with the decline of the world system. At this stage, all the contradictions of the imperialist system have become more prominent than before. The main cause of war is that late capitalism is facing a permanent crisis of over-accumulation. This situation necessitates more intense competition than before for making surplus monopoly profits. In contrast to the previous period (the classical age of imperialism), while all the laws of motion and the contradictions of global capitalism remain in place in this stage; the way that capitalism acts in other parts of the world changes.

If in the era of classical imperialism there was a tendency towards interventionism, export of capital to the peripheral countries; in the new era the focus is centred on the production of consumer commodities for the domestic markets of the peripheral countries. This trend has led to increased under-development in the peripheral countries. Let us look at this in more detail:

First, during this period the development and expansion of industrial production, the production of synthetic raw materials in the advanced countries, was achieved. The export of capital to the dependent countries changed direction towards other metropolitan countries. The cheap labour power of the peripheral countries was no longer compatible with the extensive use of industrial technology. Therefore the production of synthetic raw materials (synthetic fibre, rubber, plastics, etc.) in the metropolitan countries replaced the raw materials of the peripheral countries. The result of these changes was the transfer of investments of foreign capital from raw materials into manufacturing. As a result, the direction of imperialism’s interventions in other countries around the world began to change.

Two, in contrast to the earlier period, when the domestic markets of the backward countries were not particularly attractive for imperialism; in the latest period, with the growth of high-earning consumer layers, the markets of these countries came to the attention of the metropolitan countries. The fastest way to control the markets of these countries, and also to eliminate other imperialist competitors who offer their products in the market, was to produce in those countries themselves. At this stage, foreign capital, together with the local bourgeoisie, took over the important parts of the market. The tremendous growth in the assembly industries in this period is representative of these new developments. At the same time as the production of consumer commodities, the unequal exchange between metropolitan and peripheral countries intensified. This is because the “product of labour” in the metropolitan countries was more productive than in the backward countries. Thus, “value” from the backward countries was transferred to the metropolitan countries. In addition, the imperialist world order changed the equality of international profit rates to the detriment of the backward countries. As a result, the economic dependence was further exacerbated. In the previous period, for instance, at the time of the First World War (1917), Britain’s annual income from foreign investments was estimated as £200 million, and profit from unequal exchange was £130 million. However, in the 1960-1970 period the annual losses of the backward countries due to unequal exchange were $22 billion, while the income of the metropolitan countries from private investments was $12 billion.

Third, because of the reasons given above, Department II (the production of consumer commodities) boomed, but in Department I (the production of the means of production), growth remained limited. The lack of exchange between these two economic sectors led to renewed growth of the productive forces. Also, despite the use of cheap labour to produce consumer commodities, there is no crucial change in the exports of these countries and the commodities remain mainly for domestic consumption.

Fourth, the expansion of Department II (the production of consumer commodities) without the expansion of the internal market leads to the quick monopolisation of production and this, in turn, to the constant crisis of over-accumulation and limited industrial growth. The above factors further exacerbate inequalities at a world level. In other words, the interventions of imperialism in this period led to the emergence of a specific type of capitalism. For example, the deformed (and abnormal) type of capitalism seen in Iran. In this era, according to the stage of imperialism, politically (or directly) dependent governments change into governments of indirect rule. The position of these countries, changed from the colonial countries (of the classical period of imperialism) to semi-colonial ones (of the late capitalist era). Imperialism no longer needs the backward countries for the export of capital from the metropolitan countries; instead it prepares these countries to absorb the over-produced (or excess) means of production. In this period, to create the necessary facilities for such planning, capital does not take the form of “exports” but is given as long-term loans or grants to the peripheral countries. The role of the International Monetary Fund and similar organisations in this period is to ensure the current needs of imperialism. Thus, through the above types of help, the states and deformed (i.e., made by imperialism) native capitalism of these countries, lay the foundations of the economic infrastructure (banking, transportation, etc.) so as to attract the commodities of the metropolitan countries.

If during the previous period the class composition of the ruling elite of the backward countries was made up of large landowners, merchants and moneylenders, was formed to meet the needs of imperialism; today “industrial” national bourgeoisie and the upper layers of the petty bourgeoisie meet such needs. The moneylenders have become the bankers and the landowners have changed into factory owners. However, due to the weakness of the deformed native bourgeoisie, the main power that advances the purposes of imperialism is concentrated in the hands of a powerful state. In this period the dividing line between “native” and “comprador” capitalism, which existed during classical imperialism, disappears; and the degenerated capitalist states, together with the deformed bourgeoisie, maintain their economic dependence on imperialism. In this period the classical “bourgeois-democratic” revolutions have been superseded, because capitalism is itself in power. The struggles of the oppressed people of these countries for freedom from the yoke of imperialism are linked with the struggles against native capitalism. Because the Iranian (or similar) bourgeoisie, whatever guise it may adopt, was itself imposed by imperialism on society and is in the camp of world capitalism. As a result, in these societies democratic demands are always tied to anti-capitalist demands.

Maziar Razi

June 2014

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