From Workers' Liberty 63
Imperialism yesterday and today 9
Development? Whose, and who pays?
South Korea represented the showcase of capitalism in the Third World. Cuba still calls itself communist. Nasser proclaimed Egypt's policy as a third way between capitalism and communism. Yet many factors were common to all three models: the overwhelming role of the state in development; a very high rate of investment; a gearing of resources to education and health; and radical land reform. Colonialism imposed an alien state power on Third World countries; drained their wealth away to the metropolis, with minimal local investment in education and welfare or even in industry; and collaborated with archaic economic structures in the countryside.
Three things are necessary for national development in the Third World. All represent a radical break from the heritage of colonialism. There must be land reform; otherwise millions of people are trapped into grinding low-productivity labour, with the profits going to exploiters who will invest very little productively. A strong state machine must be constructed, capable of effectively enforcing the land reform and constructing the groundwork for modern industry - education and health services for the working class, roads, railways, airports, telecoms, power stations, water supplies, sewage, efficient administration. The state itself will have to organise some major industries; no other unit will be big enough. If the state is not strong enough to maintain a high rate of exploitation of the working class, and to organise effective protection for infant enterprise against world competition, its industry will not reach the level where it can compete on the world market.
Generally, a substantial flow of funds from abroad is necessary to finance all this: otherwise the land reform falls back into a mass of peasant debt, with only a few rising capitalist farmers making good, and new industries will falter because of lack of infrastructure and lack of hard currency to buy vital equipment. South Korea got $12.5 billion from the US between the late 1940s and 1970; Cuba got $8 billion from the USSR between 1961 and 1976; Nasser's Egypt got aid from many sources.
Listing the conditions tells us why the development of the Third World has been so uneven and troubled. Almost all the Third World states are small and weak units in a world overwhelmingly dominated by the big multinationals and banks based in richer countries. South Korea got massive aid on easy terms for political reasons; most Third World countries still get ripped off by capitalists based in the richer states.
Some Third World states - especially large ones, like Brazil, Mexico, India and partly Indonesia - have been able to promote fairly fast capitalist growth without radical social reforms (or, in the case of Mexico, with social reforms that have been rolled back and corrupted over decades). The result there is that the horrors of capitalist exploitation are compounded by the horrors of a huge mass of people in absolute poverty, pushed out of agriculture yet not absorbed by modern industry.
By the 1980s South Korea was an industrial power. But it was a hell-hole for the working class. Its factories probably had the longest working week in the world - 60-odd hours normally, and worked at an incredible pace. The accident rate was among the highest in the world. Trade unions were kept under tight control by the dreaded Korean CIA. Strikes were banned. Every citizen was registered, with their fingerprints, in a central computer system, and kept under watch by a government-organised neighbourhood surveillance scheme. Only dogged struggles by the independent trade unions, operating largely outside the law, in the late 1980s and the 1990s, improved these conditions; and now the trade-union gains are under attack again, as the government makes deals with the IMF to tackle its economic crisis.
Nasser's "Arab socialism" was fundamentally just as concerned to secure the conditions for capitalist exploitation as the South Korean dictatorship. Its methods were different. Nasser wished to form an alliance between the working class and the middle class, against the old upper classes and against foreign domination. So he gave a number of economic concessions to the working class (protection against sackings, legal limits to the working day). But the trade unions were government-controlled, and strikes were banned. And once the middle class had established itself as the upper class, the methods shifted. Under Nasser's successor Sadat, they became more similar to (though less successful than) those in South Korea.
Conversely, South Korea always had a large dose of state capitalism and nationalism. It was never just a production platform for the multinationals. Foreign direct investment was no more than 2% of the total capital stock in South Korea, up to the 1980s. (And even in fast-industrialising countries with a much bigger presence of the multinationals, like Brazil, the local state in this period had the "central role in the process of accumulation" (Peter Evans), allying with, but also bargaining with and imposing constraints on, the multinationals.)
Cuba, too, had and has government-controlled trade unions, and no effective right to strike or organise for the workers. All major decisions were and are taken by a few people around Fidel Castro. And those people - though they genuinely wanted the improvements in education, health and income distribution made by the revolution - regulated their decisions by the goal, not of workers' liberty, but of national economic development (and later, increasingly, of bureaucratic self-preservation). Just like Nasser.
As early as 1970, Rene Dumont, a French socialist and firm friend of the Cuban revolution, wrote: "The delegation of full powers to those whom Fidel trusts is almost feudal... His right-hand men have just received, free, luxury Alfa-Romeos... that they can use for their personal needs... Add in the beautiful villas of the magnificent beach at Varadero, where the officials and their families take free holidays... Add in the sexual privileges of the 'new class', which count for a lot in Cuba... And so a new leading group is being constituted in Cuba, certainly benevolent towards workers and the poor people, but in a sense often paternalist: for the latter no longer have the right to speak out if they become too critical."
Different paths of national economic development did prove possible, in the decades after colonial independence. But their success was always precarious and patchy. And even in the most "successful" variants, whether they were more "statist" or less, more "benevolent and paternalist" or less, was only a secondary variable for the workers, and one dependent on times and circumstances. What was in question, always, was national economic development on the back of the working class, where the workers had to fight fiercely even to gain the right to express an opinion or to secure some portion of the economic gains.
In the 1990s new patterns have emerged. Their immediate roots go back to the 1970s. In 1973, the major oil-producing states forced a big increase in oil prices. Among the big capitalist powers, the oil price rise hit the US less hard than others. It even made some of the US's own new oilfields profitable. Britain, too, would gain from the oil price rise, when North Sea oil production boomed in the early 1980s. But in essence the increase was a signal of the end of the colonial era. States like Iran, Iraq, Libya, Venezuela, and even Saudi Arabia, had their own capitalist ambitions. They were no longer willing just to serve as platforms for the ambitions of US or British oil companies.
Oil-producing states stashed a lot of their vast new revenues with the international banks, who in turn lent the cash to industrialising ex-colonial states. When the big capitalist economies lurched into slump after 1979-80, trade contracted, interest rates rose, and credit got tighter: those borrower states could no longer pay yesterday's debts from today's profits and new loans. In 1982, Mexico's failure to meet debt repayments signalled the start of a global Third World debt crunch. Third World capitalists who had put large slices of the loan money into safe US or European property or bank accounts now co-operated with the banks in making the workers and peasants pay the cost of the crisis, on a scale which made British Tory austerity look gentle.
The crunch was not just a sudden crisis. Third World capitalists and governments did not respond to the debt squeeze by shifting into their old mode of having their own national states as the main financiers for development, as some of them had when they became unable to meet debt payments in the 1930s. They made a new permanent regime out of heavy indebtedness, sharpened austerity and a drive for exports to cover the costs of debt. Their industrial development had reached a level requiring substantial imports - and thus international credit - to continue. Some of the costs of keeping internationally creditworthy were irksome to the Third World wealthy, but most of those costs they could offload onto the workers and peasants - and most of the benefits of the borrowing they could pocket for themselves. The US and other big economies recovered after 1983. Though the recovery has been sluggish, and interrupted by a new crisis in 1990-2, it has provided sufficient markets for the Third World capitalists to pursue their new strategy. In the 1980s, the Third World, in total, started to export more manufactured goods to the US than it imported from there.
The debt burden has increased for every Third World region except Latin America, and even there it remains heavy. Under the 'Uruguay round' of trade negotiations, average advanced country tariffs on manufactured imports will be cut to less than 4%. Tariffs of Third World states are set to fall from 34% (in 1984-7) to 14%. World merchandise exports have increased 137% between 1987 and 1997 - much faster than world output - and the merchandise exports of countries classified by the World Bank as 'low and medium income' have almost tripled, increasing by 187%. The ratio of trade (imports plus exports) to output (GDP) doubled for 'low and medium income' countries between 1970 and 1997. It increased from 18% to 40% in low-income countries and from 25% to 50% in medium-income.
Investment in Third World countries by companies which buy or construct facilities there (called foreign direct investment, as distinct from just buying shares or making bank loans) sagged in the 1980s but has increased fast in the 1990s.
Local private capitalists have also figured more largely, displacing the Third World states from their previous centrality in capital investment. Even states still run by 'Communist Parties', like Vietnam, Cuba and, most spectacularly, China, seek foreign investment and encourage private enterprise. Telecoms, other utilities and basic industries have been privatised in many countries since the 1980s. The Chilean state started privatising in 1973, and has sold off 95% of its state-owned enterprises. Mexico sold off or shut down 80% of its 1,500 state-owned enterprises between 1982 and the end of 1992, cutting 200,000 jobs in the process. South Korea started a new wave of privatisations in 1987, following previous sell-offs in 1962-66 and the early 1980s. In Pakistan, which started privatising in 1991, 43% of workers in the sold-off enterprises were laid off within the first year after privatisation, and many workers elsewhere have lost jobs, or job security, through privatisation.
In many countries, tariff reductions, a drive to make exports and attract foreign investment, and privatisation have been tied together with cuts in whatever minimal welfare provision existed - such as food price subsidies - through 'Structural Adjustment Programs' negotiated with the IMF or the World Bank as the price for further loans. Fifty-five countries borrowed from the IMF under Structural Adjustment Facilities between 1986 and April 1998.
This 'globalisation' has brought an increase in inequality both within and between nations. Millions have been pauperised. Since 1960, the gap between the richest and the poorest fifth of nations has doubled. Yet the development of an industrial base in the Third World continues. Power production increased 170% in 'low income' countries between 1960 and 1990, and 370% in 'middle income' countries. The number of telephone lines, the amount of paved roads, the extent of drinking-water supply and irrigated land also increased fairly fast. Between 1990 and 1997, manufacturing production increased 49% in 'low income' countries, 57% in 'middle income' countries (and 15% in 'high income' countries). Countries like Korea, Taiwan, Singapore, Malaysia, Thailand, Mexico and Brazil now export relatively high-tech goods. Even in the poorest Third World countries, there is generally some increase in the preconditions for industrial production, although that increase is outpaced by a parallel rise in misery and poverty. The proportion of illiterates has dropped fairly fast between 1980 and 1995 - from 30.5% to 22.6% - though the world's total illiterate population has increased from 877 million to 885 million.
Trade has changed in structure as well as increased. Manufacturing as a percentage of Third World exports has increased from 20% in 1960 to 60% in 1990. Within the reduced share of world trade due to agriculture, a new pattern has emerged 'where the South specialises in exports of labour-intensive luxury crops... and the North [especially the USA] specialises in exports of capital-intensive 'low-value' raw foods' (McMichael and Myhre).
The 'globalist' path has been followed by virtually all Third World governments, not only those pushed into it because their debt burden obliges them to do the bidding of the IMF or the World Bank. Although no doubt the governments would prefer to be able to choose their own tempo rather than obey the international bankers, the basic strategy suits their class interests. They impose the welfare-cutting, privatising, foreign-investment-seeking plans primarily because they are capitalist governments, not because they lack national independence. They queue up to join the IMF, while in the 19th century the peoples of Africa and Asia often fought hard to avoid 'joining' colonial empires. The IMF today has 182 members, as against 130 in 1975.
Despite the rapid rise of foreign direct investment in the 1990s, the economies of most Third World countries today are dominated by local capitalists. Those Third World states able to provide infrastructure and educated labour for enterprises competitive in world manufacturing and services - and they include some with vast hinterlands of absolute poverty, like India and Indonesia - are doing so not because their states have been weakened, but because they have been strengthened, because they are now established capitalist states, with local capitalist classes behind them of some substance and bulk, rather than what they often were, proto-capitalist states run by a thin middle class layer anxious to use all the levers of state protectionism to build a base and ward off big outside capital. 'Transnational capital may be more effective than was the old-style military imperialism in penetrating every corner of the world, but it tends to accomplish this through the medium of local capital and national states... it depends on many local jurisdictions - on, say, the Indian or Chinese state - to maintain the conditions of economic stability and labour discipline which are the conditions of profitable investment' (Ellen Wood).
Full-fledged capitalism has spread much more widely than ever before. But as the gleaming skyscrapers reach upwards in the cities of the Third World, the grim shanty towns spread outwards. Hundreds of millions of people suffer hideously - peasants pushed out of subsistence farming by the drive towards higher-priced world-market cash-crops; workers who lose their jobs in privatisations or debt crises; the urban poor, hit by cuts in food subsidies and increases in public transport fares and utility charges; and whole peoples in those ex-colonial countries still dependent on bulk raw material exports. But in the 1990s there is one thing worse for a poor nation than being integrated into the global economy - that is, to be excluded from it. Cuba suffers that plight. Real wages went down 39% between 1989 and 1996, and there is now open unemployment of 7%.
Historians have called British imperialism in the early and middle 19th century 'the imperialism of free trade'. In South America, for example, Britain did not need to establish its own colonial rule in place of Spain's. The competitive supremacy of its industry gave it economic dominance, and with that political influence.
An 'imperialism of free trade' is also the main form today. This is so partly because the great metropolitan capitalist interests can afford it. For example, exclusive control by their 'own' nation-state over sources of raw materials is less important to modern big capitalist concerns - often organised in transnational companies with substantial operations in many countries outside their home country - than to the big capital classes of earlier eras.
The central reason, however, is nothing to do with the metropolitan profiteers 'mellowing'. The social and political awakening of the peoples of Africa, Asia and Latin America, their transformation from populations with dispersed and illiterate peasant majorities into nations with big cities, substantial working classes, autonomous bourgeois classes and some industry of their own, has made the risk and expense of colonial or semi-colonial rule generally too great for the metropolitan powers.
Some Marxists have concluded that this amounts to the death of imperialism and the rise of a new 'post-imperialist' era. But capitalist imperialism has seen many forms since the 16th century. Often - for example, at the time Lenin wrote his famous pamphlet on imperialism, in 1916 - many different forms co-exist and intertwine at the same time.
It is dogmatism to insist that the world today is a replica of the picture painted by Lenin in 1916; and equally pedantic to claim that because the modern 'imperialism of free trade', led by the IMF, the World Bank, the big commercial banks, the transnational corporations and the military power of the US and NATO, does not conform to Lenin's picture (insightful, but not entirely accurate and complete even for 19161), therefore it is not a form of imperialism.
The new order is a 'lesser evil' than old 'High Imperialism', or imperialism-of-conquest, to the extent that it bears the impress of the victories of the colonial liberation movements. It still destroys and oppresses, and maybe on a larger global scale than its forerunners. It is a system which conveys the choicest fruits of the world's labour to the billionaires in 'highly concentrated command points in the organisation of the world economy... a new type of city... the global city... New York, London, Los Angeles, Tokyo... The more globalised the economy becomes, the higher the agglomeration of central functions in a relatively few sites, that is, the global cities' (Saskia Sassen). Despite all the relative capitalist advance in the ex-colonial world, and some significant advance in commerce within Latin America, the proportion of 'low and middle income' countries' trade done with the 'high income' countries, rather than with each other, increased between 1987 and 1997. The producers of the Third World still mostly have to do their haggling in trade with bigger, richer, more powerful concentrations of capital, centred in the rich countries.
The pillage of the workers and peasants of the Third World continues, but in different form - the urbane international banker replacing the colonial soldier and tax collector. This is a domination of rich over poor, and richer nations over poorer nations, achieved primarily, to use a phrase from Marx, by 'the dull compulsion of economic relations... Direct force, outside economic conditions, is of course still used, but only exceptionally'.
The difference of form has political significance. Battles to 'regain' or 'increase' national independence are today generally a snare. The ex-colonial states mostly have as much political independence as they can have in a dog-eat-dog capitalist world. No extra measure of 'independence' can undo economic dominance arising from the fact that the international banks have the dollars needed for international trade, and the big transnational corporations the technologies needed for world-competitive production. Imperialism can be fought only by working -class struggle, which must tackle the local capitalist classes as the most immediate enemy. If those capitalist classes, or factions of them, call on the workers and peasants to rally behind them in the cause of 'anti-imperialism' or 'national independence', then generally (though not quite always) they are lying, or promoting downright chauvinism.
For the old-style colonial, semi-colonial or military-conquest imperialism is practised today most often not by the big powers, whose capitalist classes find the 'dull compulsion of economic relations' cheapest and most effective, but by newer 'sub-imperialist' powers who have to resort to such risky methods for lack of economic strength. The last of the European colonial powers to relinquish their empires were the economically weakest, Portugal (in 1975) and Russia (in 1989-91). Today some ex-colonial or ex-semi-colonial countries have some military means to dominate their neighbours, but relatively little economic clout. They promote themselves as 'policemen' and local big powers in their regions - Nigeria in West Africa, for example, India in South Asia, or Brazil in South America, which was the case for which the term 'sub-imperialism' was first coined by the Marxist writer Ruy Mauro Marini. And sometimes they go for outright military domination: China in Tibet, Turkey in Kurdistan, Serbia in Kosova, Iraq in Kurdistan and Kuwait, Indonesia in East Timor...
This military 'sub-imperialism' is a small-scale parody of the high imperialism of the late 19th century. It is not anti-imperialist. It is not a progressive alternative to the economic domination of the big powers. It does not show a way out of underdevelopment, or towards a fairer and more equal world.
Only independent working class struggle can do that. And the working class which can wage that struggle is growing in numbers, and often in organisation, all across the ex-colonial world.