Michael Kidron

 

International Capitalism

(1965)


First published in International Socialism 20, Spring 1965.
Republished in International Socialism 61, June 1973.
Transcribed & marked up by Einde O’Callaghan for REDS – Die Roten.


The rash of political independence in the colonial world since World War II has more than once strained the concepts used by socialists and even, sometimes, their credulity. Does it mean the end of imperialism? If it does, how are we to explain the Great Power coercion that is so central a feature of our time? If it does not, what is the hidden common feature between imperialism today and that of a generation ago?

This article is an attempt to answer these and some related questions. It skirts around many problems: Cold War is not mentioned; nor is the structure of international coercion – western and eastern – built around it. The immediate future of economic, social and political developments in ex-colonial countries is hardly touched upon; and so with the role of proletariat and peasantry. The view given is a drastically foreshortened one of broad trends that have affected European imperialism over the past half-century.

 

 

1. Classic Imperialism

It is as well to recall the main features of pre-1914 imperialism. At the same time, in order to keep the discussion free of some of the more draughty generalisations, it is equally as well to confine it to one country, such as India, jewel of the British Imperial Crown, concentrating on those aspects of her relations with Britain which were typical of the system as a whole.

By the beginning of this century, “India had come to be regarded as a plantation of England, growing raw products to be shipped by British agents in British ships, to be worked into fabrics by British skill and capital and to be re-exported to India by British merchants in India through their British agents.” [1] That India had come to be so regarded was no accident. A lot of British. effort had gone into wrenching the colonial economy into rough complementarity with that of the imperialist; and a lot of British capital had come to ensure that it remained that way. How much is difficult to say. Estimates of investments prior to World War I are so unreliable as not to be worth giving [2], but whatever the precise figure there is no doubt that British capital concentrated almost exclusively on supplying British industry’s demand for raw materials, either by producing or transporting them. An Economist report in 1911 covering India and Ceylon attributed 60 per cent of investments to tea and rubber plantations, 12.3 per cent to tramways, electricity and other utilities, 8.9 per cent to vegetable oils, 5.7 per cent to finance, 2.7 per cent to shipping and 3.7 per cent to commercial and industrial undertakings. [3] In other words slightly more than three-quarters were in the extractive industries that dominated India’s exports at the time and most of the rest in the means of transporting them to their foreign markets.

Characteristics of this type of investment was its use of large quantities of unskilled labour with a minute lacing of fixed capital and technically qualified management. Equally characteristic was its utter dependence on efficient contact with markets abroad: swift and reliable transportation from the point of production via the ports to London and a flexible banking system to transmit the proceeds of sales, provide seasonal loans to cover shipment, and so on. In effect this meant that it could not have taken place without the prior intervention of the colonial state; nor could it have sustained itself without that state’s unremitting efforts at keeping the conditions of colonial exploitation unchanged. It was the 20,000 a year special subsidy from the East India Company which enabled the P&O line to inaugurate and maintain a regular shipping service between India and Europe from 1841; it was the officially guaranteed-interest railway contracts signed initially at the close of that decade that ended in linking India’s hinterland with her ports and so, ultimately, with Britain. Although “the solid core of pressure both for steam navigation and for railways came from the great mercantile houses of London and the other leading British ports trading to India and China” [4], their existence was organised and underwritten by the state or its equivalent of the day. So it was with the supply of labour to the uphill plantations, with the fixing of the rupee exchange rate to facilitate the free flow of funds between Calcutta and London, and much besides.

So necessary was economic activity by the state in perpetuating the system that it became a major sphere of investment in its own right: well over half the foreign capital in India in 1926-7 was held in government stock [5], and the proportion hardly changed until World War II when the official debt abroad was refunded.

That the state subserves business goes without further comment to readers of this journal. But there were two things that distinguished the type of service rendered by the colonial state: first, as suggested by the examples given, was its commitment to keeping the country open to foreign trade and foreign investment. Nothing was allowed to impair the forced complementarity between the home and host economies. Protection for nascent industry was unthinkable; an independent currency or any form of exchange control to stop the drain of profits abroad inconceivable. Laissez faire in a colony’s external relations became a moral imperative for the imperial ruling class, as rapacious as any. [6] Not so with regard to economic activity within a colony. There the second special service was, paradoxically, to preserve private foreign capital’s monopoly. The export industries it favoured normally made few demands on skill or fixed investment. They could be, and have been, readily assimilated by the local population, as in the case of rubber production in Indonesia, tea growing in parts of India, and so on. Were it not for the rigging of railway rates to encourage traffic to and from the ports at the expense of internal traffic, the denial of even the most elementary technical education to the subject people and a host of similar discriminatory acts and non-acts, foreign private capital’s preponderance would have been short-lived. As it was, its special relation with the colonial state plus its even more closely guarded monopoly of the service of British banks, issuing houses and other paraphernalia of private capitalism were sufficient to ensure that the commanding heights of the capitalist sector remained in its hands: as late as the 1940s, well beyond the period of classic imperialism, about 85 per cent of the total area planted to tea – a major export – was British-controlled, as were 85 per cent of the jute industry, 70 per cent of coal mining [7], 80 per cent of foreign trade [8], etc, etc.

A natural corollary was for the state machine to be kept free of local infiltration. It was not until 1919, after the shock of war and the first thrusts of the nationalist movement that a minority of posts in the Indian Civil Service were opened to Indians and examinations held in the country; as late & 1923 the Lee Commission recommended Indianisation in the Service at a rate that would ensure only 50 per cent Indian membership by 1939.

What happened outside the modern sector was of little direct concern to the foreign power. If the maintenance of Pax Britannica could be eased by recourse to local, landowning or feudal authority, as happened in India once the 1857 Mutiny had demonstrated how astronomic was to be the cost of bedding foreign rule in every pore of the country, well and good. “Progressive” capitalism was never loth to cut costs by combining with the most benighted and reactionary elements anywhere. Indeed, where colonial countries were concerned, the stronger the feudal landowners and the more influence they wielded ova the nascent bourgeoisie, turning it into the cowardly, uninspired class bereft of initiative which it so commonly is in such countries, the better for foreign capital. Were it left entirely to its foreign counterpart and local feudalism, local capital might expect to become, at best, a broker between foreign capital and domestic society, a “compradore” bourgeoisie without productive resources of its own.

These bones of description do not pretend to embody the complex system that contained the pre-1914 world. They might however, be enough to support a crude description of the class conflicts and the class alliances typical of it.

At least until the inter-war years in India, it was exceptional for the few industrial workers to be employed by native-born bosses. It was natural for them to associate the brutalities of capitalist exploitation, in both private and public sectors, with foreign rule. The peasant too was constantly being hurled against the twin pillars of foreign power. The state exacted taxes; ruined his handicrafts by opening the country to Lancashire cottons; did nothing to stop the drain of peasant wealth as the terms of trade index for primary commodities dropped from 163 in the late 1870s to 137 in 1913 [9]; refused to encourage the industries that might have solved the growing problem of rural unemployment. Private foreign capital actually brought them the cottons, bought their produce and sometimes held them virtual prisoners on its plantations under the most appalling conditions. Finally, the nascent bourgeoisie pressed vainly to- wards the industries which it was technically qualified to undertake. Starved of state support, driven from the sources of loan capital, largely excluded from European trade associations, discriminated against by officials and business, denied access to government and administration, its potential growth became a political matter, hingeing on freedom from British rule.

This is not to deny that many indigenous capitalists – notably some Parsi houses in India – flourished under British rule; or that the three classes singled out here were not the entirety of Indian society; or that they found themselves in deepest conflict inter se on more than one occasion. The picture is infinitely more complex that appears here. Nevertheless, one thing seems incontrovertible and is borne out by the experience of the time: imperialist rule so stunted the growth of modern productive forces, so pinioned economic development, that these three crucial classes were forced willy nilly into a loose nationalist coalition with the overriding aim of ridding the country of foreign rule.

For long – so long as classic imperialism was an expanding system – this nationalist coalition made heavy weather. Its major frontal assault on imperialism in India – the Swadeshi movement of 1905-8 – petered out as the dependence of India’s modern sector on Britain was brought home in practice to the boycotters. But slowly the conditions of struggle changed. Imperceptible at first, something was happening to the system which robbed it of its dynamic and made it increasingly vulnerable to nationalist attack.

 

 

2. The Arms Economy

It is time to turn back to the imperialist countries whose dynamics and organisation formed the guts of revolutionary socialist analysis before and during World War I. Since Lenin’s Imperialism is the most well-known it can best serve as a framework of reference in what follows.

Lenin’s definition of imperialism embraced the following five essential features:

  1. – The concentration of production and capital developed to such a stage that it creates monopolies which play a decisive role in economic life.
  2. – The merging of bank capital with industrial capital and the creation, on the basis of “finance capital”, of a financial oligarchy.
  3. – The export of capital, which has become extremely important, as distinguished from the export of commodities.
  4. – The formation of international capitalist monopolies which share the world among themselves.
  5. – The territorial division of the whole world among the greatest capitalist powers is completed. [10]

There is no doubt of the primacy of Lenin’s first “feature”, both in reality and in his exposition. Were it not for the concentration and accumulation of capital in ever larger (and fewer) units, a process inherent in capitalism from its inception, none of the other features of this “highest stage” could have emerged. It would be an academic exercise to spend time on substantiating this; few would deny that monopolisation and its attendant – the internationalisation of monopolies (Lenin’s fourth “feature”) – are still with us, and more pronounced than ever.

It is only when we come to the others that we begin to question the validity of Lenin’s thesis today. “Finance capital”? Its export? Territorial division? ... Are these still operative? Or at least do they still have anything like the significance attributed to them at the beginning of the century?

Some idea of the close association of the colonial state with colonial business has been given. It does not take much to realise that it had its counterpart in the imperialist countries themselves. Would-be imperialisms like German or Japanese capital, faced with the final territorial division of the world, could hope to prosper only by conquest, through the agency of their’ state. Existing imperialism could continue to do so only by organising their defence – again through the state. The strengthening of the state, its closer functional integration with big business, the growing militarisation of the economy have demonstrably become the normal condition of capitalist existence. To say this, or that the violence of world war and its political and economic organisation are characteristic of our generation, is to draw attention to the experience of our generation. It needs no proof. All that will be attempted here is a sketch of some of the changes that have accompanied and resulted from the emergence of the permanent arms economy.

In the first place demands were made of manufacturing output which were new in scale. Manufacturing as such has become more important: in Britain, it accounted for 42 per cent of gross fixed investment in 1960 compared with 32 per cent in 1938. [11] Within industry it is heavy manufacturing and particularly the giant metal-using and chemical combines that have grown fastest: between 1949 and 1955 the hundred largest industrial companies in Britain increased their share of all industrial profits from 25.2 to 31.5 per cent [12]; they were growing at a rate of 12.1 per cent compound per year compared with 6.8 per cent for all industrial companies. [13]

Second, wartime disruption of international trade, the need for every ounce of production to satisfy the gaping scarcities opened up by the slaughter and the real concessions that nationalist movements could exact in the circumstances, led to a rash of industrialisation in hitherto virgin areas. In India, cottons and lute production expanded rapidly during World War I, steel production rose from 91,000 tons in 1913 to 124,000 in 1918 [14], glass manufacturing took root. [15] The paid-up capital of all joint-stock companies rose 3.3 times between 1913 and 1921-2; average dividends in some industrial firms rose as high as 200 per cent. [16] Not all the gains were lost during the interwar depression and Indian industry managed to hang on until World War II brought relief in the form of the greatest boom in its history: between 1937 and 1945 production went up 20 per cent in cotton textiles, 43 per cent in steel, 34 in chemicals, 97 in cement and in paper. The general index rose not less than 20 per cent. [17] The subsequent progress of industry under the Plans – coincidental with world rearmament – is too well known to need repeating.

Unlimited markets at home coupled with growing competition abroad encouraged the expanding industrial sector in mature capitalist economies to finance more and more of its own expansion: in 1912 67 per cent of company profits were distributed to shareholders, in 1922 53 per cent, in 1957-8 27 per cent. [18] The 1949-56 annual average was as low as 23 per cent. [19] Here again, war and the spread of industry abroad were instrumental not only in forcing the process whereby the industrial giants became the leading potential accumulators of society’s surplus, but in acting directly on their dividend policy and so making them in practice the prime centres of accumulation. It demanded mighty increases in taxation, which bore most heavily on personal incomes as opposed to profits; its totality and the consequent need for “national unity” softened ruling class resistance to social reform which again needed to be underpinned by a significant rise in “welfare” expenditure (financed from more taxation) and by an ostensible egalitarianism in official policy which, in its turn, meant dividend restraint amongst other things under the Labour Government and an increasingly severe tax on distributed profits ever since. These combined with other factors – growth of professional management, conditioned behaviour derived from one-and-a-half decades of capital issues control, and many others – to reduce the outflow of dividends absolutely since pre-war, from 885 million in 1938 to 690 million in 1956 in pounds of constant purchasing power. [20]

The surge of the industrial corporation and relative eclipse of individual middle-class capital accumulations and, notably, its typical finance capital’ institutions such as commercial and merchant banks are obvious. The “institutionalisation” of such accumulations and their growing concentration in life assurance and pension funds (which account for the major part of new personal savings [21]); the growing involvement of such funds in industrial financing to the extent that, despite some legal inhibitions which have recently been cleared away [22], they took up more securities in industrial companies in 1957 than the combined capital issues of those companies [23]; the spate of mergers between ancient internationally – and commercially – orientated merchant banks and the brash new domestic finance houses engaged in industrial investment ... all these merely serve to underline one fact. Stated again, it is that the large concentrations of capital are no longer in the hands of banks and the other finance capital institutions as they were in the days of classic imperialism, when analysed by Luxemburg, Lenin or Hilferding, but in those of the large industrial corporations in which technical, productive and financial power are fused.

 

 

3. Changes in world markets

The implications reach too far into the nature of contemporary capitalism to be more than partially and superficially mentioned. Perhaps most important internationally is that the war-engendered drive to self-sufficiency in food and raw materials has boosted the spontaneous thrust of these manufacturing giants towards exploiting their industrial techniques in these fields, and towards the increasing use of materials which lend themselves to such exploitation. The use of oil at the expense of coal is merely a better-known result of this displacement of “natural”, unprocessed raw materials by “manufactured” ones. There are many other examples: the consumption of new, largely synthetic materials in Britain between 1950-2 and 1955-7 increased by 31 per cent for steel, 33 per cent for woodpulp, 44 per cent for synthetic rubber, 46 per cent for petroleum, 61 per cent for aluminium, 96 per cent for plastic materials and 211 per cent for synthetic fibres, as compared with increases in the use of comparable old materials of 7 per cent for cottons 12 per cent wool, 15 per cent natural rubber, 17 per cent jute and 20 per cent for copper. [24] As far as food production is concerned, the recent breakthrough on the farm of industrial techniques in western capitalist countries is well illustrated by the fact that the growth of productivity in US agriculture in the 1948-58 decade was, despite official dampers, 2.3 times as rapid as the average for all other branches of activity [25]; or that in the 1953-58 period in France, the annual increase in agricultural output averaged 14 per cent compared with a figure for industrial production of 11 per cent. [26]

Add to these trends the general saving in raw materials affected by both greater engineering efficiency and the shift to more capital intensive and technologically intensive products which, in the US, has meant that the value of gross output in 1950 was 8 times that of the raw materials used compared with 4 times in 1900 [27], and the relative decline in international trade in crude raw materials becomes apparent. As apparent should be the decline in the importance of the colonial primary products producers for developed capitalism, the loss in complementarity between backward and mature countries and the loss in importance of those institutions – private or state – which perpetuated that complementarity in practice.

Before continuing this line of thought, two international implications of the shift in the internal power structure of capital should be made explicit. First, the nature of the capitalist market and the importance of the military budget in it, together with the relative growth of accumulations in the keeping of giant industrial corporations, have reduced the volume of investment undertaken abroad – capital exports – to a shadow of its former self. As has already been shown in this magazine [28], they have been estimated at an average of 300-400 million a year from Britain in the 1950s [29] which, although larger than they have ever been over a comparable period [30], is certainly of trifling significance compared with the pre-World War I situation: then they constituted 8 per cent of gross national product [31], now some 2 per cent [32] then they accounted for some 50 per cent of all saving [33], now some 8-11 per cent [34]; then returns on foreign investment formed 4 per cent of national income in the 1880s, 7 per cent in 1907 and 10 per cent in 1914 [35], now they amount to just over 2 per cent. [36] Between 1895 and 1913, some 61 per cent of all new capital issues for investment were on overseas account [37]; by 1938 they accounted for 30 per cent and more recently for no more than 20 per cent of the total. [38] The figures and the proportions differ from country to country, but the overall trend has been the-same, being steeper for capital exports to backward countries than amongst developed ones.

Second, such capital exports as still take place are very different from what they were. Gone are the individual portfolio investments, handled by banks and other financial intermediaries, which accounted for more than 90 per cent of Britain’s overseas holdings in 1914 [39]; they had been reduced to some 16 per cent of all new foreign investments between 1954 and 1957. [40] Gone is the heavy investment in government stock – some 1,000 million in the Commonwealth alone before World War II; by 1956 these holdings had fallen to 500 million in pounds of one-half to one-third the value. [41] Foreign investment, especially in backward countries, is now the business of a small number of corporations – no more than one-half of one per cent in the United States [42] – whose size and whose “mix” of know-how, productive and financial resources needs no state aid to constitute a monopoly. Such investment is typically direct and takes the form of the wholly-controlled subsidiaries which accounted for 86 per cent of total British foreign investment in 1958. [43]

India gives striking confirmation of these changes. At least half of British private investment was withdrawn between the outbreak of World War II and the first few months of Independence [44]; since then and up to the end of 1956, while foreign investment in manufacturing (including oil refining) rose by more than 170 per cent, in tea plantations they rose by a little over half (largely due to a book revaluation of existing assets), fell absolutely in mining, trading (except in oil), and stagnated or gained very slightly in most other traditional fields of investment. [45] The same process is taking place within the big international companies:

“Ten years ago”, wrote the senior research officer of Unilever’s giant subsidiary, the United Africa Company, “we were primarily concerned with produce and the importing of so-called ‘staple’ commodities. Today these activities are of dwindling importance, and our capital and managerial energies are mainly directed towards local industry and the importing, distribution and servicing of the more difficult and technical type of goods – from cold storage products to bulldozers and television sets.” [46]

And even such unbelievably pure examples of the old pattern as the American United Fruit Company and its sterling subsidiary, Fyffes, are shifting their operations: from bananas exclusively to bananas plus bauxite and oil; and within their banana empire,

the new policy is to hang on to the distribution of bananas, but let the nationals of the banana republics take over growing as soon as possible. [47]

The contrast with classic imperialism could scarcely be sharper: where there were once a large number of individual investors abroad, new investments are typically made by a few giant, mainly manufacturing, concerns; where the many small accumulations were heavily dependent on financial intermediaries like banks, the large concentrations of investible surpluses are now autonomously controlled; where capital exports were essential to complement the metropolitan productive structure, extensively as it were, this rounding or completing of the productive structure is now intensive, built into the economy; where such capital exports were large absolutely and larger in their relative importance to the capitalist economy, they are now small; where hey took the form of technically unsophisticated and labour intensive industries, new investments are now typically the opposite; where, therefore, foreign control of the state was essential to their proper functioning, this is no longer true. The antonyms could be multiplied. The thing to be remembered about them is that they contrast ideal types, the limits to which real examples tend but which they probably never fully resemble.

 

 

4. Capital becomes international

The new investments are inherently monopolistic. The techniques and resources they deploy abroad make redundant institutional restrictions on potential local rivals and therewith, in backward countries, many of the central functions of the colonial state. On the contrary, their bias towards manufacturing, towards the local market, coupled with the decay in the old division of labour between the home and host economies impel them towards protection, state intervention and all the normal aids to industrialisation. To. put it generally, the loose integration with the host economy. which was so cardinal a feature of foreign capital a generation or two ago, its enclave character, can no longer meet its requirements in backward countries today; it needs to be replaced by a much closer relationship. Then it was a matter of exporting capital; now, if it is to succeed – a big “if” this – it has to export capitalism.

The class implications of this shift in foreign interest are enormous. Where before competition overshadowed all other elements in the relations between foreign and domestic capital, the latter chafing under a mountain of restrictions and frustrations; now, after independence, despite many points of friction and competition that remain, the overriding element is one of mutual dependence and convenience. Local capital is inheriting the labour intensive industries vacated by its foreign counterpart; it is proving itself indispensable in mediating between the complex foreign unit and its environment: in handling labour, supplies, sales, relations with the state; it is showing subtlety in its use of that state beyond anything that could have been achieved by an alien bureaucracy. In a word, it is functioning in a way and on a level necessary for modern foreign capital, but impossible for it to emulate directly. In its turn, it is buttressed by its foreign partner in a way that would have been unthinkable fifty years ago. The vast flow of state aid that crosses into backward countries every year – some $4-5,000 million a year in economic aid alone – is part of the return; technical and financial collaboration in private and state industrial projects is another part.

In some cases – one of which is India – a local agent able and willing to enter such a partnership was easily found. In others – and here most of Africa stands witness – there was nothing for it but to create one in the form of a state bureaucracy. Whether the purposes of foreign capital are best served by one or the other; whether one or other is intrinsically more suited to achieving mature, industrial capitalism within the time permitted today; whether orthodox western capitalism can collaborate with a form of state capitalism in backward countries over the long term or, conversely, state capitalism à la russe adapt to more orthodox models abroad are strategic questions. Unfortunately they reach beyond the scope of this article. All that can be done here is draw some of the conclusions that derive for socialists from the spontaneous withdrawal of classic imperialism and from its new relationship to the indigenous ruling class in backward countries whatever the precise form of internal organisation adopted by the latter.

One reservation need be made, however. It is easier to write of spontaneous withdrawals than to see tern in practice. It would be a sorry history of the transfer of power in India that did not refer to the mighty wave of strikes that swept through the country at the end of World War II or that ignored the decisive role played by the mutiny in the Royal Indian Navy. More recently the seven-year bloodbath in Algeria, Suez, Cuba and now South Vietnam look anything but a spontaneous withdrawal as does the near-apoplexy that seized large sections of the Tory party in this country whenever Central Africa was mentioned. There is a moral too in the encroaching forest in Congo. Even though the gathering forces of nationalist revolt might succeed in precipitating “spontaneous withdrawal”, peaceful transfer to an indigenous ruling class might not be foreordained – it might not be ready to have such greatness thrust upon it. There is indeed an infinity of reservation and qualification with which the thesis of spontaneous withdrawal should be read, but there is equally a sense in which the thesis is valid: capitalism has undergone a transformation which enabled it to withstand, however unwillingly, the loss of its colonies, without disaster, without indeed, much dislocation or discomfort; which has enabled it, in most cases, to work, however grudgingly, for a relatively peaceful transfer of stewardship to a local ruling class. It is this broad process whose roots and some of whose implications have been detailed above. It is a long-term, historic process whose more precise implications for socialist theory and policy need now be looked at.

 

 

5. Implications for socialists

It hardly seems necessary to sum up one’s disagreement with Lenin on imperialism, as he defined it, as the “highest stage of capitalism”. However correct the analysis in his day, and however justified the conclusion – and these are essentially true even in retrospect – it must be rejected on at least four counts: finance capital is not nearly as important for and within the system as it was; the export of capital is no longer of great importance to the system; political control in the direct sense meant by Lenin is rapidly becoming dated; and finally, resulting from>these, we don’t have imperialism but we still have capitalism ... If anything, it is the permanent war and arms economies that are “the highest stage of capitalism”.

Indeed, it is difficult to see what value there is in still using the word imperialism to describe the system of Big Power aggression and coercion of today unless it lie in the reassurance to be derived from familiar sounds. The one feature held in common by all imperialisms to date – Roman, Tsarist or British – was their direct control of the state in subject territories. Today such control is rapidly becoming vestigial, and the distinction between empire and colony which loomed so large half a century ago increasingly irrelevant, politically and economically. Still very embryonic, the picture forming slowly, vaguely, but surely before our eyes is one of a far more homogeneous world in which many centres of capital and many more potential ones – some large and powerful, others weak and willing, yet independent – jostle and compete, forming, dissolving and reforming alliances of expediency where before division of labour and the labour of divisions imposed an immutable pattern of relationships. Again, there is reason to enter the qualifications already made: it might well require revolution to turn an ex-colony into an independent centre of capital; and again imperialism is still very real – in Southeast Asia, Central and Southern Africa, and elsewhere; armed with modern techniques it is more horrific than it ever was. All one is saying – and the recent collapse of the dinosaurs in Algeria and Cuba underlines the fact – is that it is dying as reality and therefore as a useful concept.

This is more than a matter of definition. The frustrations of a potential local ruling class, the destruction of the peasantry and the exploitation of the new, colonial working class inherent in classic imperialism entailed, as has been shown, a loose but real national coalition. True, within the coalition the working class was assigned a role of special significance – as in Lenin’s “revolutionary-democratic dictatorship of the proletariat and peasantry” or in Trotsky’s theory of permanent revolution – but it was at best a substitutive one, devolving upon it by default, because the local bourgeoisie could not develop beyond client status, could not be other than an “inconsistent bourgeoisie” in Lenin’s phrase. Trotsky too saw the roots of proletarian leadership in backward countries in negative terms: a result of the compromises with feudalism indulged in by the bourgeoisie, of the uneven development of the bourgeoisie and proletariat in such countries, a result, to take it back one further step, of uneven development on a world scale. The underlying assumption, whether for Trotsky with his uncompromising proletarianism, or for Lenin with his peasant-worker alliance (in theory at least until the revolution), or for the Mensheviks wit their crude united front of all “new” classes (the model for Stalinist tactics in backward countries ever since), or for the hosts of revolutionaries and pseudo-revolutionaries in other countries this last generation, was undoubtedly the objective unity of all major classes in the struggle against imperialism and for independence, the framework within which they could grow.

The thesis of this article is that the conditions that gave the assumption validity have changed. To repeat, the national bourgeoisie – or failing it, the national bureaucracy – has been rescued from oblivion by imperialism’s withdrawal; national independence has come to it, in many cases without a struggle and therewith have come the levers of economic development and its own growth; finally it has gained greatly in strength from foreign capital’s new need for willing and active partners in production and from the associated flow of Cold War aid. To say, then, that the local bourgeoisie or bureaucracy has opted out of the national coalition, or is in the process of doing so, is to state the obvious. Less obvious perhaps are the conclusions to be derived.

First, and most important, where before the working class could expect to rely on allies – fitful and weak though they always were – in the struggle against foreign rule, now in the countries that have gained political independence, their struggle is more specifically a class struggle directed against capital as such, foreign and domestic. Where foreign capital is overwhelmingly the major component this class struggle is bound to have nationalist overtones. But here the working class is in no way a substitute leadership, its nationalism is a class expression, in the teeth of rather than in default of, the local bourgeoisie. In such conditions any policy based on the creation of a “single national democratic front” as at the 1961 Communist Party of India Congress at Vijaywada must be rejected absolutely. [48] So must its obverse in the developed countries: the blanket defence and tortuous apologetics placed at the service of “national leaders” and their regimes by the institutions of the labour movement. Nehru’s arrest of 15,000 strikers in the first few hours of a national civil service strike in 1960, or Nkrumah’s regimentation of the Ghanaian labour movement, or Ben Bella’s and Castro’s are as grim instances of class oppression as any. To keep silent is to condone them.

This is a plea to assimilate the “new countries” into the traditional framework of class analysis. But it is more than that. It is an affirmation that national solutions to, say, Cold War are becoming increasingly unrealistic and class solutions increasingly necessary. It is a rejection of the many attempts, call them positive neutralism, some forms of Third Campism, or whatever, to find refuge from Great Power terror in alliances of “uncommitted countries”. A country like India that demands – and obtains – one-quarter or more of its Plan outlay from both camps might seem independent of either. In reality it thrives on their competition. In reality the stability of its ruling class depends on the continuance of their ruling classes. It is inconceivable that India or any in the growing ranks of Cold War brokers would endanger the stability of their regimes by opting for Cold War isolationism.

Finally: when the continued functioning of capitalism rested so largely on Empire and when the form of operations abroad was such as to ultimately range almost the entire colonial population against the foreign occupation, there was good reason to believe that capitalism as a world system was most vulnerable where it was least acceptable, in the colonies; and there was a case for concentrating the revolutionary movement’s energies as much as possible on the struggle for national independence. These, at least, were the underlying theoretical considerations – in addition to the ebb of revolution in Europe which was, of course, infinitely more convincing – in the Comintern’s shift of attention to colonial issues at its second Congress in July 1920 and in its convening of the “First Congress of Peoples of the East” in Baku later that year.

The thesis is untenable today. However vulnerable certain segments of the capitalist class to events abroad and however influential they be, metropolitan capital as a whole is scarcely dependent on its marginal investments in backward countries; the economic ties that remain are less ties between functionally- integrated and distinct units than they were and more ties of ownership, ie legalistic ones, between similar and, therefore, functionally independent productive units. Put differently, the loss of a typical imperialist investment would have upset the home economy of which it was an operative part where a similar loss today, affecting a typical modern investment (with the partial, though important, exception of oil), would have merely a quantitative effect, reducing the resources of metropolitan capitalism but not affecting its pattern of production. Developed capitalism is thus less vulnerable economically to attack in backward countries. At the same time, by reason of the new alliance formed around the new type of international investment, capitalism in backward countries is more resistant to attack from within. This is not to say it is stable or that it can continue in its present form for any length of time. It might well be that the only form in which it can triumph in large sections of the world is through state initiative – bureaucratic state capitalism – and the destruction of its bourgeois democratic cousin and rival. It might be that the capitalism we know in the “western” and “neutral” parts of the backward world will founder on its inability to solve the agrarian problem and the unemployment problem in that world without a degree of social regimentation and political isolation for which it is unsuited in its present form. The importance of these questions to every particular of labour movement tactics in backward countries is obvious, but whatever the reply the proposition remains unaltered, namely, that having become more firmly based on an alliance between the indigenous ruling class in politically independent countries and the metropolitan ruling class capital is less vulnerable to working class attack in backward countries than it was. Unstable it might be: workers and peasants are working up to modern demands and forms of struggle – a kind of “demonstration effect” is operating. But the lag between capitalist internationalism and working class internationalism acts effectively to insulate their struggles. In sum, to believe nowadays that the short route to revolution in London, New York or Paris lies through Calcutta, Havana, or Algiers, is to pass the buck to where it has no currency. To act on this belief is to rob the revolutionary socialist movement of the few dollars it still possesses.

In the most general terms – and here is where the article started – the transition from imperialism to an arms economy in the mature capitalist countries has corroded a system in which backward countries fulfilled a special function in the world capitalist economy; in which, consequently, revolutionary strategy differed significantly from place to place. It has speeded up the export of capitalism and the assimilation of its major class features in a growing proportion of the world and diminished the scope for a political programme not based four-square on class analysis and working-class interests. There are exceptions of course – white South Africa’s colonialist economy has proved strong enough to absorb and assimilate the new trends, and revolutionary strategy should still orientate on some form of national coalition under working-class leadership; Portuguese power in Africa is ferociously old-model imperialist; and so on. In these the traditional analysis still holds in part and the traditional weapons retain a lot of their edge. But in the bulk of the old empires new conditions obtain. They demand a practical internationalism based on the growing uniformity in the conditions of exploitation, the growing irrelevance of national struggles as such, the growing fusion of national and class struggles and he growing similarity in the immediate aims of the working lass the world over. The greatest service we can render international socialism is to help stoke up the fires at home.

 

 

Notes

1. Mover of the Swadeshi (home production) Resolution adopted at the Allahabad convention of the Indian National Congress in 1910.

2. The first estimate not patently false is Dr V.K.R.V. Rao’s, relating to 1926-7. It puts total British private investment at just over 150 million.

3. The Economist, London, 21 June 1911, p.1345. Government and railway securities are excluded.

4. Investment In Empire, Daniel Thorner, Philadelphia, 1950, p.23.

5. Op. cit., Rao. Cited in Census of India’s Foreign Liabilities and Assets, Reserve Bank of India (RBI), Bombay, 1950, p153.

6. Philip Woodruff described what happened in the matter of famine relief. In 1866 the crops failed in the Indian province of Orissa. The members of the Board of Revenue who advised the Lieutenant-Governor were, he wrote in his book, The Guardians, “‘held by the most rigid rules of the direct political economy’. They rejected ‘almost with horror’ the idea of importing grain. They would not even allow the authorities in Orissa to take the grain from a ship which ran ashore on their coast in March. It was bound for Calcutta and to Calcutta the grain must go. In fact, it rotted in the holds while plans were made to move it ... By the time relief came a quarter of the population were dead.” (Quoted by John Strachey in The End of Empire, London, 1959, pp.55-56.)

7. Notes on the Rise of the Business Communities in India, Gokhale Institute of Politics and Economics, New York: Institute of Pacific Relations, 1951 (cyclostyled). pp.6, 10, 20, 45.

8. Exchange Banks in India, J.J. Pardiwalla, Bombay (thesis typescript), p.31

9. Economic Development of Under-Developed Countries, Relative Prices of Primary Products and Manufacturers in International Trade, United Nations, E/2544,
1953, p.22.

10. Selected Works, Volume V, London, 1936, p.81.

11. From National Income and Expenditure 1957, London: HMSO, Table 50, and The Economist, 8 April 1961, p.148. For technical reasons manufacturing is aggregated with contracting and some distribution.

12. Size, Growth and Concentration, S.J. Prais, in Studies in Company Finance, Brian Tew & R F Henderson, Cambridge, 1959, Table 8.1, p.109.

13. Ibid.

14. Social Background of Indian Nationalism, A.R. Desai, 3rd edition, Bombay, 1959, p.99.

15. India, Mixed Enterprise and Western Business, D.L. Spencer, The Hague, 1959, p.28.

16. Industrialization of the Western Pacific, Kate Mitchell, New York, 1942, pp.284-5.

17. Our Economic Problems, P.A. Wadia & K.T. Merchant, 5th edition, cited in Recent Trends in Indian Naionalism, A.R. Desai, Bombay, 1960, p.29.

18. Saving In a Free Society, J. Enoch Powell, London, 1960, Table II, p.29.

19. Treasury Bulletin for Industry, No.119, April 1959.

20. Dividend Policy and Income Appropriation, S.J. Prais, in op. cit., Tew & Henderson, p.26.

21. The Employment of Savings, Midland Dank Review, November 1960, Table, p.10.

22. See, for example, the Government White Paper, Powers of Investment of Trustees in Great Britain, Cmnd 915, December 1959.

23. Committee on the Working of the Monetary System, Report. (Radcliffe Report), Cmnd 827, 1959, p.90.

24. Barclays Bank Review inset, February 1961.

25. Economic Report of the US President, January 1960, cited in The Attack on World Poverty, A. Shonfield, London, 1960, p.176.

26. A View of de Gaulle’s France, K.S. Karol, New Statesman, 17 Febuary, 1961, p.249.

27. Raw Materials in the US Economy, Working Paper No.1, US Department of Commerce, Bureau of the Census, Washington DC, 1954, cited in World Economic Survey 1955, UN, p.36n.

28. Imperialism, Highest Stage But One, Michael Kidron, IS 9, Summer 1962, p.18.

29. The lower is an official estimate for 1953-59 in Assistance from the United Kingdom for Overseas Development, Cmnd 974, 1960, p.6; the higher is A.R. Conan’s estimate for 1956-7 in Capital Imports into Sterling Countries, London, 1960, p.84.

30. Between 1885 and 1895 capital exports from Britain averaged some 30 million a year, between 1895 and 1905 – some 40 million a year, or, in terms of today’s prices, about 100 million a year over the whole period. It was only between 1905 and 1913 that capital exports were heavy – some 200 million a year – but even then they did not reach the 150 million mark – roughly the current level in real terms – until 1910 (See discussion and sources in op. cit., Conan, p.82) Herbert Feis estimates a 1910-13 annual average of 185 million (Europe the World’s Banker, 1870-1914, Yale, 1931, pp.14-5).

31. A very rough estimate based on op. cit., Feis, p.5.

32. Roughly calculated from the estimates given in the text and the Blue Books on National Income and Expenditure.

33. Op. cit., Feis, pp.5, 14-5.

34. Sources as in note 32.

35. Op. cit., Feis, p.16; a figure of 20 percent for 1914 is given by L.H. Jenks in The Migration of British Capital to 1875, London, 1938, pp.5-6.

36. Annual average of “net income from abroad” for 1953-56 as given in the Blue Books plus an estimated 200 million in profit retentions abroad as given in The Times, 24 April 1958).

37. From A Note on the English Capital Market as a Source of Funds for Home Investment before 1914’, A.R. Hall, Economica, February 1957, p.62.

38. The International Flow of Private Capital 1956-1958, United Nations, New York, 1959, p.51.

39. Op. cit., Conan, p.49

40. Ibid., p.50.

41. Ibid., p.64.

42. Foreign Aid Program, compilation of studies and surveys, US Senate, Special Committee to Study the Foreign Aid Program, Study No.7, 85th Congress, 1st Session, 1957, p.2.

43. Op. cit., Conan, p.50.

44. This is a conservative figure based on the Statist’s 1939 estimate for British private investment of Rs 930 crores and the RBI Census count for mid-1948 of Rs 320 acres of which 72 percent – or Rs 230 crores – was British even if the Statist figures are halved to account for Indian capital wrongly smuggled in, at least half the pre-war total must have been withdrawn. The withdrawal became a panic after the August 1952 “days” of nationalist uprising.

45. Based on RBI Census Tables 111-27, 111-28; RBI Bulletin, Volume XII No 9, Table 3, p.1010.

46. Jocelyn O. Clark in a paper read to The International Conference, Ghent, Summer 1959.

47. Mammon in The Observer, 23 April 1961.

48. The Guardian (25 April 1961) reported the General Secretary’s reply to the main political debate in these terms: “Mr Ghosh was emphatic that a national democratic front could not be built by ignoring the Congress Party. He made it clear that the object of the front was not to overthrow the Congress Government or to take the country along the path of noncapitalist development but for democratic reforms and for defending and strengthening all that is progressive in the Government’s policies.”

 


Last updated on 20.2.2002