This is the first in a two part series by socialist economist and Conter Editorial Board member, George Kerevan.
To understand imperialism in the now we need to understand its history. The end of World War Two saw a whole series of anti-colonial and anti-imperialist uprisings in Africa, the Middle East, Asia and Latin America. The result was the complete dismantling of the European settler colonial empires, all within barely 30 years. This was perhaps the greatest ever revolutionary wave seen till that moment. This intervention of the colonial masses in their own history – against the combined technological and economic might of the West – was truly inspiring and had major repercussions in the West itself. The colonial world was not “granted” independence but took it, in the period 1945-1975.
However, this colonial revolution was accomplished at the cost of millions of lives in the former colonies. And in most cases, the resulting, newly independent states were quickly reabsorbed into the imperialist orbit. In many cases, the level of imperialist exploitation could be said to have increased despite the advent of formal independence, with new, local elites emerging to guarantee continuing imperialist economic domination. This was a new form of domination and exploitation. Kwame Nkrumah, independent Ghana’s first leader and a pupil of the great Marxist writer C.L.R. James, called this development “neocolonialism – the last stage of imperialism”.
As it proved, the neocolonial period was not the last stage in imperialism but an intermediary form that gave way to the neoliberal global model in the 1980s and beyond. Neocolonialism collapsed under the weight of its own contradictions, as we shall see. But we cannot understand later neoliberalism, financialisaton and globalisation without first understanding the neocolonial experiment and the period covering the great anti-colonial revolutions and counterrevolutions.
The great period of anti-colonial struggles – from 1945 to 1975 – neatly coincides with the long economic boom that followed the Second World War. The end of that Long Boom and the defeat of the workers’ movement in a series of titanic class struggles, led to the rise of the neoliberal world order and so-called globalisation. But the failure of the colonial uprisings to end their historic exploitative relationship – merely to see it altered – was also part and parcel of the defeats that laid the basis for neoliberalism. In essence, neoliberalism was built on the bones of neocolonialism.
This article attempts a preliminary inventory of the reasons for the comparative failure of the post war liberation struggles, despite their initial success in overthrowing direct colonial rule. Our aim is to identify the general dynamic rather than rehearse individual national histories. We will also investigate the relationship between the colonial revolutions and metropolitan solidarity movements and the impact of these links in determining eventual political outcomes. We will examine the contradictions of the West’s neocolonial project and why – from the point of view of the imperialist bourgeoisie – it imploded at the end of the Long Boom, only to re-emerge as neoliberalism and so-called globalisation.
The neocolonial model
To sketch our thesis: the perversion of the post-war national liberation revolutions into neocolonial outcomes involves three main elements: the physical crushing of colonial uprisings which involved a massive Western exertion of military might; the imposition of a US Cold War imperialist hegemony in place of the European powers; and the incorporation of the new, ostensibly independent ex-colonies into a new exploitative relationship with the imperialist metropoles based on debt.
(i) Crushing liberation forces
Decolonialisation was transformed into neocolonialism through the physical crushing of radical, pro-liberation forces – sometimes before but usually after independence – by the local, nascent bourgeoisie anxious to protect and extend its privileges. Or by this proto-bourgeoisie acting in covert alliance with imperialist forces – usually the USA trying to displace a former colonial power. The sheer scale of this intervention was staggering. Collectively, it resulted in the deaths of millions of people – certainly in the tens of millions – and cost the imperialist powers huge amounts of money. The US war in Vietnam alone cost approximately $1 trillion in today’s values and fully 2.3 per cent of annual GDP at its peak. France spent the equivalent of $80 billion (in 2022 prices) on military operations in Algeria.
Popular movements, especially armed ones, posed an obvious threat to emerging domestic elites and had to be dismantled, popular revolutionary leaders eliminated, and ties forged with imperialism as security for the new elites. At the root of this class struggle was the need of the nascent local bourgeoisie to crush popular, peasant liberation movements based on land hunger. Military-Bonapartist regimes – often the early outcome of successful independence struggles, especially in the Arab world – saw the revolutionary officer elite transform itself into a new industrial bourgeoisie via forced industrialisation at the expense of the peasantry. The social weakness of these new regimes laid them open to a new accommodation with imperialism.
Thus, in Algeria we see a clique around Houari Boumédiène overthrow the radical government of Ben Bella only three years after independence – ending experiments in worker self-management in favour of nationalising the oil industry as a route to self-enrichment by the new governing elite. In the Congo, formal independence led to the CIA assassination of the nationalist leader Patrice Lumumba, a vicious civil war, and a pro-Western government led by Joseph Mobutu imposed by the US. Mobuto is estimated personally to have looted $15 billion from state funds. In Indonesia, there was a protracted competition after independence between the erratic Sukamo regime (supported by domestic bourgeois forces and the US) and the local Communist Party, the PKI, which had a long history of armed struggle against colonial occupation. This tension continued till 1965, when the Indonesian army massacred at least half a million PKI members before ousting Sukamo and imposing a military dictatorship led by under Suhartu. Transparency International would later rank Suhartu as the world’s most corrupt leader.
A variation on this element is the elimination of the popular insurgent forces by the colonial power prior to independence. This allows the imperialists to do a political deal with the comprador bourgeoisie to allow them formal, juridical independence while maintaining economic links to the metropolitan centre. This was the case in Algeria, where the FLN forces of the interior – after an heroic struggle – were virtually wiped out by the French colonial power. The FLN exterior forces – armed by the Arab nations – remained uncommitted and intact. But the French bourgeoisie were exhausted, and American imperialism was anxious to win Arab support by backing Algerian independence. France pulled out leaving the bureaucratised and conservative exterior forces of the FLN to overthrow Ben Bella, personally expropriate colonial farms (the best land) and crush any remaining revolutionary tendencies. In India in 1945, the local Hindi comprador bourgeoisie remained on the sidelines when the British crushed a pro-independence mutiny in the Indian navy and the subsequent nationalised native uprising. This smashing of the radical wing of the Indian independence movement by the British allowed the Hindi bourgeoisie (that had long worked in tandem with the colonial administration) to take power after independence came in 1947.
Another variant in the way nationalist struggles were subverted is seen in the deliberate granting of a formal, highly controlled form of independence by the metropoles, in order to forestall and isolate genuinely popular movements. This ersatz independence was the model used by France in sub-Saharan Africa where formal government was handed over to puppet regimes, but the metropole retained control of the economy and monetary system. France also continued to maintain a strong military presence in its “former” colonies.
These changes did not exhaust the imperial response to the post-war colonial uprising. In two strategic areas – the Republic of South Africa (with its minerals) and British Mandate Palestine – imperialism constructed (or reconstructed) direct settler control. But again, this was only possible using coercion. The apartheid regime in South Africa was introduced in 1948 with the electoral victory of the rightist National Party. This was instantly contested by indigenous black groups leading to the infamous Sharpeville massacre of demonstrators by the white security forces on March 21, 1960. The emergence of the State of Israel was built on wars with the Arab states in 1948, 1956, and 1973.
In summation, in most cases the radical wing of the anti-colonial movements was crushed – usually with Western connivance – allowing a neocolonial outcome. But this neocolonialism remained fragile because the anti-capitalist tasks of the colonial revolution – particularly land reform – had not been achieved and the underlying class tensions had not been resolved. Neocolonialism was therefore a fragile beast politically.
(ii) American interventionism
The physical destruction of the most radical (i.e. anti-capitalist) wings of the colonial independence movements has to been seen in the specific context of a change in direction of US imperialism and the subsequent use of American economic inducements and military might as counterrevolutionary tools.
Until the end of the Second World War, the Roosevelt presidency was virulently anti-colonial in regard to the old European empires and the nascent Japanese one. For instance, the US put considerable pressure on the British to grant India independence. This ostensibly anti-colonial stance was premised primarily on undermining America’s European competitors by opening their colonial markets to US trade. However, the outbreak of the Cold War – coupled with the reinvigoration of the US manufacturing economy during World War Two – changed the attitude of the American bourgeoisie. Colonial struggles were now judged on their efficacy in containing the Soviet Union. The need to protect the global interests of the new generation of post-war US multinational companies became paramount. And the scale of US economic recovery from the Depression now demanded vast quantities of cheap oil imported from the Middle East – supplies that had to be safeguarded. The cumulative result was a US pivot towards supporting a new neocolonial order.
We must also note that outside its self-serving antagonism towards European colonialism, the American bourgeoisie had long maintained an imperialist and semi-colonial approach to Latin America and the China-Pacific region. The traditional paternalistic US relationship with Latin America could be called the model for neocolonialism – economic and military domination without formal annexation. In Asia, there was direct colonisation. The US occupied the Philippines in 1898 prompting a pro-independence uprising which saw the deaths of perhaps as many as one million native Filipinos from war and famine. American capitalism long considered China its neocolonial backyard. After the Chinese Communist victory in 1949 – essentially an anti-colonial uprising, whatever other labels one might attach – an unholy alliance emerged between US conservatives and liberals to “contain” and perhaps “roll back” the Maoist regime. America’s decision to arm and support French colonialism in Vietnam was primarily a response to the Chinese events.
By the end of World War Two, the European empires were too economically and militarily exhausted to defeat colonial uprisings on a mass scale. Without US financial and military support, the empires would have collapsed virtually overnight. Witness the inability of Dutch imperialism to reassert control over Indonesia after 1945. The Dutch (even with some British military support) never managed to reimpose control over anything but the urban areas of Sumatra and Java. Even then, the Allies actually had to mobilise surrendered Japanese occupation forces against the nationalists. America used it vast military stockpiles left over from the Second World War to supply the Europeans with the weaponry needed to fight their colonial wars. The US supplied France with aircraft, tanks and ships to fight in Vietnam. By the time French forces surrendered to the Viet Minh in 1954, the US had provided circa $30 billion (in 2024 money) in direct military aid, plus turning a blind eye to France diverting monies from civilian Marshall Plan funding.
With successive anti-colonial victories, the US increasingly turned to a neocolonial system of its own using local elites to protect its interests. These were effectively bribed. Where client states proved truculent, the offending politicians were either murdered or overthrown. Thus Mossadegh, the anti-colonial prime minister of Iran, was overthrown in a coup engineered with British help, in 1953. Saudi Arabia was turned into a US protectorate complete with a large US military presence. Similar protectorates were fostered in Taiwan and South Korea. Post Independence, Pakistan soon became a US ally, supplying the CIA with airfields to overfly the Soviet Union. America supported the military coup by Ayub Khan that effectively ended Pakistan’s experiment with democracy.
The success of Soviet ideological penetration in post-independence Africa saw the Americans resort to a “carrot and stick” approach. President Kennedy affected support for the new liberation movements in sub-Saharan Africa, flattering many of the leaders. He even publicly criticised his predecessor, Eisenhower, for his tacit support of French neocolonialism in Black Africa. However, underneath, America pursued a policy of turning revolutionary movements into anti-Soviet proxies, often by the CIA encouraging splits in insurgent groups. For instance, America funded and armed Holden Roberto’s FNLA group in the Angola war against Portuguese colonialism as a counter to the rival, Marxist MPLA, which was Soviet backed.
Perhaps the most brazen example of Kennedy’s duplicity was his covert opposition to the elected, left-populist regime of João Goulart in Brazil, which led directly to the 1964 military coup. In the face of worker and peasant unrest triggered by the example of the Cuban revolution, Kennedy applied a financial squeeze and opened contacts with the Brazilian military, effectively greenlighting a putsch. Kennedy was assassinated in November 1963, but the successor Johnson White House (still staffed by Kennedy’s appointees) supported the coup up to the point of preparing an invasion force which was only recalled when the Brazilian generals won a swift victory.
The Brazilian military regime proved particularly repressive at home but was also a zealous proponent of counter-revolution across Latin America for the next two decades – at America’s behest. As well as become the focal point for training anti-insurgency forces throughout the continent, the Brazilian army joined US troops in the invasion of the Dominican Republic in 1965. The essence of the Kennedy “liberal” approach to building the neocolonialist system was giving local allied military dictatorships their own sphere of interest, as in Brazil. As a result, over 20,000 opponents of the military regime were imprisoned and tortured while tens of thousands of indigenous minorities starved to death as their land was stolen. By 1970, deliberate cuts to the minimum wage meant as third of the Brazilian workforce had lost 50 per cent of its real purchasing power compared to before the coup. US capital investment flowed in while Brazil’s growth rate surged. This was neocolonialism red in tooth and claw.
(iii) Subordinating neocolonial states to a new form of finance capital
Neocolonialism in the period 1945-1975 was an integral part of the so-called Long Boom in the metropoles, not an afterthought. The new imperialist mechanisms grew organically from the need to export surplus capital and to create export markets for industrial goods.
In the first, 19th century period of imperialism (settler colonialism) capital was exported to the colonies, as famously analysed by Lenin in Imperialism, the Highest Stage of Capitalism. But this early form of capital export took the form of a fusion of bank and industrial capital. Vertically integrated monopolies appeared in the metropoles in which banking interests took over or acquired stakes in industrial companies, forming a trust. These companies established operations in the colonial zone – chiefly mining, railways and plantations. Bank capital was exported to the colonies via investments withing the trust. Profits (and surplus value) were repatriated directly from the foreign operations.
But after World War Two, the new, neocolonial system of exploitation fundamentally shifted the mechanism for the extraction of surplus value. There was still direct investment in colonial enterprises and the repatriation of profits to the metropoles. But after 1945, there was an increasing reliance on direct loans to the neocolonial governments or their state-owned enterprises. Vast interest was charged on these loans, forcing a rise in local exploitation to service the burgeoning debts. In addition, much of the original loan capital was used to import Western machine tools, telecoms and vehicles (again at inflated prices, due to currency manipulation) as part of local industrialisation. Thus a debt-fuelled circuit was created whereby Western loans were returned to the metropoles as interest and import purchases.
How did this system emerge? The foundation of the Long Boom was based on a combination of increased labour exploitation (itself the result of fascism and wartime labour controls) and a massive, state guaranteed expansion of new, productive manufacturing capacity (again a wartime phenomenon, particularly in America). Intensified labour exploitation coupled with automation dramatically (if temporarily) raised the rate of profit, tiggering more investment. Rising wages, new consumer credit mechanisms, and Keynesian demand management techniques expanded demand to purchase the resulting output. In both Europe and America, the transformation of agricultural workers into urban proletarians provided fresh labour supplies to exploit. And the huge, permanent arms economy spawned by the Cold War provided a further outlet for investing surplus capital profitably.
However, the very success of this model created its own contradictions. Even with the permanent arms economy, the system was accumulating surplus value faster than it was creating profitable investment outlets, threatening a drop in profit rates. This problem intensified with the revival of the German and Japanese economies. At this point, the emergence of neocolonialism added a new mechanism for exporting surplus capital from the main capitalist centres and for shoring up rates of return. This new financial mechanism operated in three ways:
First, it transferred the burden of financing administration, investment and security in the so-called developing world from the metropoles to the newly independent states. This, in turn, freed up resources in the metropoles to fund the permanent arms economy and meet the cost of expanding domestic welfare services (as a way of subsidising labour reproduction costs for the metropolitan bourgeoisie).
We can express this change in Marxist economic categories. Previously, all of the overheads of reproducing the social (state) function of capitalism in the metropoles – including the cost of empire – came out of the mass of surplus value extracted in the imperial heartlands – and accordioning lowered the average rate of profit on productive capital. This was the source of longstanding opposition to imperialism in sections of the British industrial bourgeoisie. But neocolonialism transferred most of the cost burden for running the former colonies to the newly “independent” states. This transfer was deducted from the social product produced by native farmers and traders. The result was a net increase in the rate of profit from productive capital in the metropoles. This, in turn, helped accelerate capital accumulation in the metroploes and was a contributing element of the Long Boom.
Second, the new neocolonial states provided a new and vast market for financial loans from Western governments, banks and export credit agencies. This served as a conduit for some of the excess capital accumulation in the leading metropoles – adding a degree of stability of the system.
To give an example of the scale of these loans: figures from the World Bank for 1962 show that 71 Asian, African and Latin American countries owed foreign debts of some $277 billion (in 2024 money), on which they paid annually in interest and service charges of circa $51 billion. We should note in passing that a these “loans” were rarely used for their intended development purpose but embezzled by corrupt politicians, used to buy-off domestic unrest, or to purchase Western arms.
The emergence of this vast new loan market was seized on by Western finance capital both to enrich itself and to provide a new asset class for financial speculation. The importance here is that financial speculation of this sort generally commands a higher rate of return (or expected return) than most manufacturing investment. As a result, again, the surplus value being generated in the metropolitan economies had a new (and necessary) outlet.
In addition, as this new financial trading increased, it afforded an opportunity for the Western banking system to create yet more “fictitious capital” (in Marxist terminology); i.e. expand speculative credit far in advance of the real reserve base. This development began in the 1960s with the emergence of “eurodollar” loans – bonds issued in Europe denominated in US dollars outside the regulation of the US authorities. Initially such bonds were used for raising corporate funds but soon they were being used by neocolonial governments to access easy loans – at usurious interest rates. This was the very start of the process of financialisaton that came to dominate the neoliberal era in the 1990s.
The third, component of the new neocolonial financial system involved the former colonial powers rigging the terms of independence treaties to tie the currency and monetary systems of the new states to that of the metropole. Thus Britain forced India and Pakistan to remain in a monetary union with the former imperial power while France ensured that the new sub-Saharan countries were still tied to the franc. This was to the benefit of the metropoles in several ways.
In 1947, the Labour government in Britain was worried that the new Indian and Pakistani governments would convert their pound sterling bank balances into US dollars. During World War Two, the UK had forced colonial India not only to pay for its contribution to Britain’s war effort but to keep the proceeds at the Bank of England. If independent India and Pakistan withdrew their cash in US dollars (to finance their own industrial development) then Britain would run out of dollars to fund its own imports. In the rush to gain independence and local power, the Indian and Pakistani bourgeois and landlord classes caved into these British demands. The advantage for the British ruling class was that it meant that the pound sterling would not collapse in value. The British could continue to print pounds and the rest of the world would continue to use them for financing trade, giving Britain a free ride. Essentially, Britain was creating a protected global market for its exports. The loss to India and Pakistan was not just valuable dollars but the fact their interest rates and currency exchange rates continued to be determined by the Bank of England. Economic control remained firmly in London. France employed the same neocolonial financial strategy in Africa.
Of course, the export of capital from the metropoles was nothing new. As we noted above, Lenin discusses the phenomenon in his seminal Imperialism, the Highest Stage of Capitalism. However, Lenin notes that sovereign lending to governments in the 19th century was rare and principally centred on the few “semi-colonial” states (in Latin America) or advanced, semi-capitalist countries, principally Czarist Russia. But the neocolonial model that emerged after the Second World promoted sovereign lending to the dominant form of capital export, forcing local elites to do the job of intensifying exploitation in order to repay the debt.
Part two will be published next week.
