The third and final part in George Kerevan’s series on imperialism and capitalism. You can read parts one and two if you missed them in previous weeks.
The neocolonial interregnum between 1945 and 1975 throws light on the classic debate on imperialism between Rosa Luxemburg and Second International theorists such as Otto Bauer. Famously, Luxemburg rejected Bauer’s explanation of imperialism (as a hunt for fresh labour supply) for a broader conception in which capitalism could not exist without expanding into non-capitalist regions:
“Accumulation is impossible in an exclusively capitalist environment. Therefore, we find that capital has been driven since its very inception to expand into non-capitalist strata and nations…” (All quotes from Luxemburg’s “Anti-Critique, Marxist Internet Archive.)
She argues “Modern imperialism is not the prelude to the expansion of capital, as in Bauer’s model; on the contrary, it is only the last chapter of its historical process of expansion: it is the period of universally sharpened world competition between the capitalist states for the last remaining non-capitalist areas on earth…”
The conclusion is existential: “The general tendency and final result of this process is the exclusive world rule of capitalist production. Once this is reached… further expansion of capital, becomes impossible. Capitalism comes to a dead end…”
Luxemburg is prescient enough to test her own conclusion: “Can this ever really happen? …Imperialism is as much a historical method for prolonging capital’s existence as it is the surest way of setting an objective limit to its existence as fast as possible. This is not to say that the final point need actually be attained. The very tendency of capitalist development towards this end is expressed in forms which make the concluding phase of capitalism a period of catastrophes.”
At first sight, Luxemburg and Marxists of her generation were wrong to believe the then colonial-settler model was the final evolution of imperialism, or that capitalism would not find new ways to sustain and even increase accumulation. In fact, the very defeat of the revolutionary wave in the early 1920s paved the way for fascism, Stalinism and then the Long Boom. With revolution delayed, and the rate of exploitation significantly increased, a new expansionary wave of accumulation was made possible by the advent of new technologies (including plastics) and the mass production of electro-mechanical goods and household consumer durables. The frontier where “further expansion of capital becomes impossible” moved outwards. That should not, in fact, be a surprise. Capitalism won’t leave the historical stage until it has exhausted all its potential – something Marx repeated often.
However, as we have seen, imperialism itself remained an integral part of the system, though in a more sophisticated way. Luxemburg cautioned that the incorporation of the non-capitalist world into the metropolitan system would – potentially – act as a brake on future accumulation, arising from the natural limit to market expansion and raw material supply, and the dearth of profitable new investments. In practice, as noted above, she thought that as the system closed, the most likely variant was imperialist competition leading to war and proletarian evolution –not simple stasis.
The neocolonial experiment in the first three decades after the end of World War Two was a necessity for capitalism during the Long Boom, not an accidental prolongation of the earlier colonial settler era in a new form. The intent was to delay (if not eliminate) the possibility of the metropolitan accumulation system closing in on itself – Luxemburg’s prognosis. The form of neocolonialism was designed to reduce the political and economic costs of incorporating the periphery into the capitalist metropole. It was designed specifically (1) to reduce the political and economic costs of incorporating the periphery; (2) to offshore the burden and political consequences of policing native populations to the neocolonial elites; (3) to provided new possibilities for accumulation through sovereign loans to neocolonial regimes; (4) to allow hegemonic US capital its first serious opportunity to penetrate new markets offered by the former European empires; (5) to exploit petroleum and gas deposits in the Middle East and North Africa on a large scale; and (6) to provide the vast new raw material supplies needed for capital accumulation in the metropoles.
The neocolonial form of exploitation (as opposed to settler colonialism) would – it was hoped – limit the possibility of the revolutionary instability predicted by Luxemburg. This was aided by a by-product of the Second World War: US hegemony. The hegemonic US drive to create a neocolonial zone eliminated the old, competing European empires. Coupled with Cold War imperatives, the result was to reduce (for a time) overt military competition between the imperialist powers. Rivalry was displaced towards the conflict between the West and Stalinism. This not only created a vast arms economy (stimulating accumulation), but it also turned the neocolonial periphery into a zone of intense political and sometimes military competition between East and West.
This had a series of contradictory effects. China and Eastern Europe for the most part withdrew from the world market, narrowing the area of imperialist penetration. After the bloody stalemate of the Korean War (three million dead including circa 35,000 US personnel killed) America created a bulwark against the expansion of Maoist China. In short order, it provided the capital and technology to turn Japan, South Korea and Taiwan into modern, industrial, capitalist economies rather than neocolonial satraps. This, of course, ran the risk of creating new capitalist competitors within the imperialist metropole: new sub-imperialisms. Indeed, that was precisely the outcome in time. Part of the later impetus towards neoliberalism is explained by the need for American capitalism to reboot to meet this upstart competition from Japan and the Asian “tiger” economies.
However, Luxemburg has a point in that imperialist expansion into the periphery must, at some point, encounter diminishing returns. Neocolonialism was an attempt to delay these diminishing returns, to restructure colonial-metropolitan relationships to allow the ex-colonies to continue to be exploited by the metropole. The result was both temporary and unstable. The 30-year experiment with classical neocolonialism produced just the violent instability Luxemburg predicted. Certainly, the newly independent regimes did prove more efficient extraction machines for the West – through sovereign debt repayments, intensified minerals exploitation and vast military sales.
Yet if anything the cost to the West in blood and treasure of what we might dub the “neocolonial” wars (especially in Algeria and Vietnam) proved unsustainable financially and politically. Above all, the neocolonial regimes were inherently unstable. By the 1970s, across swathes of Latin America, Africa and Asia, neocolonial countries had abandoned the benign “self-development” model originally used as ideological cover, in favour of (Western approved) authoritarian dictatorships focused on internal repression and enriching the governing elites.
The failure of bourgeois development theory
The neocolonial experiment triggered a major theoretical debate among bourgeois economists regarding the nature of the system. This debate was centred on the rise of “development studies” in metropolitan universities. Development studies turned out to be an ideological wedge for promoting paternalistic, Western-centric ideas about what was “best” to “modernise” the neocolonial economies, especially in sub-Saharan Africa. The actual results were catastrophic and led to new forms of exploitation.
In sub-Saharan Africa, in the post-colonial era, Western ideologues promoted the idea of land tenure reform and a turn to market-oriented agriculture focused on exporting cash crops. This sounds benign but was a cloak for the imposition of a new extraction regime that actually destroyed local production and left the continent hungry by the 1980s.
Early settler colonialism forced the African peasantry to abandon a relatively sophisticated and sustainable food production system based on community-owned land holdings, to an export economy based producing coffee, cocoa, tea, nuts and several food and cotton. Such cash crops were necessary in order to pay colonial hut and head taxes, to fund the colonial administration. It is no surprise that these new peasant cash crop producers provided the main political force behind national independence movements in African in the 1950s.
Through the 1950s and early 1960s, there was an increase in African agricultural output but mainly involving the new export crops. To make up for the resulting collapse in food self-sufficiency, peasant farmers were also encouraged to grow high-yield crops such as maize and wheat (a neocolonial addition to the African diet) to feed expanding urban populations. All this was hailed by bourgeois economists as proof of the modernisation of peasant agriculture using Western techniques. However, much of the profit from agricultural exports was expropriated by state-run marketing boards that placed themselves between native farmers and foreign markets, enriching the elites. Local farmers also found themselves paying heavily for the new fertilisers promoted by Western development specialists – with the profit going to agribusiness in the metropoles. Peasant farmers struggled and survived only by diverting what meagre profits they made into financing petty trade with the burgeoning African cities. As a result of this set-up, investment in local peasant farms stagnated, along with productivity.
Naturally, the failure of indigenous agriculture to spark an economic “take-off” (a favourite term used by American development economists like Rostow) was blamed on African incompetence rather than the new neocolonialism. As a result, by the 1970s, the use of imported fertilisers dominated the “modernisation” programmes being pushed by Western international development agencies. But then came the 1973 oil crisis, in the wake of the latest Arab-Israeli war. As the price of transport and petro-based fertilisers skyrocketed, production of maize and wheat faltered, causing famine. Neocolonial regimes found it cheaper to import foreign maize, rice and wheat, further eroding local food production. African food exports were also priced out of international markets. Thus the entire edifice of the post-colonial African agricultural model imploded.
But the pain got even worse: Africa became the first model for the introduction of the neoliberal policies that would come to dominate the next era of imperialism. Western “development” agencies – notably the Washington-based Word Bank – blamed the collapse of African agriculture on the over-involvement of the neocolonial states in the economy. The result was the infamous “structural adjustment programs” (SAPs) through which neocolonial regimes had to agree to privatisation of local assets (to Western buyers) and an end to subsidies (bankrupting farmers and exacerbating poverty). The SAPs also led to savage cuts in rural health, education, and agricultural support programmes.
The 1980s became Africa’s “lost decade”. But imperialism abhors an economic vacuum. With local agriculture imploding, peasant farmers turned to primitive (and usually illegal) mining operations prospecting for gold, diamonds, and other minerals. Small-scale mining proliferated especially in countries that had fallen into civil or anarchy, including Angola, Sierra Leone, and the Democratic Republic of Congo. The emergence of this parallel mining system helped fuel African wars – aided by the Western interests who bought the illegal exports.
This catalogue of disaster was the legacy of neocolonism and its ideological camouflage in the shape of bourgeois development economics. Post-independence Africa was “developed” into a new round of famine, civil war, and capture by the global market. The experience led directly to the return of neoliberal, free market economic policies being imposed on the continent.
Of course, there were radical theorists outside the Marxist left who were critical of bourgeois development economics – notably Immanuel Wallerstein, Andre Gunder Frank, and Samir Amin. If there is a weakness in their approach – especially Wallerstein and his “world-system” theory – it lies in seeing imperialism as a seamless historical whole rather than a series of episodes determined by class struggle. The neocolonial period was a distinct phase conditioned by the needs of the capital accumulation regime during the Long Boom and by the rise of US economic and political hegemony. This emergence of this phase, as we have seen, was met with heroic resistance in the neocolonial zone.
The truth is that neocolonialism deliberately and systematically underdeveloped the former colonies as a matter of economic and political necessity during the Long Boom. In the mid-1970s, the proportion of the population in the neocolonial world living (and starving) on the margin of subsistence was still over 50 per cent despite a generation which saw capital accumulation reach its zenith in the metropoles. This is the glaring contradiction of capitalism.
Uneven and combined development
The neocolonial era is also a test of the Marxist theory of uneven and combined development (UCD) and its political corollary of permanent revolution. These ideas are most closely identified in the work of Leon Trotsky. The core of this argument breaks down into two pieces.
First, that capitalism develops unevenly – an obvious truism. But this implies that “lagging” zones need to adopt the most advance technology and techniques to compete. Imperialists in the “advanced” zones, when they export capital, will actually favour investing in the most modern factories and technology, to combine with cheap labour in the laggard areas. Underdevelopment, in this model, precipitates a leap forward that (at least in certain industrial sectors) puts the laggard in front economically.
But this has serious political consequences for pre-capitalist societies on the peripheral zone. They suddenly find themselves with an advanced proletarian stratum in their urban areas (even if it is small). This alters the class dynamic of any bourgeois revolution, especially if the early spread of a market economy is disrupting traditional peasant society. In this situation, revolutions against feudal, oligarchical regimes can start as an attempt to complete bourgeois-modern transformation – principally introducing democracy, giving land to the mass of the peasantry, advancing the rights of workers, sweeping away religious and clerical obscurantism, emancipating women, and creating a unified economy. But the process will not stop there. Instead, the revolution becomes “permanent” and “grows over” into a full-blooded socialist transformation without stopping at the bourgeois democratic stage. The urban proletariat and the radicalised peasantry ally to overthrow the feudal-oligarchical-comprador ruling class. But they don’t – can’t – stop there.
This is how Trotsky explains the success of the 1917 Russian revolution. But does the history of the neocolonial period – circa 1945 to the end of the Seventies – confirm or deny the idea s of UCD and permanent revolution?
The reality, of course, turned out to be much more complex and nuanced than this schematic outline. Though we should say in Trotsky’s defence that he never envisaged an isolated revolutionary regime building socialism in one country without regressing in some fashion – witness the fate of the Russian revolution itself.
In one obvious way the rise of neocolonialism complicated the dynamic of both UCD and permanent revolution. The political thrust of the neocolonial project was to create pliant, ostensibly independent states run by a client ruling class subservient – strongly or weakly – to the capitalist metropoles. This project was premised on blocking any “growing over” of a worker-peasant revolution into a successful and sustained break with capitalism by imposing a local bourgeois regime or (usually) a military-Bonapartist caste that would evolve into a bourgeoisie. In many situations, as we have noted, the full force of imperialist military intervention was deployed early in the process – before and after nominal independence – to crush the revolutionary forces. In rare cases – Cuba for instance – the US hegemon was temporarily distracted or caught off guard, allowing a revolutionary process to unfold. Even here, the unique circumstances of the deal between Kennedy and Khrushchev to remove Russian nuclear weapons from Cuba was balanced by the American promise not to invade the island and overthrow Castro. Even then, the US imposed a decades-long economic blockade.
There is another element in the neocolonial system which complicated any successful revolutionary transition beyond capitalism: the creation of a series of so-called “multilateral” agencies which were, in effect, a disguised extension of Western capitalist state institutions into the very heart of the nominally independent, post-colonial regimes. These included the World Bank (created 1944), the International Monetary Fund (1944), the UN Food and Agriculture Organisation (1945), the International Development Association (1959, actually an offshoot of the World Bank), the American Development Bank (1959), and the Organisation for Economic Cooperation and Development (1961). For the record, the one major multilateral agency set up as a result of lobbying by the neocolonial countries themselves was the World Health Organisation (1946). Nominally independent, post-colonial states found themselves absorbed into (and policed day-to-day) by these international agencies, the most important of which are headquartered in America. Here is the beating heart of the “neo” in neocolonialism.
After 1945, the practical definition of creating a bourgeois state (or, in Marxist terms, completing the tasks of the bourgeois revolution) necessitated integration of new regimes into this global politico-economic system. To a degree, the transition from feudal particularism had become synonymous with “modernisation” as defined by the imperialist order and its multilateral institutions. Local elites and the proto bourgeoisie accepted this even if they tried to create a political balance with the local peasantry. By espousing anti-Western rhetoric. All this modified the way in which permanent revolution could operate. In practice, these multilateral state institutions – while incorporating the post-colonial regimes into the imperialist order – also provided a prop for the local proto bourgeois class, strengthening it against the revolutionary upsurge “growing over” in an anti-capitalist direction. As such, neocolonial institutions acted as a break on revolution as much as direct Western military intervention.
This is not to suggest that the concepts of uneven and combined development and permanent revolution are wrong per se. But they apply best to the European periphery in the period up to the start of the Long Boom, for here we find elements of advanced capitalism combined with an unresolved land question. Czarist Russia was indeed the great example of UCD, and the combined worker-peasant revolution did overthrow capitalism and take the Soviet Union out of the Western economic system for over 70 years. The Spanish Civil War (1936-39) saw an advanced urban proletariat in Catalonia and the Basque Lands ally with landless peasants in the south of Spain to repel a fascist military coup by seizing the factories and the land in a classic act of permanent revolution. Only the restraint and counter-revolutionary actions of the Stalinist Spanish Communist Party kept the upsurge within bourgeois democratic boundaries, ultimately to Franco’s benefit. Again, in Italy in 1945, during the dying days of the Mussolini regime, the armed urban workers and peasant farmers of northern Italy staged a united rebellion that was anti-capitalist in direction. Again, only the counter-revolutionary intervention by Stalinism (and the arrival of Allied troops) kept this upsurge from moving beyond the restoration of bourgeois democracy. Ditto in France at the end of the war. One major political project of the Long Boom and European reconstruction – via the Common Market Agricultural Policy – was to eliminate the unruly peasanty in Spain, Italy and France and turn them into urban proletarians, thus ending the prospect of permanent revolutions in the European zone.
If there is one example in the post-1945 era of a classic (or almost classic) example of UCD and permanent revolution in the neocolonial world it is Algeria. True, there was no major advanced industrial sector in Algeria. Instead, metropolitan France imported Algerian workers wholesale. By the 1960s, there were over half a million Algerians working in mainland France, around 50 per cent in engineering and construction. This immigrant group virtually funded the war for independence back home through “taxes” imposed by the FLN and provided the necessary infrastructure and mass support to sustain the insurrection for a decade. The urban struggle inside Algeria itself was defeated in 1956 when French paratroopers occupied the Casbah in Algiers. Thereafter the conflict combined a peasant war in the Algerian countryside in alliance with the Algerian proletariat in France, where a vicious urban guerrilla fight was also waged against the French state and its fascist auxiliaries.
After independence in 1962, as we noted above, a domestic process of anti-capitalist reconstruction began under Ahmed Ben Bella involving nationalisations and land distribution under workers’ control. The emphasis was put on self-management wherever possible and there was a cadre of Algerian and European revolutionary Marxists involved in the administration. The discredited Communist Party was in no position to interfere. Yet these developments were extinguished within a few years. There was no permanent revolution. Why?
One conclusion is that while a worker-peasant alliance opens the prospect of a revolutionary break with capitalism – indeed that circumstances will always propel the insurgent masses to move forward beyond bourgeois limitations – the global balance of forces is likely to act as a check on the progress of that social and economic momentum. The political and economic isolation of anti-colonial revolutionary regimes enforced by the West forces a turn towards self-financed industrialisation, which in turn leads to the super exploitation of the peasantry and the end of the worker-farmer alliance. Internalised industrialisation also favours the instant rise of a state bureaucracy that expropriates the democratic rights of both workers and peasants – as occurred in Algeria. In the neocolonial era, the general experience was for the resulting military-Bonapartist regimes to make their peace eventually with the metropoles, even if they maintained a fierce public ideological opposition to imperialism – witness the final trajectory of the Gaddafi regime in Libya.
In only two significant cases, anti-colonial revolutions were successful in expelling the imperialist powers and escaping reabsorption into the Western economic system (though only for a matter of decades). These were China and Vietnam. Many Trotskyists claimed these episodes as a vindication of the idea of permanent revolution despite the obvious absence of a local proletariat of any scale involved in the actual defeat of neocolonialism. True, there was a major urban proletarian movement in China, but this was eliminated in 1927 when Chiang Kai-shek’s KMT turned on his erstwhile (and naïve) Communist allies, massacring most of the CP cadres and launching a white terror civil that killed at least a million people. Mao was forced to quit the cities and initiate a long peasant guerrilla war. Certainly, Mao was able to create “red bases” – liberated zones under Communist control – but the result was a prolonged peasant war, not a proletarian uprising in any conventional sense. The final victory of Mao over the Nationalist forces was due to mass defections of peasant conscripts from the KMT armies after the defeat of Japan.
That said, it might be more accurate to recast the theory of permanent revolution as part of a global dynamic rather than as an episode in any particular bourgeois state. The Chinese revolution was successful in 1949, at the dawn of the neocolonial project, because there was also mass proletarian action around the world against fascism that spilled over into a wave of popular struggles against the capitalist status quo – including a massive strike wave in the United States, the election of the Labour government in the UK, the upsurge in support for the Communist parties across Western Europe, and the civil war in Greece. These struggles diverted the attention of the ruling classes in the metropoles between 1945 and 1950, particularly in America. Combined with the weakened economic state of the European metropoles, this created a space for the Chinese Communists to seize the mainland (despite orders from Stalin to do a deal with the KMT Nationalists). It is reasonable to conclude that if Mao had agreed to “share” power with the KMT, then by the 1950s US economic and military support for Chiang Kai-shek’s regime might have kept China within the neocolonial zone.
We should also note that fierce US hostility to both Mao’s China and Ho Chi Minh’s Hanoi government in Vietnam forced both regimes towards autarky and isolation from the West. In the case of Vietnam, rather than courting Ho in a purely nationalist direction – which he might have taken – successive American administrations first backed the return of French imperialism then launched an insane ground and air war themselves in the 1960s. Here the insistence of US capitalism to incorporate Vietnam into its new neocolonial system proved a fatal conceit. Ho’s regime reacted with a messy but genuine land reform in the 1950s which consolidated popular support among the peasanty and doubled agricultural output (before a renewed turn to collectivisation in the 1960s). But ultimately, the successful Vietnamese resistance to US neocolonialism in the Sixties and Seventies was achieved very much as a result of international solidarity undermining US capitalism’s willingness to continue its intervention. That episode is perhaps the clearest expression of permanent revolution operating at a global level.
Finally, we should note that these successful anti-colonial revolutions in China and Vietnam were led parties claiming at least a nominal allegiance to Marxism. The victory of the Soviet Union over fascism – with all its nuances and despite the counter-revolutionary history of the Stalinist regime – embedded Marxism as an ideological, anti-colonial banner in repressed peasant populations, especially among the young. Whatever the legitimate criticisms to be made of Stalinism, it would be wrong to ignore the ideological impact of Marxism or the anti-imperialist rhetoric of the Soviet bloc in giving a political and intellectual coherence to uprisings in the global periphery during the neocolonial era. The weakness of peasant uprisings has always been their ideological vacuity coupled with localism and divisions between the landless and smallholders. A common Marxist ideology provided a world view and an ideological bond between urban worker, intellectual and peasant. Post the Second World War, peasant uprisings led (in whole or part) by Communist parties took place not only in China and Vietnam but in Malaya and Indonesia. It is difficult to imagine these risings would have been so prolonged or energetic without this Marxist ideological leavening transforming them from classic jacquerie into long-term peasant wars. This development can be seen as one aspect of Uneven and Combined Development, but a potent one in the era of neocolonialism.
The end of classical neocolonialism
What ended the classic era of neocolonialism and brought about the consequent rise of neoliberalism? As we have seen, the neocolonial system was too unstable to last and imploded from its own contradictions. But its final demise was bound up with a simultaneous crisis in the metropoles. Post-war capitalism was a global, integrated system of exploitation and accumulation. As a result, the whole global system went into crisis at the end of the 1970s.
At the end of the Second World War a hegemonic US imperialism imposed a new world trading system based on fixed exchange rates between trading nations, and the use of the dollar as the main global means of exchange (backed by American gold reserves). This fixed exchange rate system was designed to protect the value of US investments abroad from devaluation and to give America a trading advantage as it could print dollars freely to buy imported oil and foreign assets. This dollar system was integral to the new neocolonial order as well as advancing US penetration of European markets using local cheap labour. However, the dollar regime collapsed in the early 1970s.
Without going into events in detail, essentially the reviving imperialisms in Europe and Japan found the fixed exchange rate system onerous as it imposed excessive real prices on their exports. At the same time, the new neocolonial states found themselves starved of dollars to fund imports unless they kowtowed to US dominated multilateral institutions. Meanwhile, US manufacturing capital extracted vast amounts of surplus value from the rest of the world courtesy of rigged (transfer) pricing to evade foreign taxation. Something had to give.
In the event, it was the French who broke ranks. Defeat in two bloody colonial wars – Vietnam and Algeria – had exhausted the French economy and split the bourgeoisie. This led directly to the Gaullist Bonapartist regime in 1958. De Gaulle abandoned Algeria and set about modernising the French economy, starting with the devaluation of the franc to boost exports (in defiance of the fixed exchange rate system). But the subsequent economic revolution provoked the worker-student uprising of 1968. Clinging to power narrowly, de Gaulle mobilised bourgeois and petty bourgeois nationalism by launching a full-frontal attack on American economic hegemony. He transformed French dollar holdings into gold, draining America’s gold reserves. President Nixon now mired in his own neocolonial war in Vietnam – responded by abandoning the entire global fixed exchange rate mechanism. Imperialism lurched into a dangerous free for all.
With global currency values now gyrating, and America printing billions of dollars to fund its military adventure in Vietnam, the world was soon gripped by raging price inflation. This in turn provoked intense class battles in the metropoles, as workers struck to maintain their standard of living. This sudden weakness of the imperialist system also produced a reaction in the neocolonial world. The Arab countries launched an oil boycott in the wake of the 1973 Yom Kippur war – a boycott that tuned into a massive energy price hike that added to inflation and a collapse in investment levels in the metropoles. In Africa, successful insurgencies in the remaining Portuguese colonies led to the overthrow of the dictatorship in Lisbon by an exhausted conscript army. This, in turn, hastened the fall of the neighbouring Franco dictatorship.
We might term the period of the 1970s pre-revolutionary. The symbiotic crisis of the metropoles and the neocolonial zone opened up the prospect of revolutionary transformation and the end of capitalism. As we know, that moment was lost. Instead, capitalism not only reasserted itself but embarked on a new neoliberal accumulation regime. This was based on integrating the former Soviet bloc (especially China) into the global market. Production was transferred from the metropoles to Asia and Eastern Europe, thereby undermining trades union power in the West. The offshoring of production was facilitated through a massive increase in direct Western investment into Asian and East European manufacturing. In Marxist terms, the organic composition of capital was vastly intensified in the former neocolonial zone, allowing the rate of exploitation (productivity) to be raised to levels higher even than in the West. This process of extraction was allied to low wages and harsh work discipline imposed by authoritarian regimes. In China, huge numbers of peasants were forced off the land and into new coastal cities to provide a new proletariat to exploit.
This globalisation of production was premised on a turn towards the free movement of capital and goods on an international scale. It also required a new circuit of capital to bring surplus value generated in the new manufacturing zones back into the metropoles. This was accomplished in two ways. First, the direction of sovereign lending was reversed. Emerging economies used their export earnings from being a part of the new integrated, global supply chains to buy US government bonds. As a result, American imperialism began to run both a trade deficit – importing more goods than it exported, unlike in the Long Boom – while incurring a massive (technical) debt to the “emerging” economies, chiefly China.
This new world appeared topsy-turvy compared with the neocolonial era of 1945-75. Trade and capital flows appeared to be in reverse. However, behind this subterfuge, lay a new form of imperialist exploitation: finance capital had finally broken free entirely from industrial capital. Facilitated by new technology (computers, the internet, instant telecoms) global capital became ultra-centralised – and increasingly in the hands of large US investment banks. Money capital flowed from the metropoles to a small group of (chiefly American) high-tech monopolies and was invested in offshore production facilities to extract surplus value from a vast new proletariat – the global working class doubled between 1980 and 2010.
These giant high-tech monopolies generated super profits from an above average rate of return. This drove up their share values to insane levels, creating vast new sources of “fictitious” capital (to use Marx’s term). This in turn fuelled more accumulation. The giant US investment banks at the heart of this new imperialism made huge profits from charging at all stages – collecting debt interest, fees on issuing corporate bonds, and fees on selling US government bonds to foreign central banks.
We might christen this new stage one of “monopoly financial imperialism”.
Monopoly financial imperialism
And as in previous iterations, the new form of imperialism demanded the integration of a metropolitan zone and a subordinate zone. In this phase, the Western working class plus a new, parasitical petty bourgeois layer (funded out of the surplus value extracted from the exploited regions) was turned into a mass consumer market for goods imported from the periphery. This arrangement closed the circle of money capital into offshore production, then surplus value back into metropolitan sales and realised profits.
But we should note that the Western working class was forced into personal debt (via the housing mortgage market) in order to provide the level of consumption needed to valorise this system – clearly an unsustainable component. And without the parasitical new petty bourgeois class of conspicuous consumers – bankers, managers, advertising execs, the fashion industry, public intellectuals, the elite university system, the cultural and communications providers, and the luxury goods industry – the entire system would collapse from underconsumption. The period after the mid 1990s saw wages stagnate in the Western working class while the share of GDP (as a crude proxy for surplus value) going to these privileged layers increased dramatically.
One consequence of this new circuit of trade, capital and exploitation was its extreme fragility. The so-called “Washington consensus” required an uninterrupted flow of capital, goods and valorisation through so-called free market relations. But the very act of de-legitimising the state brought its own complications. Maintaining stability demanded that the US hegemon use the maximum military and political force to impose global order. The notion that the demise of the Soviet bloc and the end of the Cold war would usher in an era of global peace was always illusory if not a calculated lie. Certainly, the US promoted liberal democratic regimes (especially in Latin America and the Republic of South Africa) as a way of defusing revolutionary unrest and fostering a new, consuming middle class. But America and its NATO appendage soon dropped all pretence that the West’s military power was simply a product of Cold War rivalry and would wither on the vine.
Instead, urged on by a new generation of “neocon” ideologues (often apostate leftists), the US presented itself as a global policeman to the point of instituting “regime change” where necessary. The world entered a series of semi-permanent wars fought by America, its allies and proxies – in Iraq, Afghanistan, Libya, Syria, Yemen, Lebanon, the Gulf, Somalia, and across the Maghreb. As NATO expanded eastwards, America also found itself involved in savage proxy wars in the Balkans, the Caucuses and finally in a massive conflict between Putin’s Russia and Ukraine. And in fulfilment of Rosa Luxemburg’s prediction, monopoly financial imperialism spawned its own inter-imperialist rivalries, with the aging American hegemon now in face-to-face economic and political competition with China.
Lessons for the future
In order to confront monopoly financial imperialism in its death rattle, we need to draw lessons from the previous stage – that of neocolonialism and its implosion.
Lesson 1: The necessity of internationalism
The neocolonial system operated – politically, economically and militarily – as an integrated, global whole. While it is sometimes convenient to talk about a core and a periphery, the reality is that it was a world system. This is important to grasp because much of the neocolonial period was spent by leftists on a fruitless debate about whether to prioritise work in the metropolitan working class (to overthrow capitalism in the metropoles) or to prioritise solidarity movements with the ongoing colonial revolutions. This division proved a chimera as the imperialist monster existed as a whole, not its constituent parts. While prioritising an immediate campaign (strike, solidarity action) was necessary, the actuality of the revolution required simultaneous, continuous work in both the metropolitan and neocolonial sectors.
It is possible to discern in many of these old debates a European and Western bias. This was often expressed in the formula that peasant-inspired uprisings in the neocolonial world were merely the prelude to the “real” anti-capitalist uprising the West. This implicit downgrading of peasant struggles was premised on a fundamental misunderstanding of the role of such resistance movements in the era of neocolonialism. Traditional peasant uprisings were directed against feudal oppression (landlords) or against bourgeois modernisation (the replacement of traditional ties to the land with market relations). But the petty bourgeois nature of pre-capitalist peasant class society was family and clan focussed, limited in access to education and culture, highly localised because tied to the land, deeply misogynistic and frequently captured by clerical oppression. Together this made peasant societies deeply conservative, highly fragmented and limited in their capacity to organise collectively. Peasant uprisings therefore took the form of short, violent spasms incapable of overthrowing the state or even creating their own permanent state. In this perspective, episodic peasant revolts and anti-landlord wars could be adjuncts of proletarian, urban revolutions but the latter were the sine qua non of any successful anti-capitalist revolution.
This stock view of the political role of the peasantry has to be modified when we come to the neocolonial era. The primacy of the proletariat (sellers of labour power) as the agent for overthrowing capitalism and instituting the path to a classless society is not in doubt. But classes and class struggle are an organic whole, not discrete parts of a piece of social clockwork. In this regard, the neocolonial peasantry was a new historical phenomena and part of a new relationship of class forces. As we saw above, the peasantry in the neocolonial phase was increasingly divorced from traditional subsistence agriculture and forced to supply the capitalist export market or provide cash food crops for burgeoning local urban markets. This new peasantry was also burdened with higher taxes to fund sovereign debt repayments to international lenders. In other words, the neocolonial peasantry was an integral part of the exploitation and accumulation regime specific to the Long Boom. The revolts of this new peasantry directly undermined global capitalism, finally imploding the complex international financial structures created during the Long Boom. The struggles of the proletariat in the metropoles were intricately linked to uprisings in the neocolonial zone, reducing the capacity of imperialism to impose order (viz. in Vietnam). It was never a case of “sympathetic” solidarity, but a matter of a common victory or defeat.
Lesson 2: Practical solidarity
The necessity of internationalism is just as vital today. But class modalities have altered dramatically with the changed nature of later imperialism. The size of the global proletariat has doubled, but this new working class is concentrated largely in Asia. This shift, taken with the atomisation of working class life and organisation in North America and Europe, has severely weakened proletarian internationalism compared with the 19th and 20th centuries.
Simultaneously, the peasantry has shrunk in numbers as mechanical agribusiness has come to dominate agriculture. Displaced peasants have been forced to migrate to the gigantic shanty towns of the global south where they eek out a precarious living. This new, mass lumpenproletariat has become the social base for the spread of criminal gangs which now threaten the very existence of a number of states in Latin America and Asia – witness the recent implosion in Haiti. While there are numerous examples of lumpen elements (with little to lose) joining in proletarian revolutions, the sheer scale, immiseration and criminal domination of this strata makes organised and sustained solidarity difficult, if not practically impossible.
The main spark of peasant resistance in the era of monopoly financial capitalism has been from indigenous peoples, notably in southern Mexico (the Zapatista movement), Bolivia (during the presidency of Evo Morales), India (the ongoing Naxalite rebellion), and the Philippines. The issue here is that such struggles are frequently isolated from the outside world by language, culture, physical isolation and the sheer scale of state repression. Again, solidarity becomes problematic.
In the Middle East, North Africa, Sahel and west Africa a special situation has arisen. The sheer scale of imperialist wars (and Saudi and Israeli proxy wars) designed to enforce a neoliberal pax and secure oil supplies has effectively devastated the region politically. This, together with the loss of popular legitimacy of secular military-Bonapartism, Baathism and Nasserism, has opened a vacuum into which a millenarist – and sometimes nihilistic – Islamic fundamentalism has emerged as a political response. Rightly or wrongly, this has created new barriers to developing mass solidarity movements in the metropoles – barriers that Western propaganda has been quick to exploit (viz. “the War Against Terror”).
This is not a counsel of despair but a restatement of the need to rebuild international solidarity movements – amongst proletarians and with peasant-national struggles – on an ongoing and permanent basis. But few international solidarity movements exist on the model of the neoliberal era and before. The La Via Campesina movement does some work coordinating peasant struggles on an international basis but functions more as an NGO than a body offering practical solidarity. The once great Socialist International still claims 132 social democratic and reformist parties as supporters. But even this motley collection of has-beens, opportunists and shadow organisations – fronted by Spain’s Pedro Sanchez – is too radical for the British Labour Party, which now maintains only “observer” status.
Perhaps the best example of an attempt to create an anti-globalist, anti-imperialist movement was the series of World Social Forums, first held in Brazil in 2001. These were a spontaneous response to the imposition of the neoliberal world order, following the Seattle riots of 1999. The WSFs were – for a time – a vehicle for activists and radical social movements to come together to share and debate at a global level. But while WSFs still take place, the energy has gone out of the movement, and the meetings are formal gatherings of NGOs. The original strength of the WSF project came from the leftist turn of Brazilian politics during the first Lula administration. But President Lula’s drift to the right and the shift of Brazilian politics towards rightist populism took away much of the social base (and funding) of the WSF.
The possibility for creating some new “international” probably lies in the emergence of an initiative similar to the WSF. That is to say, a spontaneous gathering at a global level of existing radical movements, triggered by some major political event. The major political gap in the WSF gatherings was the absence of a significant Asian link. The bulk of the global proletariat is now in India, China, Vietnam and Indonesia. India and China still have significant peasant populations. No global anti-imperialist movement can function or prosper without links to these strategic social layers.
Slaying the dragon
In one real sense, imperialism is capitalism. The accumulation of capital expands till it fills the globe, because it can do no other. But what happens when imperialism reaches its apogee? As Luxemburg predicted, this closing of the system will usher in a period of global conflicts and revolutionary uprisings – already presaged in the Arab Spring, the wave of anti-austerity revolts in the 2010s and the undermining of bourgeois democracy by a rising tide of populism and authoritarianism. The bloody saga that was the neocolonial era shows both the viciousness and tenacity of capital when defending its interests. But equally, the neocolonial period is testimony to the heroic resistance and sacrifice of millions of ordinary men and women in defence of their rights and in the hope of a better world. As capitalism-imperialism enters its final stage, this is the lesson we should escribe on our banner: resist!
