...The Economic Basis of Imperialism
The birthplace of the notion of economic imperialism, as opposed to imperialism more generally, was the United States a little more than a century ago. In his essay, "The Economic Basis of Imperialism," first published in the _North American Review_ in 1898, at the time of the Spanish-American War, Charles A. Conant argued that imperialism was necessary to absorb surplus capital in the face of a shortage of profitable investment outlets -- in other words, to relieve what he called the problem of "congested capital." For Conant,
Whether the United States shall actually acquire territorial possessions, shall set-up captain-generalships and garrisons, whether they shall adopt the middle ground of protecting sovereignties nominally independent, or whether they shall content themselves with naval stations and diplomatic representatives as the basis for their rights to the free commerce of the East, is a matter of detail....The writer is not an advocate of "imperialism" from sentiment, but does not fear the name if it means only that the United States shall assert their right to free markets in all the old countries which are being opened up to the surplus resources of the capitalist countries and thereby given the benefits of modern civilization. Whether this policy carries with it the direct government of groups of half-savage islands may be a subject for argument, but upon the economic side of the question there is but one choice -- either to enter by some means upon the competition for the employment of American capital and enterprise in these countries, or to continue the needless duplication of existing means of production and communication, with the glut of unconsumed products, the convulsions followed by trade stagnation, and the steadily declining return upon investments which a negative policy will invoke.*
Conflict among the great powers at the end of the nineteenth and the beginning of the twentieth century, over the partition of Africa, the Sino-Japanese War (1894-1895), the Spanish-American War, the South African (Boer) War, and the Russo-Japanese War, signaled the rise of a new imperialism, associated with monopoly capitalism, that was qualitatively different from the colonialism that had preceded it. This led to an economic theory of imperialism on the part of the proponents of imperialism -- who no longer viewed it as mere "sentiment," as emphasized in Conant's analysis. The changes in imperialism also soon gave rise to a more thoroughgoing critical analysis beginning with John A. Hobson's classic _Imperialism: A Study_, first published in 1902. Hobson was a leading British critic of the Boer War and out of this developed his critique of imperialism. In a famous chapter of his book entitled "The Economic Taproot of Imperialism" Hobson observed:
Every improvement of methods of production, every concentration of ownership and control, seems to accentuate the tendency [to imperialist expansion]. As one nation after another enters the machine economy and adopts advanced industrial methods, it becomes more difficult for its manufacturers, merchants, and financiers to dispose profitably of their economic resources....Everywhere appear excessive powers of production, excessive capital in search of investment. It is admitted by all business men that the growth of the powers of production in their country exceeds the growth in consumption, that more goods can be produced than can be sold at a profit, and that more capital exists than can find remunerative investment. It is this economic condition of affairs that forms the taproot of Imperialism.
Hobson's work was not socialist. He believed that imperialism was due to the dominance of certain concentrated economic and financial interests and that radical reforms that dealt with maldistribution of income and the needs of the domestic economy could bring to an end the imperialist impulse. Yet his work was to take on a much larger significance through the influence it exercised on Marxist analyses of imperialism, which were emerging at this time. The most important of these was Lenin's _Imperialism, the Highest Stage of Capitalism_, first published in 1916. The main purpose of Lenin's analysis was to explain the interimperialist rivalry among the great powers that had led to the First World War. But in the process of developing his analysis Lenin linked imperialism to monopoly capitalism, arguing that in its "briefest possible definition...imperialism is the monopoly stage of capitalism." He explored in that context a set of economic factors that went well beyond maldistribution of income or the profit-seeking goals of particular monopolistic corporations. Monopoly capitalism was seen as a new stage, beyond competitive capitalism, in which finance capital, an alliance between large firms and banking capital, dominated the economy and the state. Competition was not eliminated but it continued mainly among a relatively small number of giant firms who were able to control large parts of the national and international economy. Monopoly capitalism, in this sense, was inseparable from interimperialist rivalry, manifested primarily in the form of a struggle for global markets. The resulting division of the world into imperial spheres and the struggle that this entailed led directly to the First World War. Lenin's more complex perspective on imperialism went beyond an argument that focused simply on the necessity of finding investment outlets for surplus capital. He also placed emphasis on the impetus to gain exclusive control of raw materials and tighter control of foreign markets that arose out of the globalizing conditions of the monopoly stage of capitalism.
Later Marxist (and radical, non-Marxist) analyses were to focus more than Lenin himself had on some of the more general features of imperialism, characteristic of capitalism in all of its stages, such as the division between center and periphery, an issue that had been broached by Marx. But Lenin's sense of a new, more developed, form of imperialism, associated with the concentration and centralization of capital and the birth of the monopoly stage, has retained much of its significance in our age -- characterized by monopoly capitalism at an advanced phase of globalization. Indeed, it was the very success of Marxist theories of imperialism, which uncovered capitalism's systematic exploitation of the periphery and the conditions of interimperialist rivalry in great detail -- so that the emperor was seen in all of his nakedness -- which resulted in the term "imperialism" becoming beyond the pale within mainstream discourse. As long as the Soviet Union existed and a strong tide of anti-imperialist revolutions was evident in the periphery, there was no possibility of capitalism openly embracing the concept of imperialism in the name of the promotion of civilization. U.S. military interventions throughout the third world to combat revolutions or to gain control of markets were invariably accounted for within official discourse in the United States in terms of Cold War motives, not in terms of imperial ends.
The Age of Imperialism
_The Age of Imperialism_ by Harry Magdoff, published in 1969, had the distinction of being the most influential direct attempt to counter the dominant view of U.S. foreign policy during the Vietnam War period through an empirical treatment of the economics of U.S. imperialism.*...
...Magdoff...emphasized the flow of foreign direct investment abroad and its effect in generating a return flow of earnings. He criticized the common error of simply comparing exports or the foreign investments of multinational corporations to GDP. Rather the importance of these economic flows could only be gauged by relating them to strategic sectors of the economy, such as the capital goods industries; or by comparing the earnings on foreign investment to the profits of domestic non-financial business. In this connection, Magdoff provided data showing that earnings on foreign investments had risen from about 10 percent of all after-tax profits for U.S. domestic nonfinancial corporations in 1950 to 22 percent in 1964.
This work was also notable for its arguments on the international financial expansion of U.S. capital, based on the dollar's hegemonic position in the world economy and on the growth of a debt trap in the third world. It was here that Magdoff provided his first explanation of the "reverse flow process" inherent in the continuous reliance on foreign debt. "If a country borrows, say, a $1000 a year," he wrote, "before long the service payments on the debt will be larger than the inflow of money each year." Assuming the simple case of an annual loan of $1000 at 5 percent interest "to be repaid in equal installments over 20 years," it follows that in the fifth year almost fifty percent of the annual loan will go to servicing the debt; in the tenth year approximately ninety percent of the loan will be devoted to debt service; in the fifteenth year, the outflow for interest and amortization will be greater than the loan itself; and in the twentieth year "the borrower is paying out more than $1.50 on past debt for every $1.00 of new money he borrows."
Would it not be possible, Magdoff asked, for a country to avoid this trap by not borrowing year after year, but instead using the borrowed money to develop industry to provide the revenue to dispense with borrowing and even pay off the debt? A large part of the answer was to be found in the reality that since the repayment has to occur in the currency of the creditor nation, the debt could only be repaid (irrespective of the rate of growth) if there were enough exports to provide the needed foreign exchange. Even as early as 1969, long before the third world debt problem was deemed critical, Magdoff observed that "the service payments on the debt of the underdeveloped world has increased more rapidly than has the growth in its exports. Hence the burden of debt has become more oppressive and the financial dependency on the leading industrial nations and their international organizations such as the World Bank and the International Monetary Fund has increased accordingly."
The essence of imperialism as it manifested itself in the late twentieth century, according to Magdoff, was the globalization of monopoly capital under conditions of U.S. hegemony. The closing pages of _The Age of Imperialism_ stated:
The typical international business firm is no longer limited to the giant oil company. It is as likely to be a General Motors or a General Electric -- with 15 to 20 percent of its operations involved in foreign business, and exercising all efforts to increase this share. It is the professed goal of these international firms to obtain the lowest unit production costs on a worldwide basis. It is also their aim, though not necessarily stated, to come out on top in the merger movement in the European Common Market and to control as large a share of the world market as they do of the United States market.
Most of the essays in Magdoff's 1978 book _Imperialism: From the Colonial Age to the Present_ dealt with misconceptions about the history of imperialism. Of chief importance in this respect was Magdoff's response to the question: "Is Imperialism Necessary?" In answer to the common contention that capitalism and imperialism were completely separate categories, and that the latter was not necessarily an attribute of the former, he argued that capitalism had been from the start a world system and that imperialist expansion in the broad sense was just as much a part of the system as the search for profits itself. He also argued against those on the left who sought to generate an analysis of modern imperialism through a particular theory of economic crisis or the necessity of the export of capital, rather than recognizing that imperialism was intrinsic to capitalism's globalizing tendencies from the very start. Despite the importance of economic laws of motion of capitalism in generating the reality of modern imperialism, any simple, mechanical, narrowly economic explanation (separated off from political, military, and cultural factors) was to be avoided. Rather the ultimate sources were to be found in the historical development of capitalism since the sixteenth century. "The elimination of imperialism," Magdoff concluded, "requires the overthrow of capitalism."
Policing the Concept of Imperialism
The mainstream responded to these and related arguments by placing the term "imperialism" (insofar as it was linked to capitalism) more and more outside the realm of acceptable discourse -- characterizing it as a purely ideological term. At the same time there were attempts to isolate the concept of "economic imperialism" specifically, by disassociating it, in the narrow, compartmentalizing method of mainstream social science, from political imperialism, cultural imperialism, etc., and setting it up for special criticism.* This attack on Marxist and radical approaches to imperialism succeeded so effectively that, by November, 1990 Prabhat Patnaik wrote an article for _Monthly Review_ entitled "Whatever Happened to Imperialism?" that raised the question of the almost complete disappearance of the term from left analysis in the United States and Europe. It was particularly astonishing that this had occurred in the face of U.S. military interventions (both overt and covert) in countries such as Nicaragua, El Salvador, Guatemala, Grenada, and Panama and despite the rapacious role of multinational corporations around the world (for example in India, where Union Carbide killed thousands).
"Younger Marxists," Patnaik wrote, "look bemused when the term is mentioned. Burning issues of the day...are discussed but without any reference to imperialism....The topic has virtually disappeared from the pages of Marxist journals, especially those of a later vintage." The history and theory of imperialism, he noted, is no longer discussed.
The historical significance of this can be seen in an ideological split that occurred in response to the struggle over globalization and the new Balkan Wars, and later in relation to the September 11 attacks on the New York World Trade Center and the Pentagon and the subsequent War on Terrorism. On the one hand, mainstream intellectuals, particularly in the face of the widening military operations of the United States and NATO but also in response to such issues as U.S. support of the World Trade Organization (WTO), became more willing to reappropriate the concept of imperialism as a way of putting a larger gloss on what was presented as the beneficial hegemony or "soft imperialism" of the world's only superpower. On the other hand, post-Marxist and erstwhile radical thinkers often took on the role of criticizing any use of the concept of imperialism in its classical Marxist sense, detaching it from capitalism, global exploitation, and economic imperialism, and arguing that since the term was unacceptable in polite discourse it should be discarded.
An example of the latter is an article by Tom Barry, entitled "A Return to Interventionism," appearing online in _Foreign Policy in Focus_ http://fpif.org on March 11, 2002, ostensibly responding to the September 11 attacks and the War on Terrorism. Barry, who in his earlier writings in the 1970s had not hesitated to embrace the concept of imperialism, argued in "A Return to Interventionism," that,
For some, especially in the new and old Left this [the Vietnam era] was the "Age of Imperialism," an era when the U.S. was securing its hold on the resources and the states of the "developing" world. There were analytical weaknesses with this anti-imperialism critique, mainly because it didn't explain well why the U.S. was so deeply involved in places of seemingly so little economic consequence, such as South Vietnam. Nor was the imperial America critique helpful in explaining the idealist side of America's interventionism -- the Wilsonian compulsion to bring freedom and democracy to the rest of the world. If the aim was to reform U.S. foreign policy, criticizing the U.S. as a runaway imperial power just didn't fly, either with U.S. policy makers or the public. What did seem to work as a way to filter out the tendencies in U.S. foreign policy that supported repression and military intervention in the third world was the human rights critique....
A more influential left criticism of the notion of imperialism was launched by Michael Hardt and Antonio Negri in their book _Empire_ (2000), published by Harvard University Press. According to Hardt and Negri imperialism ended with the Vietnam War. The 1991 Gulf War, in which the United States unleashed its military power on Iraq, was, according to these authors, carried out "not as a function of [the United States'] own national motives but in the name of global right....The U.S. world police acts not in imperialist interest but in imperial interest [that is in the interest of Empire without a center and without boundaries]. In this sense the Gulf War did indeed, as George Bush [senior] claimed, announce the birth of a new world order." Elsewhere in their book they declared: "The United States does not, and indeed no nation-state can today, form the center of an imperialist project." It was precisely this position -- that denied a relationship between the United States and imperialism in the classical, exploitative sense, but which also saw the extension of U.S. sovereignty and power as reflective of "empire" and a civilizing "imperial" role (the extension of the U.S. Constitution to the global stage) -- that was emphasized in the unstinting praise of Hardt and Negri's book that poured out in such places as the _New York Times_, _Time_ magazine, the _London Observer_ and _Foreign Affairs_.*...
The Global Rich Get Richer, the Global Poor Get Poorer
An essential aspect of the rediscovery of imperialism within the mainstream is to justify U.S. military and political dominance while removing this from any notion of a rising gap between rich and poor nations -- of the kind emphasized in Marxist theories of imperialism and highlighted by the new antiglobalization/anticapitalist movement. A sign of the impact of this new global anticapitalist movement is the extent to which the global establishment and its allies have found it necessary to defend their record....
A case in point is an August 15, 2002 article in the _New York Times_ by Virginia Postrel, one of its stable of economic columnists. Given the catchy heading, "The Rich Get Richer and the Poor Get Poorer. Right? Let's Take Another Look," this article was timed to appear just prior to the World Summit on Sustainable Development held in Johannesburg in August and September 2002. The object of Postrel's article was to refute Noam Chomsky, who was quoted as saying, "Inequality is soaring through the globalizing period -- within countries and across countries." According to Postrel, not only was Chomsky dead wrong, so was the 1999 United Nations Human Development Report that reached the same conclusion based on U.N. organized data....
...Still the New York Times is not interested. It cares about the people. Postrel writes: "Over the last three decadesŠthe world's two largest countries, China and India, have raced ahead economically. So have other Asian countries with relatively large populations. The result is that 2.5 billion people have seen their standards of living rise toward those of the billion people in the already developed countries -- decreasing global poverty and increasing global equality. From the point of view of individuals, economic liberalization has been a huge success."
But what examples! Let us look at India's contribution to the decrease in global poverty. According to the latest World Bank report, 86 percent of India's population lives on less than $2 a day.* In 1983, the top 10 percent of income earners in India accounted for 26.7 percent of household income/expenditures, by 1992, their share was 28.4 percent, and by 1997, it had risen to 33.5 percent. Hardly a sign of increasing
equality! (World Bank, World Development Report, 1990, 1996, 2003 editions).*
Now, consider the example of China. Three decades ago China was the most equal nation in the world. Then the political leaders took another road in pursuing their goals. Instead of the earlier priority of equality, the citizens were told that it was good to get rich. Private enterprise was encouraged, the door to foreign investment was widened, the Chinese state became cozy with U.S. multinationals, globalization was welcomed, the World Bank entered, and China recently became a member of the WTO.
The result was exactly the opposite to what the prevailing dogma would lead one to expect, and that Postrel and other defenders of neoliberal globalization simply assume to be true. China, once distinguished by its devotion to equality became increasingly unequal. So much so that by the end of the nineties, China's distribution of income closely resembled the maldistribution of income in the United States (see Table 1 [@ <http://www.monthlyreview.org/1102jbftbl1.pdf>]).
There exists, in fact, a solid set of data on the worldwide distribution of income. The information was developed through an exhaustive and highly competent study made by Branko Milanovic, an economist at the World Bank. He burrowed into the incredible amount of statistical data buried in the World Bank's computers. His study came up with the story on the distribution of the world's income in 1988 and 1993. It demonstrates that, in fact, inequality increased during those years (see Table 2 [@ <http://www.monthlyreview.org/1102jbftbl2.pdf>]).
Note that the top 1 percent received a larger share (9.5 percent) of the world's income in 1993 than the bottom 50 percent, while the top 5 percent in 1993 had an income share far exceeding that of the bottom 75 percent and beginning to approach that of the bottom 85 percent. (Milanovic explored the data in greater detail than shown here and concluded that the top 1 percent had the same income as the bottom 57 percent of the people on this earth.) These figures are exactly what one would expect from the whole history of capitalism, which prospers through widening the gap between rich and poor -- a law of the system that now has a global field of operation. Such global exploitation is the core of imperialism, which is as basic to capitalism, and as inseparable, as accumulation itself. But this of course is not the whole of imperialism, which represents a complex history with political, military, and cultural (racial) factors tied into it. In the Marxist approach, economic imperialism is not really separate from these other features, which are equally a part of global capitalist development. Just as the search for profits is the mantra of the American imperium, so is its military and political power aimed at extending this search and expanding its sway on a world basis -- all the time placing first and foremost the interests of U.S. corporations and the U.S. state.
The rediscovery of imperialism within the mainstream only means that these processes are now being presented, especially by ruling circles in the United States, as inevitable -- a reality from which there is no escape. The revolt against this new phase of imperialism, however, has clearly only just begun. Most of the population of the world knows what U.S. pundits conveniently forget, that U.S. imperialism resembles the exploitative empires of the past, and will likely suffer the same fate as past empires: revolt from within and "barbarians" at the gates.... -- Yoshie
* Calendar of Events in Columbus: <http://www.osu.edu/students/sif/calendar.html> * Anti-War Activist Resources: <http://www.osu.edu/students/sif/activist.html> * Student International Forum: <http://www.osu.edu/students/sif/> * Committee for Justice in Palestine: <http://www.osu.edu/students/CJP/>