The post-war order, under US hegemony, saw the "intermeshing" and relative integration of rival imperialist monopoly capitals. An economic bloc was formed in which commodities and capital could flow, and to a lesser extent labor-power. The chapter of MIM's 1997 book that deals with this begins by noting the reversal in FDI flows, which reflect this change:
In 1914, the pattern of foreign direct investment was for the industrial countries to put their capital into the colonies. Hence, 62.8 percent of investment went to the Third World and only 37.2 percent went to other colonial countries. The situation reversed after World War II, and by 1985, 75 percent of investment occurred from one imperialist country into another and only 25 percent went to the Third World.
It makes sense that during the period of direct colonization, capital would directly flow into the colonies because the colonies were where super-profits could be made, because capital investment follows the profit-rate. (This is what allows profit rates to equalize, yadda yadda yadda.) This FDI figure has not changed since. So why did this reverse?
Of course, one says, we shouldn't take FDI figures at face value. Official FDI data does not differentiate between mergers & acquisitions and so-called "greenfield" investments - mergers & acquisitions represent merely the centralization of capital, not profitable (in terms of it employing labor-power to produce new value) investment. (One can still break down FDI further, note some other issues, and today's FDI figures alone disprove the Eurocentric "capital shuns the Third World" thesis. But this does not capture the whole picture.)
Let's set that aside. We are able to see the relevance of this near flip in FDI data by looking at the years in question: 1914 and *1985*. 1985 would have been when the project of globalization and financialization first clearly took shape. Here is some relevant data:
GDP share of US finance industry (i.e. value captured by finance):
US employment by sector as a percentage of employed workers:
Global mergers & acquisitions
Third World manufactured goods in world trade:
Third World manufactured goods imported by imperialist countries:
Thus the shift of post-war neocolonialism from a situation where the Third World exported raw materials to be manufactured in the imperialist core, to a world of globalized production where the economy of the imperialist countries was such that a majority of workers were employed in unproductive occupations, had just begun.
But where does, and where did, the capital for production in the Third World come from, if not from FDI? To answer this, we need to understand what we mean by globalization.
John Smith writes the following in an abstract of his book:
Neoliberal globalization must therefore be recognized as a new, imperialist stage of capitalist development….
The globalization of production has transformed not just the production of commodities but of social relations in general, and especially of the social relation that defines capitalism: the capital-labor relation, which is increasingly a relation between northern capital and southern labor.
Its fundamental driving force is what some economists call “global labor arbitrage”: the efforts by firms in Europe, North America, and Japan to cut costs and boost profits by replacing higher-waged domestic labor with cheaper foreign labor, achieved either through emigration of production (“outsourcing,” as used here) or through immigration of workers.
The result is a highly peculiar structure of world trade, in which northern firms compete with other northern firms, their success hinging on their ability to cut costs by outsourcing production; and firms in low-wage countries fiercely compete with each other, all seeking to exercise the same “comparative advantage,” namely their surfeit of unemployed workers desperate for work. But northern firms do not generally compete with southern firms.
The last line hints at his thesis. One of Smith's main contentions is that imperialist investments are largely made indirectly through "arms-length" contract manufacturing today. This is such that "the only part of Apple’s profits that appear to originate in China are those resulting from the sale of its products in that country" (Smith 22). The latter part of the following quote makes this explicitly clear:
The UNCTAD (United Nations Conference on Trade and Development) "estimates that “about 80 per cent of global trade… is linked to the international production networks of TNCs ”" and "about 60 percent of global trade… consists of trade in intermediate goods and services that are incorporated at various stages in the production process of goods and services for final consumption”" (50).
"In contrast to FDI", Smith writes, "where the production process and associated revenues are offshored but kept in-house, an outsourcing firm may chose to contract some or all of production to an independent supplier while retaining effective control over both the final product and the process of its production" (79). This is favored because (81-82):
• Local capitalists tend to be more exploitive than foreign TNCs because of the fierce South-South competition
• TNCs are able to maintain "clean hands" - "responsibility for pollution, poverty wages, and suppression of trade unions" is outsourced; other 'risks' are outsourced as well, like cyclical fluctuations in the world-market
• No repatriated profits appear in the data
• The lack of direct “N-S capital flows enables Northern firms to divert investment funds into "financial intermediation and speculation”"
(The last point makes clear the connection between globalization and financialization.)
MIM is more explicit in regard to the first two points:
The 500 million invisible workers work under military regimes or death-squad governments or in the best of circumstances, they work in newly minted political regimes with good intentions that nonetheless come with a history of low wages. We do not mean that there is a particular set of 500 million workers who work for free. We only mean that 20 percent of the work of 2.5 billion Third World workers and peasants is done for free for the imperialist countries, because they are forced to by military regimes or regimes that compete with military regimes.
Even in those regimes where the rulers do not use military force, the threat of political/military force remains and unless they mobilize their peoples for people's war against imperialism, even the best-intentioned rulers must set up their countries to compete with countries that do keep down wages by using death-squads often furnished with Amerikan weapons and training. "Sony's Kirihara observed: 'We should not think only of Japan but Korea and Taiwan, If we compare Korea with China, nobody can compete. Even Malaysia or Singapore is weaker than China or India because of wages."(194) So if you are a poor country emerging from semi-feudalism and you have many people seeking employment, whether you like it or not, you are competing with countries where they do use repression against union organizers to keep down wages.
Today, "he large majority of the roughly five billion inhabitants of the Global South now live in countries where manufacturing exports—mainly to the imperialist economies—form more than a half of their total exports" (66). This and the Third World manufactured goods graphs cited above should make clear that the majority of the working class lives in the Third World:
Let's deal briefly with the change in the US class structure. It's no coincidence that the services industry massively increased as agriculture and manufacturing declined. Sakai was writing when this was occurring:
We can see this in the dramatic increase of the non-productive layers in economic life. While this phenomenon is centered in the rule of finance capital, its manifestation appears in all imperialist institutions. Advertising, marketing, package design, finance, "corporate planning," etc. mushroom with each corporation. Management on all levels grows as numbers of production workers shrink. When one includes the large army of white-collar clerical workers needed to maintain management and carry out its work, the proportions become visibly lop-sided.
MIM continues as to the implications of imperialist capital integration.
Since trade and finance do not produce physical wealth themselves, it only proves that the activities of the unproductive and parasitic sectors have been spread around, so that no one imperialist can enjoy parasitic advantages over another, as in the old days of colonialism.
Now no single imperialist entity can completely exclude other imperialists. As a result, the possible outlets for capital exported from the imperialist countries have become more similar. As late as 1970, cross-border movements of capital were relatively infrequent in the imperialist world. We could say that there was mobility of capital within the United $tates, but we could not say capital was mobile across imperialist country borders. With the collapse of colonialism, all that changed.…
If capital is allowed free flow between places, as it is in the 1990s, we can expect the rate of profits and superprofits to become similar across those places. If the profit rises somewhere, the capital will flow to that place from all over the world, if there are no political obstacles. In fact, if there are political obstacles, if the profit differential is great enough, the capitalists wishing to invest where there are political obstacles will see to the removal of those obstacles through bribery or war.
As to what it means in regard to other imperialist class structures, they write that "he long-standing freedom of movement for capital that has existed within the old Western imperialist bloc led by the United $tates against the old Soviet social-imperialists is the major reason that MIM believes it proved the nature of the Western European class structure in MIM Theory #1". Why (my emphasis)?
If Amerikan capital is heavily invested in Latin America, then French capital can share in the swag from Latin America simply by investing in the United $tates. Japanese banks can and do buy interest-bearing securities in the United $tates and collect a share of the loot wherever the U.$. monopoly capitalists got it. In the private sector, other imperialists can also integrate themselves with U.$. imperialism.
As to the future:
Meanwhile bourgeois internationalists… share a vision of international imperialist cooperation to exploit first pioneered by arch-revisionist Karl Kautsky. They favor equal opportunity exploitation for people of all countries and they have the momentum in their creation of rudimentary forms of world government.
The intervention of the UN in places previously thought not to be appropriate places for intervention by the UN--Somalia, Bosnia, Iraq etc.--reflects the increased interweaving of imperialist capital and the dissolution of both the socialist bloc and its successor social-imperialist bloc. Whereas UN intervention in Korea was the exception of the time, in the future, the UN under bourgeois internationalist leadership will try to make Korea the rule and not the exception. In this agenda of war only on the oppressed nations, the bourgeois internationalists can be assured of a good degree of labor aristocracy support, compared with other aspects of world government opening the labor aristocracy up to competition.
Compared with Lenin's day, 1997 shows one aspect of Kautsky's theory of super-imperialism has become less far-fetched. That aspect is the unification of imperialism and the amelioration of national conflict amongst the imperialist capitals. The end of strict colonialism in which imperialists were iced out of competitor colonies completely has ended. Not to mention trade, massive cross-national investment amongst imperialists has become a reality.
But Kautsky is incorrect from a Leninist point of view because:
The trend of interweaving of imperialist capital goes along with an acceleration of the gap between the Third World and the imperialist countries, and for this reason, Kautsky's theories are invalid on a grander scale than in Lenin's day. The fact that most investment occurs in the imperialist countries speaks to the decadence of this stage of capitalism where the focus is increasingly on realizing surplus-value and not on production itself. Both the interweaving of imperialist capital and expansion of the labor aristocracy spell the doom of imperialism's viability all the faster, because neither activity generates surplus-value.
There are those who would claim to follow Marx and not Lenin that say that Lenin was wrong about finance capital being the dominant sector of imperialism. These anti-Leninists are wrong, because no industrial capitalist can avoid the competition engendered by banking capital's activities, and because as Poulantzas points out, it is wrong to separate industrial and banking capital.
The obvious limits to bourgeois internationalism are:
Russian and Chinese imperialism are the most concrete manifestations of contradictions for the integration of finance capital. Most bourgeois economists will admit that labor is not free to cross borders, and hence is not a "mobile factor" in a global free market. Thus we say there is no globally integrated market for labor-power. Moreover, it is true that imperialist capital can now penetrate pretty much every nook and cranny, but we would prefer to limit talk of finance capital integration to discussion of the imperialist countries. The meaning of counting the Third World as integrated into finance capitalism is clouded by the stunted development of a bourgeoisie in the Third World.
MIM concludes as follows (my emphasis): "[w]e limit our conclusion to saying that the vast preponderance of imperialist capital is integrated and this is a new and important development fully conforming to Lenin's theses".
Okay, now here's the thing, and here's the real reason I made this thread. If the regular functioning of capitalism is now dependent on these globalized processes, and it's the imperialist countries that are most integrated, with an agreement of sorts between the imperialists to share the spoils of imperialism under US hegemony, how does t H E r H i z z o n E think shit is going to go down with regard to the reaction against "globalism"? I'd have to look at data (if such data exists), but if, say, Japan's economy is dependent on investing in the US economy (even if the surplus-value is really from some Third World country), what's gonna happen when they get cut out because of a low profit rate and so on?
theres going to be a big war
my thought atm is that there isn't going to be a single big war, there's just going to be a bunch of wars over access to markets. i think that's what john smith writes at the end of the book, but i read it like a year ago and between that and the dems russia stuff i stopped thinking that for a while
my one point that might be worth considering is i think even China is too involved in our empire and our most direct opposite is India, but that's from a clinical and morally bankrupt IR view and not a marxist one so who knows.
heck, talking about globalism ending is requiring too much vague conjecture on my part so either it's universally unclear or i haven't read enough in that vein.
The imperialist means for maintaining "their own" geographically positioned stable base areas through imperialist bribes is drying up as things stand atm, unrest across imperialist countries will spread and those countries where they think they're not getting a "good deal" or just feel that they're better off going their own way will split with the post ww2 order and pursue economic nationalism (including amerikkka itself mebbe), which will force all the others to do it too, which can only lead to war between them, as things stand now with the imperialist labour aristocraccy cheering them on
i mean as an example, for all the talk of peace and integration of imperialism, we are currently seeing some pretty intense EU-USA tit for tat economic warfare going on between multinats of the two blocks exercising state power to fine and fuck about with multinats from the other block. The USA really doesn't like the fact that the German empire is an economic threat any more than it likes china.
the "reaction against globalism" is not some sort of oddity but a direct manifestation of the disintergration of the post ww2 compact for the "peaceful" exploitation of the global south and a trend which will only increese despite various countertendencies
i think there will be war(s) but whatever this is all futerology to me and could be completly wrong
e: and the rising contradiction that may supercided all of this is between capitalism and the environment, which should never be overlooked when thinking about the future. Things are changing almost too fast to make sense of them
e2: hoky fuk am i bad at translating my thoughts in2 words
Edited by tears ()
we are currently seeing some pretty intense EU-USA tit for tat economic warfare
examples? i haven't been able to keep up wiht western european shit while paying attention to eastern europe.
if, say, Japan's economy is dependent on investing in the US economy (even if the surplus-value is really from some Third World country), what's gonna happen when they get cut out because of a low profit rate and so on?
in a similar vein:
The system of unequal exchange is one of the indispensable mechanisms for the operation of the capitalist world-economy. With unequal exchange, the surplus value produced in the system is concentrated in the core zone, generating large profits for the core-zone capitalists who in turn engage in accumulation in the crucial “leading sectors” that act as the driving engines for the entire capitalist world-economy. Surplus value also provides the financial resources required for the construction of social compromises in the core zone, indispensable for the core-zone’s political stability.
Between the core and the periphery, there is a third layer of states: the semi-periphery. This is another indispensable mechanism for the operation of the capitalist world-economy. In term of their political strength and their positions in the system-wide division of labor, the semi-peripheral states have characteristics and play roles that are located between the core states and the peripheral states.
The semi-periphery acts as the “middle stratum” in the capitalist world-economy and plays a crucial role for the political stability of the world-system as a whole. Without the semi-periphery, the core zone risks the combined resistance from the exploited periphery that comprises the overwhelming majority of the world population. However, to secure the political support or at least the neutrality of the semi-periphery, it is necessary for the core zone to share at least part of the surplus value exploited from the periphery with the semi-periphery.
Until the mid-twentieth century, there was not much problem with this arrangement as the semi-periphery was composed of states with a minority of the world population. The “buying-off” of the semiperiphery was thus relatively inexpensive. Since then, fundamental transformations have taken place in the capitalist world-economy. The rapid growth of the Chinese and the Indian economies has been among the most important developments. What could be the worldhistorical implications of the rise of China and the rise of India?
If the per capita incomes and wage rates in China and India were to approach the semi-peripheral states’ levels, what would remain as the periphery? Would the remaining periphery – much reduced in size – be able to generate a sufficiently large surplus value that would be able to support not only the core zone but also a greatly expanded semi-periphery? [lol no] Could the competition between the core zone and the greatly expanded semi-periphery lead to a dramatic narrowing of the system-wide profit margin and therefore undermine the systemic accumulation as a whole? Related to this, does the world still have the ecological space to accommodate the rise of China and India? In short, can the capitalist world-economy survive the rise of China and India?
- Minqi Li, The Rise of China and the Demise of the Capitalist World Economy
(USA/China not purely vis-a-vis one another, but in their overall relationship to the rest of the world)
The practical implications are that if there had been no unequal exchange, for the US to maintain its existing material consumption levels, about 50 million US workers would have to be transferred from the non-essential services back to the goods production sectors (assuming that the American workers will have the same labor productivity to produce the currently imported goods as the foreign workers). Statistically, this would lead to a reduction of the US economic output by about one-third.
e: i was looking for it on my uni's database for it and i found this which may be of interest as well, which i'll read later: https://a.uguu.se/uh1y7t3y8EDe_out.pdf
Edited by marlax78 ()
The first chapter engages with the developments in the international imperialist system and includes assessments on the economic-social developments in the world at the end of the second decade of the 21st century. It identifies the arenas where the inter-imperialist antagonisms are sharpening, where there is an increase of local and regional conflicts and the dangers for a more generalized imperialist war in the conditions where the victims of war have increased the flows of refugees and immigrants. The adjustments-modernizations of the repressive apparatuses of the bourgeois states and their inter-state unions are being pushed to the fore on this terrain.
The obvious limits to bourgeois internationalism are
haha...but really, good thread. How do you think increasingly significant internal, commercial consumption and the more n more prominent haute bourgeoisie class in countries like India and China will affect this? (if at all.) thanks
Edited by herbsaint ()
@herbsaint if you're asking if shifts in the reproduction processes (greater or lesser consumption by the bourgeoisie) can cause a breakdown a la luxemburg, my intuition tells me no for the old reasons. i'm an idiot tho.
random bump. i'm having my library get a hold (they dont have a sub to the journal it was in) of Cope's "Global Wage Scaling and Left Ideology: A Critique of Charles Post on the ‘Labour Aristocracy’" since it's behind a paywall and the link to the pdf online is dead. when i pick it up, i'll transcribe it 4 this thread.
@herbsaint if you're asking if shifts in the reproduction processes (greater or lesser consumption by the bourgeoisie) can cause a breakdown a la luxemburg, my intuition tells me no for the old reasons. i'm an idiot tho.
Basically, except what I meant (and didn't actually make clear) was rather than breakdown, how do u think increasing internal consumption in China, India etc among these demographics effects the final point you bring up in this post re: anti globalism backlash? Feels like it might significantly mitigate potential export losses
by Zak Cope
Abstract: This essay demonstrates that US economist Charles Post's attempted rebuttal of the 'labor aristocracy' thesis is both theoretically and empirically flawed. Defending the proposition that colonialism, capital export imperialism, and the formation of oligopolies with global reach have, over the past century and more, worked to sustain the living standards of a privileged upper stratum of the international working class, it rejects Post's assertion that the existence of such cannot be proven. The essay concludes with a working definition of this 'labor aristocracy': setting the concept within the field of global political economy and reclaiming its relevance to the Marxist tradition.
Nowadays, given the enormous gap between the living standards of the people in the First World and the people in the Third World, a statement such that the problems facing most workers in the former are significantly less daunting than those facing the majority of the world's workers residing in the latter may appear self-evident (1). That the lack of any revolutionary movement aiming at the abolition of capitalism in the rich countries may have something to do with the affluence of the workers there might, at first blush, seem equally uncontroversial. After all, as English radical William Cobbett famously challenged in the early nineteenth century, 'I defy you to agitation any fellow with a full stomach'. On the left, however, the idea that the global divide between rich and poor nations has its reflection in the divide between rich and poor workers is very often anathema.
US economist Charles Post is today the leading left theorist concerned with refuting the Marxist concept of the 'labor aristocracy' (2). This term has traditionally come to delineate the most well-off section of the workers of the world constituted through what I shall refer to herein as the global stratification of labor, that is, 'the scaling of radically different wages paid for the same labor in countries of the North and the South' (Amin, 2011). More precisely, the labor aristocracy is that section of the global workforce that is afforded its prosperity in large part by the redistribution of surplus value extracted from non-aristocratic labor. The condition for this redistribution is the labor aristocracy's political rapprochement with capital engaged in the super-exploitation of subject labor in the (neo)colonial countries.
Post has challenged the idea that 'super-profits, derived from either imperialist investment in the global South or corporate monopoly, and shared with a segment of the working class, is the source of enduring working-class racism and conservatism in the United States and other industrialized capitalist societies' (Post, 2010, p. 5). The proposition central to Post's rejection of the labor aristocracy thesis is that the 'existence of a privileged layer of workers who share monopoly super-profits with the capitalist class cannot be empirically verified' (Post, 2010, p. 3). For Post, as opposed to those writers whom he criticizes - Marx and Engels (1955, p. 132), Zinoviev (1984 ), Lenin (1964, 1970, 1974), and Elbaum and Seltzer (1982, 2004) - 'wage-differentials among workers in the advanced capitalist countries be explained either by Britain's dominance of key-branches of global production in the late-nineteenth century, by profits from investments in the global South, or by the degree of industrial concentration' (Post, 2010, p. 4). As we will see, however, not only is Post wide of the mark in his specific criticisms of the aforementioned authors, his narrow concern with wage differentials inside the imperialist countries misses the most significant economic and political repercussions of global labor stratification.
The following critique of Post's view on the labor aristocracy will proceed according to the order in which he himself has traced the intellectual evolution of the labor aristocracy thesis (3). Beginning with a rebuttal of Post's critique of Marx and Engels, we will go on to take issue with Post's dismissal of the classical Marxist understanding of the concept and his repudiation of the role of oligopoly in determining wage differentials.
(1) The term First World refers to the developed countries of the United States and Canada, Europe (excluding Russia and parts of Eastern Europe), Japan, Israel, Australia and New Zealand. 'Third World' refers to the underdeveloped countries of Asia (excluding Japan and Israel), Africa, 'Latin' America, the Caribbean and Oceania (excluding Australia and New Zealand)
(2) The term was originally coined in 1872 by Russian anarchist Mikhail Bakunin, who criticized the idea, which he attributed to Marxists, that organized workers are the most revolutionary social group (Post, 2006a, 2006b, 2010)
(3) It is important to note that Post misses much of the important contributions made to the theory of global labor stratification by dependency, unequal exchange and world systems theorists both inside and outside of academia. See, for example, Emmanuel (1976); Amin (1976); Sau (1978); Stavrianos (1981); Edwards (1978); Communist Working Group (1986); Sakai (1989); Cope (2012).
Engels famously argued that there is a material basis for metropolitan workers' social chauvinism, that is their patriotic attachment to a (neo-)colonialist government. In 1882, when asked in a letter by German Socialist Karl Kautsky what the English working class thought of colonialism, Engels replied:
Exactly the same as they think about politics in general, the same as what the bourgeois think. There is no working class party here, there are only Conservatives and Liberal-Radicals, and the workers merrily devour with them the fruits of the British colonial monopoly and of the British monopoly of the world market. (Engels quoted in Lenin, 1969, p. 65)
For Engels, 'opportunism' in the British Labor movement was a result of and is conditioned by the preponderance of two major economic factors, namely, in Lenin's words, 'vast colonial possessions and a monopolist position in world markets' (Lenin 1969, p. 65). As he wrote to Marx in 1858:
The British working class is actually becoming more and more bourgeois, so that this most bourgeois of all nations is apparently aiming ultimately at the possession of a bourgeois aristocracy and a bourgeois proletariat as well as a bourgeoisie. Of course, this is to a certain extent justifiable for a nation which is exploiting the whole world. (Marx & Engels, 1955, p. 132)
Deny the existence of a Victorian-era labor aristocracy, Post (2010, p. 7) defines Marx and Engels' position thus:
Marx and Engels argued that British capitalists accrued higher-than-average profits from their 'industrial monopoly' in the world-market of the mid-nineteenth century. These super-profits allowed British capitalists to recognize the skilled workers' craft-unions and accept their respective apprenticeship-practices, which, in turn, enabled the labor-aristocracy to secure a role in supervising less-skilled workers, higher-than-average wages, and more-secure employment.
Post rejects this picture of embourgeoisement - detached as it is from Marx and Engels' emphasis on the division of labor established by colonialism - by asserting, firstly, that the supervision of unskilled workers by skilled workers was not universal (there being only weak evidence for skilled workers in textiles and mining acting as task masters). Secondly, he claims that 'craft-unions were able to secure stable, year-round employment for all of their members'. In the face of technological advancement and the parallel deskilling of labor, Post asserts, by the end of the nineteenth century it became increasingly difficult for the craft-based unions to maintain traditional restrictions over the training and supply of labor. Thirdly, Post underlines that the alleged ascendancy of the British labor aristocracy in the decades after 1870 actually coincides with the decline of Britain's domination of the world market and the rise of German and US competition. During this period, he argues, wages fell for the entire British working class. Finally, Post writes, 'the profits earned through the export of British machinery divided by the number of skilled metal-workers "would not have amounted to the average weekly wage of an engineer in Manchester in 1871"'. Overall, Post argues that the flexibility provided to the capitalist class by its receipt of super-profits cannot provide an explanation for the growth of the labor aristocracy from the mid-to-late nineteenth century. Rather, he suggests that it was the high productivity and skill levels of workers in certain Victorian industries that account for their high wages (Post, 2010, p. 18).
We may deal with each of these criticisms in turn. Before doing so, however, an important point to note about Post's critique of Marx and Engels is that 'every contemporary political commentator on the phenomenon of the classic, late nineteenth century labor aristocracy not only recognized its existence, but usually predicated part of their political activity on either fostering it (The Liberal Party, Disraeli (with his "one nation" conservatism - ZC), organizing it (the New Model Trade Unions), or fighting its bankrupt political standpoint (the revolutionaries)' (Clough, 1993). Clough considers in this regard the example of the Reform League, a British lobby set up in 1865 under the primary auspices of the First Working Men's International to agitate for universal male suffrage and a secret ballot. Its central committee was made up of six middle class Liberals and six workers. However, despite the efforts of Marx and others, the workers in the organization quickly gave in to the Liberals' pressure to qualify the demand for universal male suffrage to those men of a certain 'registered and residential' position. This property qualification quite explicitly excluded the mass of workers engaged in unskilled or casual labor from electoral representation. In fact, the new voting system agreed to by the Reform League was introduced in 1868 by Tory Prime Minister Benjamin Disraeli in the clear understanding that the one in five workers it enfranchised would use their votes 'moderately' (ibid). In the general election the same year, the Liberal Party attempted to garner the support of the enfranchised upper stratum of English workers by paying them £10 a head to canvass for the Liberals. In response to the blatant bribery nurturing reformism within England's labor elite, Marx wrote:
The Trade unions are an aristocratic minority - the poor workers cannot belong to them: the great mass of workers whom economic development is driving from the countryside into the towns every day has long been outside the trades unions - and the most wretched mass has never belonged; the same goes for the workers born in the East End in London; one in 10 belongs to the Trade Unions - peasants, day laborers never belong to these societies… The Trade Unions can do nothing by themselves - they will remain a minority - they have no power of the mass of proletarians. (Marx & Engels, 1996, p. 614)
Moreover, Marx found to his chagrin that the leaders of the English working class were unwilling to lend the necessary political support to the Irish independence struggle being conducted by the Fenian movement of the time or even to the more distant Communards of Paris in 1871. It was the distinctly bourgeois politics of the burgeoning British labor aristocracy that finally convinced Marx (Marx & Engels, 1996a) that the overthrow of British capitalism depended, first and foremost, on the liberation of its colonies, in particular, its Irish one.
For a long time, I believed that it would be possible to overthrow the Irish regime through English working class ascendancy… . Deeper study has convinced me of the opposite. The English working class will never accomplish anything before it has got rid of Ireland … . THe lever must be applied in Ireland.
Not only does Post show complete disregard for the evident realities of British politics in the nineteenth century, but his attempt to define the Victorian labor aristocracy out of existence is similarly quixotic. Post is certainly correct that the position of the labor aristocracy was, and is, precarious and in flux. Indeed, as reflected in hidebound theory, it has been a recurrent weakness of the Marxian position on the labor aristocracy to assume that what Marx, Engels and Lenin sometimes suggested in their fragmentary and century-old analyses were its major characteristics, in particular, its being a thin upper stratum of highly skilled and organized male labor in any given nation, must remain unchanged. In fact, application of the Marxist method demonstrates how the evolution of the labor aristocracy is intrinsically bound up with the historical development of the class struggle as waged internationally, in particular, with the increasing incorporation of super-exploitation into the circuit of capital.
After the depression of 1873, the restructuring of capitalist production signaled the rise of trusts, cartels, syndicates and industrial oligopolies, first in Germany and the United States an then in 'free trade' England and other capitalist nations (Nabudere, 1979, p. 21). By 1880, Britain's unique position as the 'workshop of the world' was being effectively challenged. Thus, while world industrial production increased seven times between 1860 and 1913, British production increased only three times and French production four times as against Germany's seven times, and the United States' twelve times (Stavrianos, 1981, p. 259). Bolstered by the second industrial revolution, Fordist production techniques and state capitalist intervention in the economy, the core capitalist nations sought to use their unprecedented power for imperial expansion. Amin demonstrates that it was during this period that unequal exchange resulting from a global disparity between the rewards of labor (at equal productivity) began to assume increased importance to the capitalist cycle. Between 1880 and 1930, imperialist capital obtained a higher output in the colonized countries by establishing modern facilities and intensifying the exploitation of low-wage labor power there (Amin, 1976, p. 131).
In its own heartlands, as Post highlights, the expanded mechanization of capitalist production displaced the traditional autonomy and organizational hegemony of craft union-based early-to-mid-Victorian labor aristocracy. At this time, labor organization became much broader and more anti-capitalist than it had been previously. However, Post obscures the extent to which capitalism has historically allowed for divisions within the working class to be reformed and recreated in new ways by those groups within it with the necessary sway to influence its development. As such, far from straightforwardly leading to the 'radical decline' of the traditional organizations of the labor aristocracy, the 'technological transformation of the labor-process' (Post, 2010, p. 16) in the mid-to-late nineteenth century established the basis for new forms of skilled labor and narrow craft organization. Thus, Gray (1981, p. 32) writes:
Attempts to rationalize production were limited by the strength of skilled labor, market conditions and the absence of managerial experience; the prospectuses of inventors and entrepreneurs might promise to eliminate independent and willful skilled men, what actually happened as machinery was introduced is another matter. To accept areas of craft control over production could also appear a more viable strategy than grandiose schemes of rationalization, especially with the limited character of managerial technique… . Although skill is partly a question of bargaining power and cultural attitudes, there were few if any groups of skilled workers whose position did not involve control of some specialized technique indispensable to their employers - that control was indeed the basis of their bargaining power.
Similarly, Davis (1986, pp. 42-43) shows how, in the United States, a corporate assault on the power of skilled labor beginning at the end of the nineteenth century 'broke the power of craftsmen and diluted their skills' but 'carefully avoided "levelling" them into the ranks of the semiskilled' through according them significant economic benefits and cultivating new social norms.
As the number of of organized craft workers acting as piece masters and subcontractors dwindled relative to the increasing size of the workforce, the coalition upon which what Hobsbawm (1951, p. 326) has called 'the Liberal-Radical phase of parliamentarism' also declined. Moreover, the extension of the franchise brought the looming prospect of the popular majority voting against the properties interest. Thus, there began a concerted effort by the British rulers to kill the working class party with kindness, that is in the words of British constitutionalist Sir Walter Bagehot, to 'willingly concede every claim which they can safely concede in order that they may not have to concede unwillingly some claim which would impair the safety of the country' (Bagehot, 2001 , p. 202). With this imperative to the fore, between 1907 and 1911, the British government introduced a series of welfare reforms (most notably the Liberal government's 1909 Finance Bill, the so-called People's Budget, and the 1911 National Insurance Act) that delivered real benefits to the British working class, benefits decidedly the indigenous subjects of Britain's overseas Empire.
The periodic unemployment and short-ranging mobility of workers in the late nineteenth century, contrary to Post, do not make it impossible to identify a body of relatively privileged workers. For example, whilst painters were a low-paid and casualized trade, 'joiners, bricklayers and masons, despite vulnerability to seasonal unemployment, often appear in the better-paid and more secure section of the working class' (Gray, 1981, p. 23). Clough (1992, p. 19) notes that, on average, unemployment was three times higher for the unskilled than for the skilled worker. Although there were both continuities and discontinuities within the labor aristocracy - based on geography, ideology, gender and ethnicity - there is no doubt that British trade and industry in the mid-to-late nineteenth century was characterized by specific groups of workers having divergent levels of pay, economic security and measures of control in the immediate work situation (Gray, 1981). It was these better-off workers who furnished the support base and leadership of the British trade union movement of the time. In 1885, Engels (1977) wrote:
The great Trade Unions are the organizations of those trades in which the labor of grown-up men predominates, or is alone applicable. Here the competition neither of women or children nor of machinery has so far weakened their organized strength. The engineers, the carpenters and joiners, the bricklayers are each of them a power to the extent that as in the case of the bricklayers and bricklayers' laborers, they can even successfully resist the introduction of machinery… They form an aristocracy among the working class; they have succeeded in enforcing for themselves a relatively comfortable position, and they accept it as final. They are the model workingmen of Messrs Leone Levi and Giffen, and they are very nice people nowadays to deal with, for any sensible capitalist in particular and for the whole capitalist class in general.
How was the economic welfare and conservative political conformity of this most 'aristocratic' section of the working class afforded? Quite straightforwardly, the economic and political benefits accruing to the skilled working class of Victorian England were directly attributable to their exceptional position in the international division of labor at the time, that is to British colonial imperialism.
If we look at the sectors where skilled workers and their organization were strongest, we find them to be closely connected to Empire: textiles, iron and steel, engineering and coal. Textiles because of the cheap cotton from Egypt, and a captive market in India; iron and steel because of ship-building and railway exports, engineering because of the imperialist arms industry, and coal because of the demands of Britain's monopoly of world shipping. In a myriad of different ways, the conditions of the labor aristocracy were bound up with the maintenance of British imperialism. And this fact was bound to be reflected in their political standpoint. (Clough, 1993)
Post's apolitical and narrowly national explanation of the aristocratic traits of the leading craft-unions thus ignores their basis in Britain's global ascendancy. For it was not simply its skills, its productivity or the forms of its industrial organizations which afforded the upper stratum of British labor its middle class privileges, but its centripetal position in the labor markets and political apparatus established through imperialism.
Post's claim of an increasing immiseration for British workers in the last quarter of the is also open for challenge. In fact, during this period, as a corollary to vastly improved transpiration, increased primary goods exports and super-exploitative conditions in colonial markets, the wages of Britain's domestic working class improved. Thus, wages measured against prices rose by 26% in the 1970s, 21% in the 1880s, while slowing down to 11% in the 1890s (Clough, 1992, p. 19; Halevy, 1939, p. 133). Certainly, much of these improved circumstances disproportionately benefited the skilled upper stratum of workers, the labor aristocracy of the time. This subset of the British workforce earned perhaps double that of its unskilled counterpart, a large proportion of which was barely able to feed its families. Indeed, a study by Liberal economic theorist Sir Leo Chiozza-Money in 1905, Riches and Poverty, found that out of British population of 43 million, 33 million lived in poverty and 13 million in destitution (cited in Clough, 1992, p. 20). Yet even within the latter group, there were important gradations of income unconducive to working class unity. Halevy (1939, p. 133) highlights how the benefits of colonialism came not to be restricted only to a small section of British workers:
The fall in… current prices resulting from British monopoly capital's colonial trade had enabled a very large body to come into existence among the British proletariat, able to keep up a standard of living almost identical with that of the middle class. The self-respecting workman in the North of England wanted to own his own cottage and garden, in Lancashire his piano. His life was insured. If he shared the common English failing and was a gambler, prone to bet too highly on horses… the rapid growth of savings banks proved that he was nevertheless learning the prudent of the middle class.
The phenomenon of falling prices bringing middle class living standards, and hence, middle class aspirations to metropolitan workers was noted as early as 1903 by US sociologist and economist Thorstein Veblen:
The workers do not seek to displace their managers; they seem to emulate them. They themselves acquiesce in the general judgment that the work they do is somehow less 'dignified' than the work of their masters, and their goal is not to rid themselves of a superior class but to climb up to it. (cf. Heilbroner, 1980, pp. 230-231)
At the dawn of the imperialist era, super-profits generated by imperialism trickled down to the broad urban masses of the advanced countries, stimulating new needs therein, including
soap, margarine, chocolate, cocoa and rubber tires for bicycles. All of these commodities required large-scale imports from tropical regions, which in turn necessitated local infrastructures of harbors, railways, steamers, trucks, warehouses, machinery and telegraph and postal systems. Such infrastructures required order and security to ensure adequate dividends to shareholders. Hence the clamor for annexation if local conflicts disrupted the flow of trade, or if a neighboring colonial power threatened to expand. (Stavrianos, 1981, p. 262)
Clearly, as Stavrianos suggests, and given the very public promotion of social-imperialist doctrines and practices, if the economy provided jobs, rising living standards and a strong sense of national identity to the citizens of the colonial powers, were not likely to passively accept rival countries affecting the flow of super-profits, hence the aforementioned clamor for annexation. The clamor was, of course, amplified to a deafening din by the imperialist politicians and ideological state apparati, then as today (Cope, 2012, p. 105; Diamond, 2006; Mackenzie, 1987; Schneider, 1982).
Post's claim of falling wages for the entire British working class in the last quarter of the nineteenth century is fallacious. Although wages were a diminishing portion of national income, measured in real terms, they improved for the British working class, especially for its skilled, unionized members (Stavrianos, 1981, pp. 266-267).
Whether the real wages of the British working class rose or fell during the early years of the Industrial Revolution in the late 18th and early 19th centuries remains a disputed issue. A definitive answer is difficult because the large-scale urbanization accompanying industrialization altered the structure of worker consumption, as, for example, by the introduction of rent for lodging. But there is no question about the steady rise of real wages in the second half of the 19th century. The following figures show that between 1850 and 1913 real wages in Britain and France almost doubled. (4)
It may be argued that the rising purchasing power of wages depicted here merely indicates that British workers were receiving some of the benefits from the increased productivity of domestic labor employed in those industries producing workers' consumption goods (Table 1). Rising British wages are in this regard perfectly consistent with an increased domestic rate of surplus value or exploitation (this being the ratio between the necessary labor time required to produce workers' consumption goods and the surplus labor time workers expend beyond that) (see below). Yet it must be understood that greater productivity in industries producing workers' consumption goods may come from two distinct sources. First, it maybe the result of their more intensive exploitation, that is of their being paid less absolutely to activate the same materialized composition of capital. Second, it may result from their being paid proportionately less to activate a greater materialized composition of capital. Scientific and technical improvements lead to cheapened production costs for workers consumption goods and, hence, a decrease in the necessary as opposed to surplus labor. Capitalists will introduce new technological advances to the production process if the amount of labor expended on producing labor-saving machinery is less than the amount of labor displaced by its introduction.
Mechanization, however, involves substitution living (value-creating) labor for dead labor, and hence, constitutes a growing restriction on the rate of surplus value and the rate of profit. As such, capitalists must strive to increase productivity without proportionate wage increases. Nonetheless, if British workers were wholly responsible for producing their own consumption goods, it could properly be said that rising British wages in the Victorian era represented returns to British labor according to increased domestic exploitation, possibly as forced upon capitalists by working class militancy. This explanation for rising British wages, however, ignores the extent to which they were, in fact, afforded by an increase in the proportion of workers' consumption goods produced by colonial labor.
Between 1870 and 1913, merchandise imports to Britain increased from £279 million to £719 million, and with it the country's trade deficit from £33 million to £82 million (Clough, 1992, p. 18; Michell & Deane, 1962, pp. 828-829, 872-873). As Patnaik notes, the rising consumption of sugar, beverages, rice, cotton and what by West Europeans at this time depended heavily on the unpaid import surpluses from colonial countries (Patnaik, 1999). Thus, although the outsourcing of the production of workers consumption goods to oppressed nations occurred on a much smaller scale during the last three decades of the nineteenth century than it has during recent times, the rising real wage of British workers at that time is in no small measure attributable to their receipt of the colonial loot. A primary reason for nineteenth century British wages falling relative to gross domestic product (GDP) but rising in terms of purchasing power is that value was being transferred from colonial societies wherein the (then largely rural) workforce was on the losing side of the international class struggle.
Whilst most left theorists have for a long time fallen into the habit of gauging exploitation on a national(ist) basis, commonly examining wages in relation to profits in the rich countries (and thereby 'proving' that the most exploited workers in the world are those of the developed nations), in the context of global imperialism, value creation and distribution must be examined as an international process.
As Smith correctly argues, 'GDP, which claims to be a measure of the wealth produced in a nation, is in reality, a measure of a wealth captured by a nation' (Smith 2010. As such, GDP is expanded by surplus value extracted from workers in low-wage countries and is not a valid measure of 'gross domestic product', since it may rise of decline independently of (domestic) labor's share of it. Commodities produced by low-wage workers in the labor-intensive export industries obtain correspondingly low prices internationally. However, as soon as these goods enter into imperialist-country markets, their prices are multiplied several fold, sometimes by as much as 1000%. As Chossudovsky notes, 'value added' is thus 'artificially created within the services economy of the rich countries without any material production taking place' (Chossudovsky, 2003. p. 80). Jedlicki (2007), meanwhile, observes that 'value added' already incorporates those wage and capital differentials that some Western socialists aim to justify in the name of superior First World 'productivity'. In doing so, 'a demonstration is carried out by using as proof what constitutes, precisely, the object of demonstration'.
Post (2010, p. 24) observes that 'in the United States today, real wages for both union and non-union workers have fallen, and are about 11% below their 1973 level, despite strong growth beginning in the mid 1980s'. By measuring wages against GDP figures and reported profits, Post intends to convince his readership that the living standards of the US working class have been declining and that a renewed offensive against capital would entitle them to a greater share of the wealth they ostensibly create. However, there are at least two problems with the idea that US wages have fallen.
Firstly, whilst wages in the United States have indeed fallen since 1973 as a proportionate share of GDP, in real terms the poor in that country were better off in 1999 than they were in 1975. For example, Cox and Alm (1999) show that whereas in 1971 31.8% of allUS households had air-conditioners, in 1994 49.6% of households below the poverty line had air-conditioners. These authors also demonstrate that the United States poor in 1999 had more refrigerators, dishwashers, clothes dryers, microwaves, televisions, college educations and personal computers than they did in 1971. Wages decidedly did not shrink, then, relative to the purchasing power necessary to consume these items.
US economists Meyer and Sullivan (2011) had constructed a measure of consumption which challenges mainstream assessments of declining US living standards. They note that income-based analyses of economic well-being in the United States do not reflect the full range of available household consumption resources such as, for example, food stamps, or lessened marginal tax rates. Second, they demonstrate that official statistics account for inflation using a price index with reflects a cumulative upward trend based on substitution bias, outlet bias, quality bias and new-product bias. Third, official government income measures fail to reflect important components of economic well-being such as consumed wealth, the ownership of durables such as houses and cars or the insurance value of government programs. Thus, a retired couple who own their own home and live off savings, for example, are income-poor but may still be materially well-off. Taking into account the flawed methodologies of official reports on declining US household income, the authors construct a very different picture of US living standards:
Our results show evidence of considerable improvement in material well-being for both the middle class and the poor in the US over the past three decades. Median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009. In addition, the middle 20 percent of the income distribution experiences noticeable improvements in housing characteristics: living units became bigger and much more likely to have air conditioning and other features. The quality of the cars these families own also improved considerably. Similarly, we find strong evidence of improvements in the material well-being of poor families. After incorporating taxes and noncash benefits and adjusting for bias in standard price indices, we show that the tenth percentile of the income distribution grew by 44 percent between 1980 and 2009. Even this measure, however, understates improvements at the bottom. The tenth percentile of the consumption distribution grew by 54 percent during this period. In addition, for those in the bottom income quintile, living units became bigger, and the fraction with any air conditioning doubled. The share of households with amenities such as dishwasher or clothes dryer also rose noticeably.
Not, indeed, dis US incomes decline relative to the costs of those items necessary in the reproduction of the worker as such (the 'value of labor-power' in Marxist terms). Thus, between 1970 and 1997, the real price of a food basket containing one pound of ground beef, one dozen eggs, three pounds of tomatoes, one dozen oranges, one pound of coffee, one pound of beans, half a gallon of milk, five pounds of sugar, one pound of bacon, one pound of lettuce, one pound of onions and one pound of bread fell so that it took 26% less of the workers' time to buy it (ibid pp. 40-41).
It may be argued that several of these items are almost exclusively produced within the United States and that, therefore, it is the increased productivity of US agriculture that accounts for the relative cheapness of these goods over time. Certainly, tomatoes, orange,s carrots, onions, milk, bread and other foodstuffs are produced in great quantities within US borders. However, it must be understood that US agricultural production is heavily subsidized by the government. Indeed, half of the value of all Organization for Economic Co-Operation and Development (OECD) agriculture, according to OECD estimates, consists of government subsidies (Patnaik, 2007, p. 44). As she explains:
Since these are rich industrial countries where the farm sector employs less than 5 percent of full time workers and correspondingly contribute 4 percent or less to GDP, they can easily afford to give budgetary support to the extent of 2-3 percent of GDP, which amounts to half or more of the total value of agricultural output. In India where agriculture employs two thirds of the workers and contributes over a quarter of GDP, a similar order of support would not be possible even if every single rupee of central government revenues went to agriculture alone. (ibid, p. 43)
Second, Patnaik (2007, p. 25) notes that as much as 60-70% of Northern food items have tropical or sub-tropical import content. Finally, the developed world's investment in agriculture, including in the fossil fuel, chemical and machine production which facilitates its great productivity, is in part made possible by the economic buoyancy guaranteed to the import of large quantities of surplus value form the underdeveloped world (Cope, 2012). More generally, it is the globalization of production which plays the major role in cheapening the costs of the reproduction of labor power in the developed countries and, hence, the apparent surfeit of surplus labor preformed by production workers therein.
According to the International Monetary Fund, although OECD's labor share of GDP decreased, the globalization of labor in the last three decades 'as manifested in cheaper imports in advanced economies' has increased the 'size of the pie' to be shared amongst citizens there and thus a net gain in total workers' real compensation (IMF, 2007, p. 179). Smith (2008, pp. 10-11) notes that
WEO 2007 estimates that between 1980 and 2003, real, terms-of-trade adjusted wages of unskilled workers (defined as those with less than university-level education) in the US increased by 14%, and that around half of this improvement resulted from falling prices of imported consumed goods… Broda and Romalis (2008) calculate that 4/5 of the total inflation-lowering effect of cheap imports is accounted for by cheap Chinese imports, these having risen during the decade of 1994 to 2004 from 6% to 17% of all US imports, and that the "rise of Chinese trade… alone can offset around a third of the rise in official inequality we have seen over this period". (5)
In the United Kingdom, declines in the cost of living during the past decade are similarly attributable to trade with China (6). The important point to note here is that a fall in wages relative to GDP does not by itself account for the purchasing power of said wage, nor, crucially, need it compensate for the transferred surplus value (super-profits) inhering in the average OECD wage.
To return to Post's critique of Marx and Engels, the author goes awry in claiming that the United States and German challenge to Britain's monopolistic position on the world market could only have led to lower standards of living for British workers. It is true that British capital's preeminence was profoundly challenged by the rise of monopoly capitalism in Germany and the United States between the 1870s and World War I (WWI). Furthermore, as Hobsbawm notes, the effective end of Britain's industrial monopoly eroded those 'economic devices which created a satisfied "aristocracy of labor" …automatically (that is, without the deliberate adoption of reformist policies)' (Hobsbawm, 1951, p. 328). However, British capitalism's inherent need to expand remained undiminished. On the contrary, to better compete with its imperialist rivals, Britain escalated its extraction of surplus labor embodied in colonial foods and raw materials but, crucially, never paid for in colonial wages. IN doing so, Britain was able to supplement the consumption of its own workforce, still at that time exploited in the main, at the expense of that in the colonized nations. By what means did British colonialism drain surplus from the colonial world?
State-guaranteed colonial investments made through qualified solicitors and bankers (largely self-financed in India where exports exceeded imports by some £4 million per year in the 1850s) had steadily increased throughout the 'classical' era of capitalism so that by 1870 36% of British overseas capital was in the Empire alongside half the annual flow (Barratt Brown, 1974, pp. 133-138). Later, Britain increased its level of foreign investment by an average of £660 million every decade between 1870 and the outbreak of WWI (Nabudere, 1979, p. 64). Its net annual foreign investment between 1870 and 1914 was a then unprecedented one-third of its capital accumulation and 15% of the total wealth of it Empire (cf. Edelstein, 1981, pp. 70-72; Hehn, 2002, p. 135). According to Elsenhans, the percentage of total capital exported to the world economy's periphery up to 1914 was as follows: Britain, 37.9%; France, 34.5%; Germany, 31.1% and United States, 54% (Elsenhans 1983, cf. Feis, 1930, pp. 23, 46, 70; Woodruff, 1975, p. 340). Later, in the highly protectionist interwar period when nearly half of Britain's trade was with its dominions and colonies and one-third of France's exports went to its colonies (Hehn, 2002, p. 145), the imperial powers (not including a Germany stripped of her colonies) could use super-profits to purchase social peace.
Overseas investment greatly facilitated Britain's capital exports. The £600 million invested in overseas railway building between 1907 and 1914, for example, created a captured market for iron, steel, and rolling stock. It also worked to cheapen the (transportation) costs of food and raw materials (Clough 1993, p. 17), thus reducing the costs of British constant and variable capital, and buoying profit rates (7). Moreover, enforced bilateral 'trade' with the colonies financed much of this capital export. The core nations of Europe and North America increased their purchase of raw materials and foodstuffs from the oppressed nations in the decades before WWI, maintaining a constant excess of merchandise imports over exports (Frank, 1979, p. 190). By 1928, Europe had a net export deficit of US$2.9 billion which was offset by the colonial world's merchandise export surplus of US$1.5 billion.
In 1913, the British government exported merchandises valued at £635 million and had imports totaling £769 million. In addition it imported gold worth £24 million and thus had an import surplus of £158 million in the movement of merchandise and gold. To offset this defect, the British had items totaling £129 million (from earnings of the merchant marine £94, earnings of traders' commission £25, other earnings £10 million). The British thus would have a deficit of £29 million, except for interest and dividends from their investments abroad, which amounted to £210 million. Addition of this item to the other 'invisible' exports reversed the balance of payments in favor of the United Kingdom, giving it a net surplus of £181 million. Theoretically, the British could take this balance in increased imports of merchandise and still have the balance of payments in equilibrium. Actually, they left the whole net balance abroad as new investment. In fact, in 1913, London advanced to colonial and foreign concerns long-term loans for £198 million - almost exactly the amount of the current profits from investments abroad. (Woytinsky & Woytinsky, 1955, p. 199)
Effectively, then, British imperialism's trade deficits with the colonies financed much of its overseas capital investment. British re-investment in foreign and colonial ventures of nearly £200 million in 1913 may thus be compared to its export deficit and import surplus of £158 million in the same year, representing pure profit of which India alone contributed two-fifths (Frank, 1979, pp. 192-193).
These sums may also be compared with the profit required to subvent the labor aristocracy. Let us assume that Britain's 1.5 million unionized workers in 1892, representing 11% of all British workers in trade and industry, constituted the core of the labor aristocracy of the time (with the very partial exception of miners, unskilled unions were then negligible) (Clugh, 1992, p. 20). Skilled workers in 1900 could expect an average weekly wage of 40s (£104 annually). Since these earned almost double that of unskilled workers, we will take the 'excess' annual wage of the labor aristocracy to amount to £52 annually, a total wage bill for the group of £78 million per annum. At £59.2 million in 1913 (Frank, 1979, pp. 192-193), it is likely that at least three quarters of this total can be accounted for by Britain's trade deficit with India alone. Post errs, then, in examining profits from foreign investments and machinery exports as the sole measure of British parasitism. More crucially, his narrow focus on profit levels is indicative of his glaring indifference to the extraction of surplus value, that is, to exploitation per se.
According to Marx, during the time they are employed, production workers spend part of their day reproducing the value of the goods necessary to their own reproduction, that is, the cost of their own labor power (or variable capital). Marx calls this necessary labor. For the rest of the working day, these workers produce value exceeding that of their labor power, what Marx called surplus value (the combined value of gross domestic investment, the non-productive or service sector and profits). The rate of surplus value (or of exploitation) is the ratio of surplus labor to the necessary labor or of surplus value to the value of variable capital. Fundamentally, however, capitalists are not interested in creating surplus value, but in generating profit. Profit, as the unpaid labor time of the worker appropriated by the capitalist as measured against total capital invested, must be properly distinguished from surplus value. In bourgeois accounting terms, profit is simply the excess of sales revenue over the cost of producing the goods sold.
Thus, the price of production of a commodity does not directly correspond to its value within a single industry or group of industries (Marx, 1977b, pp. 758-759). Rather, as capital is withdrawn from industries with low rates of profit and invested in those with higher rates, output and supply in the former declines and its prices rise above the actual sums of value and surplus value the industry produces, and conversely. As a result, competing capitals using different magnitudes of value-creating labor ultimately sell commodities at average prices. As a result, surplus value is distributed more or less uniformly across the branches of production. An average rate of profit is formed by competing capitals' continuous search for higher rates of profit and the flight of capitals' to and from those industrial sectors producing commodities in high or low demand. Overall, where one commodity sells for less than its value, there is a corresponding sale of another commodity for more than its value.
This equalization of profit rates under capitalism ensures that surplus value does not necessarily adhere to the particular industry (or territory, give international restrictions on the mobility of capital and/or labor) in which it was created. Instead, surplus value is transferred from those industries (or territories) providing less socially necessary labor to those providing more. Thus, even branches of production which may enjoy the same rate of exploitation, that is, the same underpayment of the workforce for the value produced by its labor, will have different rates of profit depending upon the organic composition of capital involved in the production process (8). Capitals equal in size yield profits equal in size, no matter where investment is made or how the capital is shared between constant and variable capital (or, indeed, between capitalists and workers).
As Marx (1977a, p. 238) recognized, though purely at the level of divergent international 'productivity' levels, super-profits derived from foreign trade enter into the rate of profit as such
Capitals invested in foreign trade can yield a higher rate of profit, because, in the first place, there is competition with commodities produced in other countries with inferior production facilities, so that the more advanced country sells its goods above their value even though cheaper than the competing countries. In so far as the labor of the more advanced country is here realized as labor of a higher specific weight, the rate of profit rises, because labor which has not been paid as being of a higher quality is sold as such. The same may obtain in relation to the country, to which commodities are exported and to that from which commodities are imported; namely, the latter may offer more materialized labor in kind than it receives, and yet thereby receive commodities cheaper than it could produce them. Just as a manufacturer who employs a new invention before it becomes generally used, undersells his competitors and yet sells his commodity above its individual value, that is, realizes the specifically higher productiveness of the labor he employs as surplus-labor. He thus secures a surplus-profit. As concerns capitals invested in colonies, etc., on the other hand, they may yield higher rates of profit for the simple reason that the rate of profit is higher there due to backward development, and likewise the exploitation of labor, because of the use of slaves, coolies, etc. Why should not these higher rates of profit, realized by capitals invested in certain lines and sent home by them, enter into the equalization of the general rate of profit and thus tend, pro tanto, to raise it, unless it is the monopolies that stand in the way. There is so much less reason for it, since these spheres of investment of capital are subject to the laws of free competition. (Cope's emphasis)
My own definition of super-profits, accounting for global divergences in the rate of exploitation at equivalent levels of productivity, is the extra or above average surplus value the metropolitan capitalist countries extort from workers in colonial or neocolonial countries by means of capital export imperialism, debt servitude, and unequal exchange (Cope 2012).
(4) Ibid. See 'Measuring Worth: Exchange Rates between the United States Dollar and Forty-one Currencies'. In 1900, the average real wage of Russian agricultural day workers, building, factory and railroad workers - the latter category paid almost twice as the previous two - was 251 rubles (Allen, 2003, pp. 38-42) or 49.5% of the average French real wage. Russian wages were very constant throughout the period of Russia's industrial capitalist boom (c. 1861-1913) and Russian workers, unlike their British, French and German counterparts,'did not receive rising incomes in step with the economic growth of the country' (Ibid, p. 37). Alongside miserable wages, another factor helping to explain the relatively militant ethos of Russian labor in the pre-war period is its higher socialization. In comparison to German workers, 70% of whom in 1895 were employed in industries employing 50 or less (Bernstein, 1961), nearly 50% of Russian workers worked in industries with over 1000 employees. Fully 83% of the Russian population was engaged in agriculture as compared to 23.8% of Germans in the immediate pre-war period (Kemp, 1985, p. 191).
(5) The IMF calculation was made by deflating nominal wages by the rate of inflation as reported by the official consumer price index (CPI).
(6) '"Made-in-China" helps make rich countries richer' in People's Daily, China, August 20, 2005.
(7) By 1925, the Caribbean, South Africa, Asia and Oceania (furnishing about 73% of colonial produce), produced some 54-60% of all oil seeds, 50% of all textiles, 34-35% of all cereals and other foodstuffs, 100% of rubber, 24-28% of all fertilizers and chemicals, and 17% of all cereals alone (an average increase of 137% of 1913 levels of raw material production) (Krooth, 1980, pp. 84-85).
(8) The term 'organic composition of capital' refers to the ratio between variable and constant capital, that is to the amount of value-creating labor power against technology and raw materials utilized in the labor process. A greater ratio between capital outlay and wages may result from the increased materialized composition of capital (i.e. fixed capital costs) or from the diminishing share of wages in total capital outlay. Whereas in the first case, the rate of profit is threatened by a diminution of the living labor involved in production, in the second case it may be buoyed by the diminution of necessary labor costs (rising surplus value). The latter is typically the result of the greater productivity of labor in those industries producing workers' subsistence goods. In the capitalist world system, reduced labor costs have always been associated with the extortion of subordinate peasantries and the (related) super-exploitation of dependent wage labor.
Edited by marlax78 ()
For Lenin, Zinoviev and the Bolsheviks, super-exploitation (the lower than average return to nationally oppressed wage labor, often at levels insufficient for their households to reproduce their labor power) generates super-profits which may be used to supplement the 'wages' of core-nation workers. According to Lenin (1970 ), it is not only capitalists who benefit from imperialism:
The export of capital, one of the most essential economic bases of imperialism, still more completely isolates the rentiers from production and sets the seal of parasitism on the whole country that lives by exploiting the labor of several overseas countries and colonies. (Cope's emphasis)
Super-profits derived from imperialism allow the globally predominant bourgeoisie to pay inflated wages to sections of the proletariat, sections who thus derive a material stake in the preservation of the capitalist system.
In all the civilized, advanced countries the bourgeoisie rob - either by colonial oppression or by financially extracting "gain" from formally independent weak countries - they rob a population many times larger than that of "their own" country. This is the economic factor that enables the imperialist bourgeoisie to obtain super-profits, part of which is used to bribe the top section of the proletariat and convert it into a reformist, opportunist petty bourgeoisie that fears revolution. (Lenin, 1963 , p. 443)
Although not articulated as such by any of the writers Post criticizes, there are several pressing reasons why the haute-bourgeoisie in command of the heights of the global capitalist economy engages in such 'bribery' (sic), even where it is not forced to by militant trade union struggle within the metropoles. Economically, the embourgeoisement of First World workers has provided oligopolies - that is, those few giant firms dominating key industries - with the secure and thriving consumer markets necessary to capital's expanded reproduction. Politically, the stability of pro-imperialist polities with a working class majority is of paramount concern to cautious investors and their representatives in government. Militarily, a pliant and/or quiescent workforce furnishes both the national chauvinist personnel required to enforce global hegemony and a secure base from which to launch the subjugation of Third World territories. Finally, ideologically, the lifestyles and cultural mores enjoyed by most First World workers signify to the Third World not what benefits imperialism brings, but what capitalist industrial development and parliamentary democracy alone can achieve (Cope, 2012, p. 30).
In receiving a share of super-profits, a sometimes fraught alliance is forged between workers and capitalists in the world's core nations. As long ago as 1919, when global wage scaling was nowhere near so marked as today, the first congress of the Communist International (COMINTERN) adopted a resolution, agreed on by all of the major leaders of the world Communist movement of the time, which read:
At the expense of the plundered colonial peoples capital corrupted its wage slaves, created a community of interest between the exploited and the exploiters as against the oppressed colonies - the yellow, black, and red colonial people - and chained the European and American working class to the imperialist 'fatherland'. (Degras, 1956, p. 18)
Post (2010, pp. 18-21) challenges this compelling interpretation of the roots of opportunism, reformism and national chauvinism amongst core-nation workers, suggesting that profits earned in the global South by US transnational corporations today are negligible compared to the total wage bill of the US working class.
Imperialist investment, particularly in the global South, represents a tiny portion of global capitalist investment even today, in the era of globalization. Foreign direct investment made up only 5% of total world-investment prior to 2000 - 95% of total capitalist investment took place within the boundaries of each industrialized country. Nearly three-quarters of total foreign direct investment flowed from one industrialized country - one part of the global North - to another. Less than 2% of total world-investment flowed from the global North to the global South. It is not surprising that the global South accounted for only 20% of global manufacturing output, mostly in labor-intensive industries such as clothing, shoes, automobile-parts, and simple electronics. The rapid growth of transnational corporate investment in China in the last decade has changed this picture, but only slightly. Foreign direct investment as a percentage of global gross fixed-capital formation jumped from 2.5% in 1982, to 4.1% in 1990 to 9.7% in 2005. The percentage of foreign direct investment flowing to the global North fell from 82.5% in 1990 to 59.4% in 2005. However, the global South still only accounts for less than 4% of global fixed-capital formation.51 While China has led the growth of transnational capital-accumulation, the bulk of the capital invested in China remains in labor-intensive manufacturing - the low and medium end of transnational-corporate organized global-production chains.
Even accepting that as much as 50% of repatriated foreign profits of US companies emanate from the global South, profits earned from investment in the global South make up a tiny fraction of the total wages of workers in the global North… Total profits earned by US companies abroad exceeded 4% of total US wages only once before 1995 - in 1979. Foreign profits as a percentage of total US wages rose above 5% only in 1997, 2000 and 20002, and rose slightly over 6% in 2003. If we hold to our estimate that half of total foreign profits are earned from investment in the global South, only 1-2% of total US wages for most of the nearly 50 years prior to 1995 - and only 2-3% of total US wages in the 1990s - came fro profits earned in Africa, Asia and Latin America. Such proportions are hardly sufficient to explain the 37% wage differentials between secretaries in advertising agencies and machinists working on oil pipelines, or the 64% wage differential between janitors in restaurants and bars and automobile workers.
Post is here reiterating the familiar view amongst Western economists, socialists and otherwise, that the super-exploitation of Third World labor is today entirely marginal to capital accumulation on a world scale. Thus, economist Raphael Shaub writes: 'The data reveals that most of the FDI stock is owned by and is invested in developed countries… FDI stock and flows have increasingly been concentrating in the industrialized countries since the 1960s' (Schaub, 2004, pp. 26-27). British socialists Ashman and Callinicos concur that 'the transnational corporations that dominate global capitalism tend to concentrate their investment (and trade) in the advanced economies… Capital continues largely to shun the global South' (Ashman & Callinicos, 2006, p. 125). However, Smith (2007) provides the following reasons as to why this interpretation, based as it is 'on an uncritical regurgitation of deeply misleading headline statistics' is wrong and how 'far form "shunning" the global South, northern capital is embracing it and is becoming ever more dependent on the super-exploitation of southern low-wage labor'.
First, nearly 50% of manufacturing foreign direct investment (FDI) is received by the developing economies (US$82.1 billion between 2003 and 2005 compared with US$83.7 billion to developed countries). Meanwhile, FDI within the developed world is hugely inflated by non-productive 'finance and business' activities (US$185 billion, or more than twice the inward flow of manufacturing in the period cited ) (United Nations Conference on Trade and Development , 2007, p. 227). Moreover, intra-OECD manufacturing (particularly in those Transnational Corporations (TNCs) which have offshored or outsourced much of their production processes to low-wage nations) is heavily dependent upon capital infusions from the Third World. Smith cites the example of the restructuring of Royal Dutch Shell having increased the United Kingdom's inward FDI by US$100 billion even though nearly all of Shell's oil (and, he adds, profits) production takes place in Latin America, Central Asia and the Middle East. Post's citation of the low level of global fixed capital formation that takes place in the global South, moreover, suggests a misunderstanding of the purpose of imperialism, namely, to siphon and extort surplus value from foreign territories (Grossman, 1992). That imperialism is moribund, that is that it holds back the full potential development of the productive forces, has long been noted by its critics. Thus, where oligopolies dominate Third World markets, there is not the same urgent imperative to replace cheap labor with expensive machinery.
Secondly, whilst the United States, Europe and Japan (the 'Triad' powers) invest in each other at roughly equivalent rates, there is no investment flow from the Third World to the developed world to match investment from the latter to the former. Whereas 'repatriated profits flow in both directions between the United States, Europe and Japan, between these "Triad" nations and the global South the flow is one-way' (Smith, 2007, p. 15). So much is this the case that profit repatriation from South to North now regularly exceeds new North-South FDI flows. Jalée (1968, p. 76) has earlier described this process of 'decapitalizing' the Third World:
There are many well-meaning people, both in the imperialist countries and the Third World, who still have illusions as to the usefulness of private investment in the underdeveloped countries. It is simple to make the following calculation. A foreign private enterprise sets up in a Third World country where it makes a regular, yearly profit of 10% on its investment. If the whole of these profits are transferred abroad, at the end of the tenth year an amount equal to the original investment will have been exported. From the eleventh year onwards, the receiving country will be exporting currency which it has no received; in twenty years it will have exported twice as much, etc. If the rate of profit is 20% instead of 10% the outflow will begin twice as early. If only half the profits are exported the process will be only half as rapid. This example is a somewhat oversimplified hypothesis, but reflects reality. There is no end to the loss of Third World capital through such outflows, except through nationalization or socialization of the enterprises.
Smith also makes the point that much supposed 'South-South' FDI is, in fact, 'North-South' FDI (Smith, 2007). Not only is it the case that United States and United Kingdom TNCs using profits earned in one Third World country to finance investments in another show the FDI as originating in the former (Lipsey, 2006, p. 3), but 10% of Southern FDI originates from the British Virgin Islands, the Cayman Islands and other offshore tax havens and, hence, likely originates from imperialist sources.
Thirdly, FDI flows are purely quantitative and say nothing about the type of economic activity they are connected to. As such, merges and acquisitions, merely representing a change in ownership, should be distinguished from 'greenfield' FDI in new plant and machinery. Whilst intra-OECD FDI is dominated by mergers and acquisitions activity, between 2000 and 2006, 51% of all Greenfield FDI was North-South (UNCTAD, 2007, p. 206).
Fourthly, and perhaps most significantly for the present purposes, undue fixation on FDI flows as a means of calculation the value of imperialist super-exploitation to the capitalist system and the wealth of the developed nations ensured that obscured from view are the tens of thousands of Third World-owned factories whose hundreds of millions of workers supply inexpensive intermediate inputs and cheap consumer goods to the imperialist countries via the vertical integration of production (Smith, 2007, p. 18). Rather than FDI being the major means of securing this supply, outsourcing and subcontracting by TNCs has become a prevailing mode of monopolistic capital accumulation in recent decades.
Finally, data on FDI stocks and flows are given in dollars converted from national currencies at current exchange rates. However, a dollar invested in a Third World country typically buys much more resources than a dollar invested in the First World. Measuring the value of Southern FDI in Purchasing Power Parity (PPP) dollars, we find that UNCTAD totals must be multiplied by a factor of 2.6 (the weighted average PPP coefficient between the OECD and non-OECD countries). Furthermore, as Harvie and de Angelis highlight, whereas in the United States $20 commands one hour of labor time, in India the same US$20 is sufficient to put ten people to work each for ten hours (Harvie & de Angelis, 2004). Thus, between 1997 and 2002, some US$3.5 billion of intra-imperialist FDI flows commanded 190 billion labor hours at just under US$18 per hour. Meanwhile, some US$800 billion of FDI flowing into the Third World commanded 330 billion hours at US$2.4 per hour (an average labor cost ratio of 7.5:1). As such, the 19% of the glboal total of FDI that went from the North to the South in this period comprised 63% of the total 'labor commanded' (ibid).
Post's acceptance of capitalist accounting figures at face value, that is, without critiquing their real world significance in terms of average socially necessary labor and surplus labor (Cope, 2012), can only head him to the absurd positions that (a) the world's largest capitals have practically no interest in the Third World and (b) that the most exploited workers in the world (i.e. those whose higher productivity supposedly generates the biggest profits) are also the world's richest. Thus, in an article for the Trotskyist Fourth International, Post writes that 'global wage differentials are the result of the greater capital intensity (organic composition of capital) and higher productivity of labor (rate of surplus value) in the advanced capitalist social formations, not some sharing of "super profits" between capital and labor in the industrialized countries. Put simply, the better paid workers of the "north" are more exploited than the poorly paid workers of the "south"' (9). Post shows complete disregard for the massive infusions of capital which result from global surplus value transfer and the all-too-obvious facts of Northern working consumption goods being the product of super-exploited Third World labor. For Post, the North's purportedly greater 'capital intensity' and its workers higher 'productivity' may as well have dropped from the sky.
(9) Charles Post, 'Ernest Mandel and the Marxian Theory of Bureaucracy'
I mention it here instead of in the Reading thread because its intro is an essay by Zak Cope & Torkil Lauesen that's practically worth the price of admission by itself. however, it also alerted me to the fact that there's apparently a second (2015) edition of Divided World, Divided Class that's got more data
maybe i've been spoiled by software practices but it'd be cool as hell if publishers started including changelogs between editions of scholarly works
anyway, i may transcribe said essay some time this week, probably in this thread after Marlax is done with his own transcriptions (let me know!), so things don't get muddled. (incidentally, cope apparently also wrote a follow-up to his initial critique of Post)
Edited by Constantignoble ()
however, it also alerted me to the fact that there's apparently a second (2015) edition of Divided World, Divided Class that's got more data
maybe i've been spoiled by software practices but it'd be cool as hell if publishers started including changelogs between editions of scholarly works
otherwise known as the preface to the 2nd edition
anyway, ima leave this here:
otherwise known as the preface to the 2nd edition
that's too many words, i need terse bullet points. twitter dot com, i live for this
(though thank you, this has alerted me to the fact that you can actually read the entire new preface via Amazon's "look inside" thing)
Night Vision is amazing. Written in 1993 but still feels cutting edge.
been meaning to read it for ages bu t kept getting distracted...until now and yea, it feels v good, wish more people wrote books in this type of writing
a note with regard to Norfield while i'm at it: Amin's second and thrid major monopoly sources of super-profits mentioned in Cope's essay below (in Norfield's words, the 'financial privileges' of the imperialist powers) are excellently analyzed in The City.
(incidentally, cope apparently also wrote a follow-up to his initial critique of Post)
i realized this a little while ago, but i appreciate the heads up. i'll have my library request it. annoyingly, this journal (research in political economy) is subscribed to by a university in boston, whereas i go to a different university in cambridge. so i have to wait for what i should be able to get immediately, lol.
tears posted:marimite posted:
Night Vision is amazing. Written in 1993 but still feels cutting edge.
been meaning to read it for ages bu t kept getting distracted...until now and yea, it feels v good, wish more people wrote books in this type of writing
i really enjoyed night-vision too. there's a new edition out from Kersplebedeb, but i was informed in an email that towards the end of the year they'll be releasing a newer edition with additional material (the authors, however, are (fortunately) in no rush to complete it). i'm gonna buy that when it comes out.
the table you posted above from the book is indeed useful in quickly breaking down the qualitative transformation of imperialism with neocolonialism/globalization. however, for the purpose of clarification (re: im bored), there are several things one could point out about it*:
* the authors may be aware of these problems. i can't remember if and how they were dealt with.
a) "growing integration of world into one class structure" & loss of the settler aristocracy. i would place emphasis on the 'ing' in growing, as this is certainly what the neoliberal project seeks to accomplish (and hence the authors were very prescient in predicting the intensified settler versus imperialist antagonism), but we now know this project is breaking down, and thus a misreading could lead to something like kautskyite ultra-imperialism -- and with that to white guy identity politics ("national oppression? nah, it's all about the global working class").
i think one is justified in questioning whether or not this was even theoretically possible to begin with. one might think that if capitalism is able to overcome its current crisis, this neoliberal project will continue, the trumps and assads will disappear, and we'll eventually witness this projected one world class structure. but if a decline in the profitability of metropolitan industry is what caused neoliberal globalization to begin with, and the current capitalist crisis can only be overcome with a restoration to a higher rate of profit (some believe this is possible, others do not), does this mean the process of neocolonialism can be reversed, and the collapsing settler-aristocracy can be appeased? to ask it another way: what is the exact connection between neocolonialism and globalization?
b) 'spread of industry around the world' should be qualified. the authors write that this spreading of industrial production develops in a 'pathalogical' way, which i presume is a way of just saying uneven and combined development (industry in the third world is a 'distroted extension of the metropolis'), but this is a given. what the authors fail to mention, after themselves saying that the "Third world was restricted to producing raw materials" under colonialism is that there is uneven development within the third world itself. iirc, europe/north america were both home to the periphery & semi-periphery of the capitalist world-system under colonialism, but under neocolonialism we see a geographic shift of the semi-periphery outside of these continents. (of course, a major reason for this is that china isn't capitalist.) this is of importance in thinking of the long term trajectory of imperialism, i think. moreover, "spread of industry around the world" kind of obfuscates that manufacturing is not the most capital-intensive sector, and thus first world de-industrialization does not mean the end of the labor aristocracy, as high-paying white collar jobs replaced the high-paying blue collar jobs (i.e. does not signal a singular growing world class structure).
another thing with regard to the above 2 points. globalization is the globalization of production, the globalization of the capital-labor relation, but this does not signal anything other than a tendency towards a global class structure in the final instance, i think. vivek chibber's response to the claims of the postcolonial theories with regard to capital's universalizing tendencies would fit here. for instance, the wellknown lack of mobility in labor-markets is a major bulwark for first world labor - and this can co-exist with globalization, can it not? (i guess part of this depends on how you understand labor-power as a commodity, but there are other examples we could think of.) empirically, we know that the 90s saw massively increasing globalization (see OP graphs), but super-profits continued flowing throughout the system and thus there was no massive proletarianization in the first world (one can quickly check the poverty rate, for instance, and see it did corresponding increase).
c) the authors locate the primary tendency of neocolonialism with regard to the black nation as being "re-placed economically by new Third World population transfer". in other words, there is a tendency towards the lumpenization of the black nation. perhaps one could study this change empirically between 1975-2016? this is possible and shouldn't be hard.
a random offtopicish thought: while the causes are different for Third World pauperization versus black lumpenization, it would be interesting to attempt to develop a sophisticated analysis of pauperization vis-a-vis the capital-accumulation process. with this, uncovering what the 'sustainable' level of the lumpenproletariat produced endogenously by capital accumulation is, and whether it's getting 'too big' to the point where it jeopardizes the process itself (because the lumpenproleratiat cannot produce value - as only wage-labor can), and how this expansion to the point where it's 'too big' is endogenous to the process itself, and whether this has happened before in history. like, how do we bring amin's analysis of the high productivity of agribusiness + creation of a world-market of food causing falling food prices pauperizing millions into these basic economic categories?
capital accumulation -> expansion of the proletariat + concentration of capital -> centralization of capital + rising OCC -> creation of a lumpenproletariat -> fall in profitabiltiy -> further expansion of a lumpenproletariat = slumdweller commie revolution
d) the authors regard neocolonialism as the 'managed' form of captialism heading towards a chronic collapse , whereas colonialism was characterized by cyclical crises resolved by "periodic bloodletting". this is a little weird to me, as trustification & cartelization, regarded as having prevented crises of overproduction, and social democracy, regarded as having prevented crises of underconsumption, were supposed to be the end of cyclical crises, according to the revisionists. the authors are repeating this line, but for globalization instead, but with the caveat of having a theory of collapse. i think the correct posistion is that capitalism has always suffered from cyclical crises, and theories of collapse are bad because they encourage laziness.
other than that, the main issue with the book, MIM pointed out in their review of it, is that the authors could use a good reading of mao's on contradiction to avoid a kind of agnosticism whereby they see race/nation/gender/class as 'equal'.
but it's still a great book.
finally, since this is somewhat relevant, to whoever is unaware of it, i'd check out sam williams' ongoing serialized review of shaikh's magnum opus on capitalism, where he contrasts "real competition" with the 'updating' of marx's analysis by baran and sweezy on this the 50th(-51st) anniversary of monopoly capital, and will end with a contrasting john smith's analysis with shaikh's anti-leninism. presumably (if i understood smith correctly, and it would make sense given what i just said) he'll analyze smith's attempt to marxicize lenin's theory of imperialism.
Oligopoly and Global Wage Differentials
Post's third and final version of the labor aristocracy thesis is that presented by Elbaum and Seltzer. They argue that the severely limited competition faced by oligopolies and large-scale industrial concerns means that these can secure higher-than-average profits (the authors' singular definition of super-profits) which allow them to afford their unionized workers higher wages and benefits and more secure employment than their counterparts in the 'marginal' industries, in the retail and services sector, in agriculture and amongst the under- and un-employed.
In refuting this thesis, Post cites studies which demonstrate the absence of a strong correlation between industrial concentration and higher-than-average profits and wages. Instead, for Post, the lower wages of female and black and minority ethnic workers can be explained by capitalists' recruiting them into the more labor-intensive industries. The stratification of labor, then, is based on how 'competition and accumulation - not monopoly - continually differentiate in terms of technique, profitability, and wages and working conditions' (Post, 2010, pp. 27-28). As such, profit and wage differentials are rooted in differences in labor productivity. It is not, then, that workers in unionized capital-intensive industries share in their oligopolistic employers' super-profits, but that their higher-than-average wages may be accounted for by the lower unit costs of these industries and effective, militant union organization.
Tellingly, Post is entirely oblivious to the lower unit costs of non-OECD manufacturing. Smith (2010, p. 215) tabulates data from the World Bank (2006) showing value added versus labor costs between 1995 and 1999 for 64 countries. THis table demonstrates that unit labor costs (i.e. the average cost of labor per unit of output) are an average 1.6 times lower for non-OECD manufacturing workers than OECD manufacturing workers. Thus, if an OECD worker is paid $1 for an hour's work and creates #20 worth of output in that hour, a non-OECD worker paid at the same rate would create $32 worth of output in that hour. Obviously, OECD wages are greatly in excess of non-OECD wages, by around 1000%, so one hour of OECD labor appears to generate much more value added than one hour of non-OECD labor. Nonetheless, in purely price-based terms, terms abstracted from the ratios between what Marxists call necessary and surplus labor, non-OECD manufacturing workers are 60% more exploited (more 'productive') than OECD workers.
Post is certainly correct, however, in highlighting as he does how the technical division of labor as organized according to the uneven development of the productive forces is crucial to the issue of labor stratification. The national, 'racial' and gender hierarchies upon which social chauvinism is predicated are de- and reconstructed in the age of globalization (i.e. globalized imperialism). As Bhattacharyya, Gabriel, and Small (2002, p. 8) write:
Overall, several global developments have helped to reconfigure old patterns of ethnic relations and create new forms of racial privilege and politics. These include: economic restructuring in the West, including the demise of heavy industries, the rise of the new technologies, and the expansion of old and new service industries; the growth in significance of transnational and multinational operations; the emergence of new global divisions of labor and, finally, the rise of international agencies and global economic blocs, all of which have surfaced to transform 'national' production forms and processes and their corresponding social relations. These relations have been racialized in a number of ways; the role assigned to migrant labor in the new service economy; the shift of production sites from inner city areas, where migrant communities have traditionally resided, to greenfield (high-technology) sites, where they traditionally have not, and finally internal patterns of migration within the Third World and the use of female labor in the production of microchips and the manufacture of designer sportswear.
The facts of racist workers' and labor organizations' responsibility for the exclusion of black and minority ethnic workers from particular industries, occupations and countries are largely beyond the scope of the present essay. Suffice it to note that global wage differentials are politically grounded in such a way that the conservative political behavior of the metropolitan working class must be taken into account.
Just as serious an issue is Post's dismissal of the role of oligopoly, alongside its political, military and cultural supports, in sustaining wages differentials on a global scale. By focusing on critiquing the possibility of super-profits derived from the uneven development of (1) branches of industry, Post misses the greater significance of super-profits generated via the uneven development of (2) countries and (3) regions of the world economy (Strauss, 2004). Amin (2000, pp. 4-5) cites five major sources of monopoly super-profits through which the imperialist countries constrain competitive production in the developing world and ensure that value is transferred sui gratis from the global South to North.
• Technological monopolies sustained mainly by state control, military spending in particular. Metropolitan 'defense' systems, as afforded by taxing the affluent Western public, function as a massive fund for research and development in 'private' industry;
• Financial control of worldwide markets ensuring that national savings are subject to international banking interests based largely in the developed countries. The US trade deficit currently swallows fully 80% of all global savings in the form of foreign purchases of US municipal, state and government bonds;
• Monopolistic access to the planet's natural resources. 'Petrodollar warfare', for example, enables the transfer of surplus value from the global South to the global North, as the militarily secured denomination of oil sales in US dollars forces countries to maintain large dollar reserves, creating a consistent demand for dollars and upwards pressure on the dollar's value, regardless of economic conditions in the United States;
• Media and communication monopolies provide developed countries with a crucial means by which to manipulate political events. The corporate and government media monopolies, largely based in the metropolitan countries, present a picture of the world perfectly suited to their own anti-social agenda; and,
• Monopolies of weapons of mass destruction, particularly by the United States, ensure that Third World states are literally forced to comply with imperialist diktat, upon pain of terrible war (Amin, 2000, pp. 4-5).
The dominance of OECD-based monopolies in non-OECD markets entail for the latter: (1) a constant drain on available capital, (2) deteriorating terms of trade and (3) massive surplus value transfer resulting from unequal exchange. To pay for the product of OECD-based oligopolies, non-OECD countries must send abroad a greater amount of socially necessary labor time than they would were their own industries free to develop according to the demand of their own peoples. Developing countries are compelled under capitalism to compete with one another for access to the capital, electronic and military goods monopolized by the OECD. This ensures that each must drive down wages to gain comparative advantage over the other, hence contributing additional surplus value than would result simply from unequal exchange based on divergent materialized compositions of capital.
Post on Labor Aristocratic Militancy
Post (2010) misunderstands the significance of the labor aristocracy thesis when he ascribes to it the notion that bourgeois workers are politically quiescent, in his words, unable to 'play a leading role in radical and revolutionary working-class organizations and struggles'. He thus sets up a straw man version of the labor aristocracy thesis which he attempts to then refute by citing examples of the economic struggles of relatively well-paid, skilled and securely employed workers, both in the developed world and elsewhere, against their employers. Indeed, besides the examples cited by Post, it may be noted that the English trade union movement has always been the strongest in those trades wherein workers were most independent, most in demand and best paid. The wool combers, for example, were the first group of English workers to organize against the common exploitation of their employers (Mantoux, 1970, p. 78). More generally, there is some sociological truth in the idea that it has been mostly skilled workers and intellectuals who have been members of the Communist parties in Europe. That does not, however, change the reality that these have been small in numbers or that the main policy they have pursued has been narrowly economistic and at least tacitly social-imperialist.
Proponents of the labor aristocracy thesis do not assert that the interests of the haute-bourgeoisie and the labor aristocracy are identical or entirely congruous. There is a conflict of interest between rich workers and capitalists and this may at critical moments manifest itself in widespread strikes and social turmoil. In South Africa, for example, where th white working class per se constituted a labor aristocracy (Davies, 1973), there were frequent conflict between it and the state over the impact of the job color-bar system on production costs, outputs, and profits (Phakathi, 2012, p. 283). The labor aristocracy thesis affirms, however, that workers in the major imperialist countries cannot and will not overthrow the capitalist system so long as a system of super-exploitation existst to maintain lagging profit rates and guarantee them high living standards.
Post is distinctly disingenuous, therefore, in disregarding the pro-capitalist-imperialist tendencies of the metropolitan working class in the twentieth century and beyond. As Sassoon (1997) has amply demonstrated, the effective parties of the left in the imperialist countries have functioned as vehicles to enforce the partial regulation and socialization of capitalism, as opposed to having posed any serious threat to its replacement. Indeed, those parties and organizations that the metropolitan working class has supported throughout the twentieth century and beyond have certainly been no less imperialist or militarist than their 'conservative' counterparts. It is demonstrably absurd to meekly attribute the reformism of the working bourgeoisie to 'false class consciousness', job insecurity ('precarity') or Stalinist or social democratic 'betrayal' as is typical amongst Western Marxists.
Yet whilst independent parties of the working class, distinct from the two or three main imperialist parties, have had practically zero electoral significance for the past century, that situation is changing today. That Western 'workers' are today fascism's major constituency has been shown by Oesch in his survey of literature showing an 'increasing proletarianization (sic) of right-wing populist parties' electorate' since the 19990s' (Oesch, 2008, p. 350). In particular, studies show that workers have become the core electoral base of the Austrian Freedom Party, the Belgian Flemish Block, the French National Front, the Danish People's Party, and the Norwegian Progress Party. At the same time, 'working class' votes for the Swiss People's Party and the Italian Lega Nord are only surpassed by those of small-business owners, shopkeepers, artisans and independents. It seems reasonable to suggest, then, that during the 1990s, right-wing populist parties constituted a new type of working-class party. Oesch queries why persons 'strongly exposed to labor market risks and possessing few socioeconomic resources', 'located at the bottom of the occupational hierarchy', might vote for right-wing populist parties and finds the answer in popular cultural protectionism and deep-seated discontent with the functioning of the 'democratic' system, as opposed to 'economic grievances' per se (Oesch, 2008). In fact, it is a mistake to postulate a rigid dichotomy between the racist authoritarian nationalism of metropolitan labor and its socioeconomic position. The degree of core-nation workers' exposure to labor market risks and their possession of socioeconomic resources are directly related to their location, not at the bottom of the occupational hierarchy but, at the level of the global economy, right at its top. As such, the political intent to oppress, disenfranchise and exclude 'non-white', non-Christian people from state boundaries is not only based on actual or potential competition for jobs. Rather, it is an expression of 'working class' support for an imperialist system that more and more openly subjects entire nations in order to monopolize their national resources and capital. That global imperialism has found it necessary to admit persons from neocolonial states ac cross its border for economic, diplomatic, political and other reasons has consistently met with the disapproval of the metropolitan workforce. This has only intensifies as Keynesian social democracy has been replaced with neoliberal economic restructuring and the accompanying growth of the racialized police state. The super-wages of metropolitan labor do not only depend upon militarized borders and job market discrimination but also on the degree to which workers can influence state policy in their own favor. In the absence of trade union vehicles (appropriate to an earlier, social democratic phase of labor organization), First World democracy, based as it is upon the oppression of more than three quarters of the world's population, finds its sine qua non in racist national chauvinism. As such, it is not uncommon for brazenly national-chauvinist parties to gain support from groups of persons considering themselves politically left-wing. With 20% of its members considering themselves 'left', Jean-Marie Le Pen's fascist Front National, for example, did well in the 1995 French elections wit hthe slogan 'neither right nor left, but French', garnering 30% of the working class vote and 25% of the unemployed vote (Weissmann, 1996). More recently, a 2011 poll found that while 48% of Britons would vote for a far-right anti-immigration party committed to opposing so-called Islamist extremism with 'non-violent' means, 52% agreed with the proposition that 'Muslims create problems in the UK' (Townsend, 2011).
None of the above testifies to the labor aristocracy constituting what Post refers to as 'the revolutionary and internationalist wing of the labor movement' (Post's emphasis).
What is the Labor Aristocracy?
Post castigates sections of the left for writing about a 'labor aristocracy' for which 'there is no single, coherent theory'. To clarify my position, I will attempt to outline the fundamentals of such a theory.
The labor aristocracy is that section of the international working class whose privileged position in the lucrative job markets opened up by imperialism secures for it wages approaching or exceeding the per capita value created by the working class as a whole. As such, the class interests of the labor aristocracy are bound up with those of the haute-bourgeoisie so that if the latter is unable to accumulate super-profits, then the super-wages (wages supplemented by super-profits) (Edwards, 1978, p. 20; Emmanuel, 1972, pp. 110-120) of the labor aristocracy must be reduced.
The labor aristocracy provides the major vehicle for bourgeois ideological and political influence within the working class. As highlighted above, for Lenin, these conditions allow for ever-greater sections of the metropolitan working class to be granted super-wages.
As it has developed over the course of the last century, the labor aristocracy was first transformed from being a minority of skilled workers in key imperial industries to a majority of core-nation workers dependent on imperialist state patronage. From WW1 to the 1970s, social-democratic politicians and trade union bureaucrats were the reputable middlemen in the social partnership forged between globally ascendant oligopoly capital and metropolitan labor. Even as the Keynesian social contract was systemically dismantled under the ensuing neoliberalism, however, the massive proletarianization and super-exploitation of Third World labor in the final decades of the last century provided that unprecedented standards of living and the widespread introduction of supervisory and circulatory occupations further insulated metropolitan labor from the intrinsic conflict between capital and labor (10). Nineteenth century restrictions imposed by labor aristocratic unions on membership for the mass of workers have today been entirely substituted for restrictions on immigration from the Third World which are national in scope and allow the maintenance of profound global wage differentials.
Divergent global rates of exploitation have profound consequences in terms of the amount of wealth workers in different countries consume. Fig 1. compares total contribution to global production to the share of total working class and middle class household consumption for the world's population, ranked in order of income. In the Lorenz curve used to depict global income equality, where the χ-axis is cumulative population and the Υ-axis is cumulative income, perfect income equality is expressed in a diagonal straight line. The reality of income distribution, however, shows a curve that is more or less flat for the first two-thirds of its trajectory, but rises ever more steeply towards the end. The definition of the 'Gini Inequality Index' is the ratio between the area bounded by the curve and the straight diagonal, and the total area under the straight line. Plotted according to international income distribution, we refer to this as the 'world consumption curve'. Smith has suggested that generating a 'world production curve' by plotting each country's production of social wealth and superimposing this on said consumption curve can illustrate much in regard to global exploitation (11). In a world without exploitation, the two curves would be identical, that is each person/household would produce what they consume. In fact, however, the global production curve diverges greatly from the consumption curve. In Fig 1., the area bounded by the two curves to the left of their intersection ought to be the same as the bounded area to their right were the world's workers to consume what they themselves produce. The ratio between this area and the area under either of the two curves (by definition identical, since total production = total consumption) might be called the 'global exploitation index'. The countries closest to the point of intersection are those whose total contribution to global wealth is closest to their total consumption of it. All countries to the right are net exploiters, that is imperialists, and all countries to the left are net exploited.
According to mainstream economic doctrine, since markets equalize the income of workers, capitalists and nations with the value of their product, the production curve must be identical to the consumption curve; any deviation of one from the other being the result of the interruption of market forces. As neo-classical marginalist economist John Bates Clark put it:
Where natural laws have their way, the share of income that attaches to any productive function is gauged by the actual product of it. In other words, free competition tends to give labor what labor creates, to capital what capital creates, and to entrepreneurs what the coordinating function creates. (Clark quoted in Baran, 2012, p. 29)
As Smith notes, 'Marx pointed out the fundamental error in this view: workers are paid not for what they produce, but for what they consume' (12). As such, the two curves described and depicted above directly juxtapose neoclassical and Marxist value theory. Moreover, by graphically illustrating the great disjuncture between contribution to global production and share of global consumption, Fig. 1 refutes the views of Post and others on the left who persist in denying the effects of global labor segmentation and stratification on the transformation of the global class structure.
For Post's non-Marxist, marginalist, view of income distribution, global wage differentials are the result of productivity differentials conditioned by differences in the level of the productive forces at different societies' disposal. However, as Marx argued, it is only living labor and not machinery or constant capital which adds value. According to Marx (1977a, p. 53), an hour of average socially necessary labor always yields an equal amount of value independently of variations in physical productivity, hence the tendency for labor-saving technological change to depress the rate of profit. Although increased productivity results in the creation of more use values per unit of time, only the intensified consumption of labor power can generate added (exchange) value. Since wages are not the price for the result of labor, but the price for labor power, higher wages are not the consequence of (short-term) productivity gains accruing to capital. Rather, in a capitalist society, the product of machinery belongs to the capitalist, not the worker, just as in a feudal or tributary society part of the product of the soil belongs to the landlord, not the peasant. As Engels (1995, pp. 181-182) wrote:
Marx demonstrates that machinery merely helps to lower the price of the products, and that it is competition which accentuates that effect; in other words, the gain consists in manufacturing a greater number of products in the same length of time, so that the amount of work involved in each is correspondingly less and the value of each proportionately lower. Mr. Beaulieu forgets to tell us in what respect the wage earner benefits from seeing his productivity increase when the product of that increased productivity does not belong to him, and when his wage is not determined by the productivity of the instrument (i.e. the machine - ZC)
In Fig. 1, the economically active population (EAP) is defined as all persons who furnish the supply of labor for the production of goods and services. As such, the EAP includes hundreds of millions of persons engaged in private, so-called subsistence farming in the Third World. WE have favored Eurocentric assumptions that subsistence farmers contribute nothing to global production (even though most contribute money to capitalist landlords and supply goods for sale on the market), and assumed that only wage labor capable of generating surplus-value is considered productive. Total global production is defined as the working hours of full-time equivalent production sector wage employment in all countries (13). The total production workforce was obtained by multiplying the EAP in each country by the rate of full employment for its correspondingly global income quintile (Kohler, 2005, p. 9) and then by multiplying this total by the percentage of each country's workforce in industry and agriculture. The figure thus obtained was then multiplied by 133%, since I define 'underemployment' as being employed for only one-third of the hours of a full-time worker. To calculate capitalists' share of household income expenditure, Piketty and Saez's (2004) measure of the income share of the top echelons of the US income distribution has been used as a global benchmark. Capitalists typically earn more than they can possible consume, and much of their household consumption is reinvested. Since accumulated wealth is almost entirely in the hands of capitalists, the share of wealth of the top 10% of the population has been subtracted from total household consumption expenditures figures for each country. Doing so allows a morel focused comparison of relations between the world's working and middle classes, the major bone of contention between exponents and opponents of the labor aristocracy thesis. Rather than adjusting each country's figure by the ratio of its Gini index to that of the United States (so that for countries with more unequal income distribution like Brazil or Pakistan, a larger portion of its national income would be subtracted), I have assumed a flat rate of 42% for capitalist household income expenditure in all countries.
To suppose that these stark inequalities are purely the result of superior economic efficiency and skill levels of the part of the core capitalist nations, or that they are the reward of a section of the global working class for its exceptional militancy, is to stretch reality to a breaking point (Cope, 2012, pp. 221-251).
The failure on the part of the left to rigorously examine the structuration of the international class structure by imperialism, as evidenced by the global contradiction between production and consumption highlighted above, has in no small measure added to the serious difficulties facing the socialist movement, both historically and today. Socialist movements in the metropolitan countries have tacitly accepted the global division between imperialist and exploited nations by obfuscating and divaricating from the issue of international surplus value transfer. Working class internationalism and the struggle against racism and colonialism within the imperialist countries are both sacrificed at the altar of narrow appeals to material self-interest on the part of the wealthiest sections of the inelectuably global workforce. Historically, such economism has its corollary in a deeply conservative reformism and chauvinist acceptance of the status quo ante, such that imperialist governments have been and are permitted to carry out virtually any act of aggression and penal repression against foreign countries and minority communities without fear of widespread national opposition.
Metropolitan labor's dependence upon imperialism for its existence as such - that is as labor whose affluence is predicated upon the maintenance of the core-periphery divide - clearly precludes the possibility that its conservatism is based purely on intellectual myopia. However, to paraphrase Noam Chomsky, intellectuals have the responsibility to expose untruth wherever they see it. This is all the more imperative when disclosing that the reality of vested interests can only assist conscious workers and their representatives, those really committed to socialism, to combat working class acquiescence in the creeping fascination of the body politic associated with the ascendancy of the neoliberal police state.
Understanding how the 'labor aristocracy' is formed means understanding imperialism, and conversely. Those socialist organizations which do not understand the embourgeoisement of labor typically play down the significance of imperialism, so that even those ostensibly opposed to imperialism very often miss their target. Thus, some socialist organizations prioritize peace work and opposition to militarism, equating imperialism with the exercise of brute force against one or more sovereign nations. Their foil may be a particular administration, tis foreign policy, or even the military-industrial complex tout court. Alternatively, imperialism might be opposed as befitting only a handful of ultra-rich bankers and foreign investors (or even, at a stretch, a handful of very well-paid union bureaucrats and highly skilled professionals). In this case, only the richest 1-5% of society is seen as upholding the rule of monopoly capital.
The approach recommended here to readers, by contrast, is to treat imperialism as essentially involving the transfer of surplus value from one country to another and an imperialist country as a net importer of surplus value. This approach allows us to gauge the size and boundaries of the labor aristocracy and, hence, to work out the logistics of mounting really effective opposition to capitalism and its military, legal, financial and political bulwarks.
(10) Class struggle pivots around the exploited section of the working class' retention or otherwise of the surplus value it creates at the point of production. Since the fundamental class antagonism in capitalism is thus between the producers of surplus value and the capitalists who receive it in the first instance, unproductive laborers receive what Resnick and Wolff (2006, pp. 206-220) call 'subsumed class income' from the distribution of already appropriated surplus value. As imperialism comes to form the central core of the capitalist system, the physical toil needed to produce surplus value is increasingly the sole preserve of super-exploited Third World labor.
(11) The idea for Fig 1., a graphical comparison between global consumption and global production, was suggested to me by Dr. John Smith in private correspondence. I am indebted to John Smith for the use of the idea herein.
(12) Private correspondence from John Smith.
(13) For a Marxist view of productive and unproductive labor, see Amin (1976, p. 244); Marx (1968, p. 157); Marx (1977a, pp. 518-519); Resnick and Wolff (2006, pp. 206-220); Shaikh and Tonak (1994, p. 24)
Edited by marlax78 ()
i realized this a little while ago, but i appreciate the heads up. i'll have my library request it. annoyingly, this journal (research in political economy) is subscribed to by a university in boston, whereas i go to a different university in cambridge. so i have to wait for what i should be able to get immediately, lol.
i might could save you a little time, for look what i have just found via an imperialism study group:
Cope - Global Wage Scaling and Left Ideology: A Critique of Charles Post on the ‘Labour Aristocracy’ (2013)
Post - The Roots of Working Class Reformism and Conservatism: A Response to Zak Cope's Defense of the "Labor Aristocracy" Thesis (2014)
Cope - Final Comments on Charles Post’s Critique of the Theory of the Labour Aristocracy (2014)
Bagchi - A Comment on the Post–Cope Debate on Labour Aristocracy and Colonialism (2014)
maybe the real Secret PDF Subforum... was the friends we made along the way
Edited by Constantignoble ()
by Zak Cope and Torkil Lauesen
This collection of texts by Marx and Engels on colonialism, industrial monopoly, and the labor movement is a reprint of a booklet published in 1972. The texts were originally collected by a Danish anti-imperialist group called the Communist Working Circle (CWC). In the late 1960s, the CWC developed the so-called “parasite state” (“snylerstaten,” literally “leech state”) theory linking the imperialist exploitation and oppression of the proletariat in the global “South” with the establishment of states in the global “North” in which the working class lives in relative prosperity.
In connection with the CWC’s studies of the development of this division of the world and of the global working class, they selected and published these texts by Marx and Engels under the title On Colonies, Industrial Monopoly and the Labor Movement. As the title indicates, the texts focus on the connection between colonialism, the establishment of an English industrial monopoly around the middle of the 19th century, and the consequent spread of bourgeois ideology within the English working class.
There is a tradition in ostensibly Marxist thought which prides itself on making the labor of hundreds and thousands of millions of slaves, peasants, and superexploited workers in the export dependencies and colonies disappear from the ledger sheets and pay packets of the advanced capitalist countries. By contrast, we argue that a section of the working class had and continues to have a vested interest in maintaining the profitability of capitalist enterprise, thus necessitating imperialism (first colonialism, and now neocolonialism). The dimensions of this labor aristocracy, undergirded by the superexploitation of the international proletariat, have expanded to encompass the overwhelming majority of metropolitan employees. The stratification of labor globally implies a relatively rigid caste-like system for which white nationalism is typically a basic organising principle (Cope 2014).
What are the main observations of Marx and Engels concerning the connection between colonialism, English industrial monopoly, and the spread of bourgeois ideology throughout the working class? First, Marx underlines the connection between the colonial plunder of Latin America, Africa, and Asia and the breakthrough of capitalism in Northwestern Europe. In the 17th and 18th centuries, the number of laborers and slaves in plantations, haciendas, factories, and mines in the colonies was at least as large as the proletariat of Europe itself (Blaut 1987, p. 181). The exploitation of the colonies created the wealth that made up the original capital that produced the breakthrough of industrial capitalism in England in the early 19th century. Marx describes this in Capital, in the chapter “The genesis of industrial capital” (page 93 in this book).
Blaut suggests two ways to assess the real significance of colonial production to the beginnings of capitalism in the 16th century. The first is to “trace the direct and indirect effects of colonialism on European society, looking for movements of goods and capital, tracing labor flows into industries and regions stimulated or created by colonial enterprise or closely connected to it, and the like” (Blaut 1993, p. 193). The second “is to arrive at a global calculation of the amount of labor (free and unfree) that was employed in European enterprises in America, Africa, and Asia, along with the amount of labor in Europe itself which was employed in activities derived from extra-European enterprise, and then to look at these quantities in relation to the total labor market in Europe for economic activities that can be thought of as connected to the rise of capitalism” (ibid).
On the basis of population data, and noting the divergent rates of exploitation of labor, Blaut (1993, p. 194) argues that “the European populations were [no] more intimately involved in the rise of capitalism than the American populations—that is, the 13 million people who we assume were in European-dominated regions.” Moreover, “It is likely that the proportion of the American population that was engaged in labor for Europeans, as wage work, as forced labor including slave labor, and as the labor of farmers delivering goods as tribute or rent in kind, was no lower than the proportion of Iberian people engaged in labor for commercialized sectors of the Spanish and Portuguese economy” (ibid).
Acemoglu et al (2002) have argued that the rise of Western Europe after 1500 “is due largely to growth in countries with access to the Atlantic Ocean and with substantial trade with the New World, Africa, and Asia via the Atlantic. This trade and the associated colonialism affected Europe not only directly, but also indirectly by inducing institutional change. Where “initial” political institutions (those established before 1500) placed significant checks on the monarchy, the growth of Atlantic trade strengthened merchant groups by constraining the power of the monarchy, and helped merchants obtain changes in institutions to protect property rights. These changes were central to subsequent economic growth.” The authors further demonstrate that nearly all the differential growth of Western Europe between the 16th and early 19th centuries is accounted for by the growth of Atlantic trading nations directly involved in trade and colonialism with the New World and Asia, namely, Britain, France, the Netherlands, Portugal, and Spain, a pattern in large measure reflecting the direct effects of Atlantic trade between Europe and America, Africa and Asia.
The external precondition of Britain’s growth as a capitalist country was commercial hegemony founded upon a burgeoning colonial empire. Britain became the center of world trade, and an industrial division of labor developed in relation to overseas countries. These supplied the raw materials for British industry, which in return supplied the finished products. Britain became the workshop of the world, and her industry expanded in an international setting created by the British navy. This hegemonic position guaranteed Britain a monopoly of industrial manufacture, a monopoly that it held through the first half of the 19th century. During this initial period, British capitalism developed at the expense of handicraft production nationally and internationally, ensuring that comparatively cheaper British industrial goods dominated the world market.
Marx and Engels on the Development of Capitalism
This situation was not to last, and the most serious economic depression capitalism had yet experienced materialized around 1873. As capitalism expanded, competing firms in the metropolitan countries endeavored to increase productivity using new industrial techniques. The discovery of electricity alongside scientific innovations in chemical and steel production (the so-called “second industrial revolution”), alongside the expansion of colonial and American agriculture, led to overproduction and a consequent fall in the prices of commodities. At the same time, the ratio between constant (c, raw materials and machinery) and variable capital (v, labor power, or wages), what Marx called the “organic composition of capital,” has an ongoing tendency to expand. The combination of a rising organic composition of capital, rising wages, and intensified international competition accompanying the spread of industrialization in Germany and the United States, resulted in a glut in commodities markets, a regression in the rate of exploitation, and a decline in the rate of profit (that is the sum of surplus value(s) divided by total capital (c + v) outlay) (Cottrell  2006, pp. 262–4).
In the first half of the 19th century, it was difficult for capital to meet the demands of the proletariat if the rate of profit was to be maintained. During this period the productive forces were revolutionized. The advance from spinning wheel to spinning-machine, from handloom to power-loom, the invention of the steam engine, the introduction of the railways and so on, increased productivity exponentially. However, this increase in productivity did not in any way mean better conditions for the working class—on the contrary. During the whole period, wages were near the physiological subsistence level. Industry no longer competed only with handicrafts, but competition among the capitalists themselves became its most important form. Consequently, major demands for improvements were rejected. The bourgeoisie could not in this period afford the luxury of higher wages and better working conditions, not to mention universal male suffrage, the right to form trade unions, and other demands made by the English working class.
Reform at that time threatened the very existence of the capitalist system. The 1840s and 1850s were thus a period of chaotic conflict between labor and capital. The early labor movement developed new forms of action such as the strike and industrial sabotage. Citizens revolted in the streets of the big cities. This was met with harsh repression by the ruling elite which feared revolution and the “dangerous classes.” In 1848, a wave of revolutionary uprisings swept through Europe’s cities. It was in this context that Marx and Engels wrote in the first line of the Communist Manifesto: “There is a specter haunting Europe—the specter of communism.”
The Colonialist Solution
In the mid-19th century, the system had only one way in which crises might be avoided, and that was to find new markets for goods and capital. Imperialism is in part the attempt to resolve the contradiction between production and consumption by creating a buoyant consumer market in the First World while at the same time relocating low-wage production to the Third World. Capitalism cannot be confined to one country; according to its very nature it must continuously expand. Marx and Engels describe this trend in The Communist Manifesto (see page 64 in this book). Marx regarded capitalist development as a centrifugal process driven by the contradictions of capitalism itself. These were manifested by the decreasing possibilities of profitable investment in the most highly developed capitalist countries. At the same time, more profitable investments could be made in the colonies and in the less developed countries.
Marx believed that the export of capital would result in capitalism spreading all over the world. However, he did not imagine that it would institute a rigid division of the world between a highly developed imperialist center and an exploited and underdeveloped periphery. Marx thought that capital would diffuse outwardly, making the rest of the world a reflected image of Britain, and thus develop the same contradictions globally as it had domestically, ones which threatened capitalism’s existence and would thereby pave the way for a worldwide revolutionary socialist process. As Marx ( 1954, p. 19) writes in Capital: “The country that is more developed industrially only shows, to the less developed, the image of its own future.”
Around 1830, Britain had completed the initial stage of the industrial revolution. At that time, continental Europe and the United States had hardly begun theirs. These countries did not become a periphery to Britain. On the contrary, British capital contributed largely to making them highly developed capitalist countries. The United States caught up with Britain a few decades later. Marx believed that the development of capitalism in the colonized countries of Asia and Africa would be similar. When Britain had destroyed the original societies and introduced capitalism, these colonies would experience a rapid development. Marx describes this in August 1853 in his article “The future results of the British rule in India” in the newspaper Daily Tribune (page 78).
The opening of new markets in Africa and Asia, and the export of capital to North and South America would put off the collapse of capitalism for a while. However, it would only be a short respite; the final result would merely be an even more intense accumulation which would lead to a new and more intensified crisis of overproduction (Engels  1976, pp. 527–9). In fact, however, capitalism did spread out across the globe, but as a polarizing process, not only between the bourgeoisie and the working class, but also as a division between an imperialist center and an exploited periphery. This fundamental contradiction gave capitalism completely new conditions of growth and a longer life.
Marx and Engels’s considerations regarding the development of the colonies and the early collapse of capitalism did not transpire. This is not to say that their analyses of capitalism at that time were wrong. In the middle of the 19th century, the capitalist system was indeed on the verge of having exhausted its potential. Crises arose at ever shorter intervals and assumed an increasingly serious character. The strength and fighting spirit of the proletariat grew accordingly: the “specter of communism” moved through Europe, materializing in the uprising of the Paris Commune of 1871. The bourgeoisie was terrified of revolution. What Marx and Engels could not foresee was that just when aggravating crises seemed to forebode terminal crisis, a new development offered it renewed strength and vigor, namely, the transfer of values from abroad.
Crucially, in Marxist terms, as a force to counteract the tendency for the rate of profit to fall, imperialism is of the highest import. Marx listed five major ways that this tendency is forestalled: (1) cheapening of the elements of constant capital (raw materials and machinery); (2) raising of the intensity of exploitation (longer working days and more efficient labor organisation); (3) depression of wages below their value (superexploitation, or the payment of less than the domestic average value of labor power); (4) relative overpopulation (or a larger reserve army of labor); and (5) foreign trade (Sweezy 1949, pp. 97–100). Every one of these countervailing forces is realized through imperialist exploitation of dependent nations.
Jawaharlal Nehru ( 1982, p. 548), India’s first Prime Minister, highlighted the significance of imperialism in a world history originally written for his daughter:
“It is said that capitalism managed to prolong its life to our day because of a factor which perhaps Marx did not fully consider. This was the exploitation of colonial empires by the industrial countries of the West. This gave fresh life and prosperity to it, at the expense, of course, of the poor countries so exploited.”
From Dangerous Class to National Citizenship
In the second half of the 19th century, the conditions of the European proletariat slowly began to change. For the first time in the history of capitalism, the capitalists had to pay wages above the mere subsistence level. This first tiny improvement was not primarily a result of the fight of the proletariat itself. The labor movement was politically weaker than before and Chartism had been impaired by cleavage and corruption. Rather, these first improvements in wages and working conditions for the British proletariat were due to contradictions between rival factions of the ruling class.
As noted, Britain had a virtual monopoly of industrial goods at the beginning of the 19th century, resulting in extra profits. However, these profits did not only go to the industrial capitalists, and during the first part of the century it definitely did not result in higher real wages for the working class either. Paradoxically, a large portion of the extra profits from the industrial monopoly was passed on to the landowning class, its historically strong position in Parliament having allowed it to introduce an embargo on the import of corn and other agricultural products into Britain from 1804. The landowners could thereby maintain a high level of prices for their products ensuring that capitalists had to pay their workers comparatively high nominal wages just to enable them to live above the breadline.
By this artificially high price of corn the landowners could apportion to themselves a considerable part of the extra profits earned by Britain’s industrial monopoly. Therefore, in the 1840s the industrial capitalists struggled to have the Corn Laws repealed. Allied with the working class they succeeded in 1846. The reopening of the importation of corn from Prussia and later from the United States caused a fall in the prices of bread and other food.
Following the fall in corn prices, the industrial capitalists tried to decrease wages, but the working class was able to limit this decrease and thus obtain an improvement. This victory was added to shortly after the abrogation of the Corn Laws, by the introduction of a ten-hour working day, a goal for which the workers had been fighting for thirty years. Here organized labor was unexpectedly supported by the landowners in Parliament, who thirsted for revenge on the industrial capitalists.
The extra profits of the British industrial monopoly and the internal fight between landowners and industrial capitalists meant that the wages of the British working class were increased above the subsistence level at which they had been so far kept. Between 1850 and 1872, imports of wheat more than doubled and imports of meat increased eightfold. Slowly the bourgeoisie changed its political strategy from repression of the “dangerous classes” to a gradual inclusion of the working class as national citizens. In the 1860s and 1870s both Napoleon III of France and the Conservative government in England allowed the working class to organize. Socialist parties were formed in all Western European countries while the trade union movement grew in strength. The right to vote was extended to include men from the working class, wage levels rose, and the first social and health insurance systems were introduced.
Parallel to this development was a de-radicalization of the Western European working class. It had left the 1848 revolutions and the Paris barricades behind in favor of parliamentarism and negotiation with employers. Class struggle became a controlled process within the parameters set by the system. Working-class political parties and trade unions successfully fought for higher wages and better working conditions, for unemployment and health insurance, pensions, and so forth. The result was a compromise between capital and the working class which dampened the future form class struggle would take.
This historic compromise had a dark side. The developing welfare services of the state, and the widening and deepening of the franchise, united the former “dangerous classes” behind the nation-state in imperialist wars. So that the citizens in the center of the Empire could enjoy a growing welfare, ideologies of “national interest” and racism arose to justify policies which, by contrast, meant death and misery for the people in the colonies. It is this that Australian academic M.G.E. Kelly calls “biopolitical imperialism.”
“Imperialism, therefore, is primarily thanatopolitical, a politics of death, contrasting with the biopolitics of the population found within the metropole. There is, I will contend, a direct relation between the two things, in which death is figuratively exported and life imported back, in a systematic degradation of the possibilities for biopolitics in the periphery, arising out of the operation of biopolitics in the center. …
“I will argue that biopolitics constitutes a missing link in explaining how imperialism involves ordinary people of the First World. For one thing, biopolitics provides a mechanism by which the profits of imperialism may be spread to a whole population. By uniting us in a single population, moreover, biopolitics generates solidarity between ordinary people and elites.” (Kelly 2015, pp. 18–19)
Mike Davis (2000, p. 59) illustrates this reality through case studies of India, China, and Brazil that show how imperialism in the form of direct governmental intervention or “neutral” economic processes destroys the health and welfare of these countries’ populations:
“Between 1875–1900—a period that included the worst famines in Indian history—annual grain exports increased from 3 to 10 million tons, equivalent to the annual nutrition of 25m people. Indeed, by the turn of the century, India was supplying nearly a fifth of Britain’s wheat consumption at the cost of its own food security.”
In addition India also had to pay a part of the British Empire’s military effort in cash and lives:
“Already saddled with a huge public debt that included reimbursing the stockholders of the East India Company and paying the costs of the 1857 revolt, India also had to finance British military supremacy in Asia. In addition to incessant proxy warfare with Russia on the Afghan frontier, the subcontinent’s masses also subsidized such far-flung adventures of the Indian Army as the occupation of Egypt, the invasion of Ethiopia, and the conquest of the Sudan. As a result, military expenditures never comprised less than 25 percent (34 percent including police) of India’s annual budget” (ibid, pp. 60–1).
As an example of the restructuring of the local economy to suit imperial needs regardless of the consequences for the population in the colonies, Davis (ibid, p. 66) notes: “During the famine of 1899–1900, when 143,000 Beraris died directly from starvation, the province exported not only thousands of bales of cotton but an incredible 747,000 bushels of grain.”
The Rationale Behind Capitalist Colonialism
During the 1850s, committed proponents of free trade considered that the costs of administering and enforcing British colonial diktat would outweigh any potential or actual economic benefits derived from it. For authors then and since, including those ostensibly opposed to formal colonialism, the colonising nations of Europe and North America did not substantially benefit from colonialism; rather, it was only a thin stratum of private investors, officials, and migrant workers who benefited.
During the early 19th century, there were precious few consistent free trade anti-imperialists, the most famous, manufacturer and Radical free trade supporter Richard Cobden, excepted. As Marx recognized in 1853, “when India had been in the process of annexation, everyone had kept quiet; once the ‘natural limits’ had been reached, they had ‘become loudest with their hypocritical peace cant.’ But, then, ‘firstly, they had to get it [India] in order to subject it to their sharp philanthropy.’ … In 1859 Marx was writing that ‘the “glorious” reconquest of India after the Mutiny’ had been essentially carried out for securing the monopoly of the Indian market to the Manchester free traders” (Habib 2002, pp. 8–9).
Adam Smith is well-known for having insisted that colonies were a never-ending source of war and expense for the colonising country. Less well known is the fact that his opposition to colonialism was fundamentally based on opposition to colonial monopolies in trade and investment as opposed to colonialism tout court. For Smith, colonialism was permissible if the colony contributed net revenue to the metropolis within a system of free trade for all members of an Imperial Federation (Kittrell 1965, p. 49).
More recently, Thomas and McCloskey (1981) argue that the Empire was an overall burden on the British economy. For not only did Imperial preferential duties ensure that British consumers paid over the world market price for West Indian commodities like cotton, ginger, indigo, molasses, rum, pimento, and sugar (they neglect to discuss the purchasing power of British wages), but the costs of occupying and administering the colonies, not to mention defending them from rival colonial powers, were a severe drain on the British government budget.
Are these authors correct in their estimate of the negligible role of Empire in Britain’s economy? According to economic historian Ralph Davis (1979, p. 10):
“Overseas trade did much to strengthen Britain’s economic life during the eighteenth century, and in doing so it helped to create the base without which the industrial take-off might not have proceeded so fast or gone so far. Moreover, once home demand ceased to be sufficient to maintain the momentum of growth of the most advanced industries, around 1800, overseas trade did begin to play an absolutely vital direct part in their further expansion.”
Indeed, there can be no doubt that colonialism was crucial to British and European capital accumulation. Imperialist trade and investment in the Third World is the foundation of the capitalist world economy, and not only historically. As the great historian and first Prime Minister of Trinidad and Tobago Eric Williams wrote: “The colonial system was the spinal cord of the commercial capitalism of the mercantile epoch” (Williams 1944, p. 142). In particular, the massive profits accruing from the slave trade and slave-based production were used to finance early British capital accumulation in shipping, insurance, agriculture, and technology, notably including James Watt’s epoch-making invention and production of the steam engine.
Australian economic historian G.S.L. Tucker has argued that the investment of English savings in countries where wheat and other primary goods could be produced more cheaply than at home tended to raise and maintain the rate of profit and thereby enlarge the sphere of investment (Tucker 1960, p. 135). A declining rate of profit, by contrast, could neither be averted by investing in one form of manufacture instead of another, nor by transferring capital to agriculture rather than industry. Instead, for proponents of colonialism, the rate of profit could only be maintained and extended by exporting capital and labor to the colonies, “where they would produce the food and raw materials that England required, and at the same time create new and growing markets for her export industries.” In so doing, Britain would no longer be so dependent on foreign markets and the exigencies of foreign tariff policies. Rather, by setting up a “colonial Zollverein” (or customs union) it would be able to control its own economic destiny (ibid, p. 141).
Despite being a staunch opponent of North American slavery, Liberal economist and political theorist John Stuart Mill was firmly convinced of the benefits of colonialism to human progress, so much so that he vouchsafed the option of the enslavement of colonized peoples. For Mill, whose advocacy of a liberal pluralist voting system based on the educational standards of citizens was explicitly formulated so as to exclude the representation of the broad working class (he feared that its numerical preponderance would lead to political domination), freedom applied “only to human beings in the maturity of their faculties” and could not be demanded by minors or “those backward states of society in which the race itself may be considered as in its nonage” (Mill 1972, p. 72). In Mill’s view, “a ruler full of the spirit of improvement is warranted in the use of any expedients that will attain an end, perhaps otherwise unattainable” (ibid, p. 73). He demanded the barbarians’ “obedience” for the purposes of their education for “continuous labor,” the supposed foundation of civilization. In this context, writes Italian historian Domenico Losurdo (2011, pp. 225–6), Mill did not hesitate to theorize a transitional phase of “slavery” for “uncivilized races” (Mill 1972, p. 198), since there were “savage tribes so averse from regular industry, that industrial life is scarcely able to introduce itself among them until they are … conquered and made slaves of” (Mill 1963–91, p. 247).
Mill was sanguine about the benefits of colonialism to the British economy:
“It is to the emigration of English capital, that we have chiefly to look for keeping up a supply of cheap food and cheap materials of clothing, proportional to the increase of our population; thus enabling an increasing capital to find employment in the country, without reduction of profit, in producing manufactured articles with which to pay for this supply of raw produce. Thus, the exportation of capital is an agent of great efficacy in extending the field of employment for that which remains: and it may be said truly that, up to a certain point, the more capital we send away, the more we shall possess and be able to retain at home” (Mill 1909, p. 739, quoted in Tucker, 1960, p. 136).
For Porter (1984, p. 142), the centrality of the developing world to British capital accumulation was threefold:
“Firstly: in so far as it was developing, and not merely stagnant, it followed that it required more capital than it could provide itself: and this Britain could supply. In the 1890s, ninety-two per cent of the new capital Britain invested abroad went outside Europe, and half of it to the developing countries of Africa, Asia and Australasia. Secondly: from the commercial point of view it was a market which overall bought more from Britain than it sold—just; and such markets were becoming very rare. Thirdly: it was a market which, in so far as it had not been cornered by European rivals and surrounded by their tariffs or saturated with their capital, was still ‘open.’ ‘Open’ markets were getting hard to find in the protectionist ’nineties; but if Britain’s products were to be sold abroad at all, those that were still open had to be kept open.”
Economic historian Phyllis Deane lists six main ways that foreign trade contributed to catalysing what she calls the first industrial revolution. First, foreign trade created a demand for the products of British industry. Second, it provided access to raw materials which widened the range and cheapened the products of British industry. Third, international trade provided underdeveloped countries with the purchasing power to buy British goods. Fourth, it provided an economic surplus which helped finance industrial expansion and agricultural improvement, with the profits of trade having “overflowed into agriculture, mining and manufacture.” Fifth, international trade helped to create an institutional structure and business ethic which was almost as effective in promoting the home trade as for the foreign trade. Finally, the expansion of international trade in the eighteenth century was a prime cause of the growth of large towns and industrial centres such as Liverpool and Glasgow (Deane 1965, pp. 66–68, quoted in Frank 1978, p. 227).
Capital Gains from Empire
What was the extent to which capitalism relied on colonialism for its advancement? We will examine several measures here, concentrating in particular on the British case. We encourage readers to research the impact of colonialism on other European economies. Our view is that an important reason why the shift in Europe in the exercise of state power from repression to inclusion could take place within a dynamic capitalist environment is due to the fruits of the colonial Empire. These came partly in the form of (1) imported colonial mass consumption goods, (2) raw materials imports for expanding British industry, (3) profit from colonial trade, taxes, and investments, and (4) an area for settlements for the “industrial reserve army”—the unemployed surplus population in Europe.
Hidden Colonial Surplus Value
Marxist author, teacher, activist, and a founding member of the Non-European Unity Movement in South Africa, his country of birth, Hosea Jaffe (1921–2014) coined the term “hidden colonial surplus value” to describe the large amount of surplus value transferred to the imperialist countries by the oppressed countries of Africa, Asia, and South America. This “hidden surplus value” is the difference between the selling price of Third World exports and the selling price of these same exports in the imperialist markets (Jaffe 1980, p. 113). The source of this cheapness is not purely “economic,” but intrinsically a matter of political economy, that is, the ensemble of power relations within which goods and services are produced, distributed, and consumed.
For Jaffe, as for Cope (2015, p. 219), imperialist value transfers may be resolved into two components: repatriated profits and hidden surplus value. Repatriated profits represent only the visible portion of the value transfers generated by foreign investment and loan capital, whilst superprofits (the extra or above average surplus-value extracted from the labor of nationally oppressed workers) represent the invisible portions retrieved through capital export imperialism, unequal exchange, and debt usury.
As Jaffe has argued, and Cope (2015) has demonstrated applies in today’s world economy, the intra-imperialist rate of profit may be negative if hidden surplus-value from invisible net transfers amounts to more than net profits. In such a case, value-added (s + v) is less than wages (v), and profits derive only from the exploited nations whilst wages are subsidized by superprofits. In short, were the Third World workers involved in the production of commodities for First World markets suddenly to be remunerated at the same rate as “workers” in the latter, the entirety of profits of the world’s leading capitalist powers would be completely annihilated.
Jaffe estimates that no less than 500 million people were killed by Europeans during the four centuries of its primary accumulation of capital in the Americas, Asia, and Africa, an average of 100 million people per century at a time when the total world population increased from 300 million to 1 billion. As he writes: “This 400-year long process left a permanent mark on the value of human labor power of the colonial workers and on the immediate ‘value’ equivalent, in gold and its money representation, of the labor time of these workers” (ibid, p. 102).
Between the 16th and 19th centuries, the major international motors for European capital accumulation were the trade in African slaves carried in British and French ships; silver and gold exports from South America to Spain and Portugal; profits from the use of slave labor in the British West Indies; profits from the Dutch spice trade; profits from the opium trade; and colonial land revenue. In each case, colonialism as the expansion and acquisition of control of overseas territories by burgeoning capitalist European powers, many featuring unmitigated slavery, provided the impetus for nascent capitalist accumulation (Blaut 1980, p. 105).
Jaffe argues that during the first half of the 19th century, the wages of British, French, Dutch, and German workers differed little from the maintenance cost of slaves in the United States, Brazil, Cape, and the Dutch and French colonies. The rate of exploitation for these two distinct groups of workers (those from oppressed nations and those from oppressor nations) was more or less equally miserable. However, with the transition to imperialism in the second half of the 19th century, the ratio s/v rose for colonial and fell for metropolitan workers (ibid, p. 111).
The Drain Theory of British Colonialism
Among the earliest writers to systematically analyse and oppose the parasitic relationship obtaining between a colonial and a colonising country was Parsi intellectual, teacher, cotton trader, and early Indian nationalist Dadhabai Naoroji (1825–1917). Naoroji, India’s “grand old man,” was the first Asian to be a member of the British Parliament (the House of Commons), which he was from 1892 to 1895. Naoroji formed the Indian National Congress together with A.O. Hume and Dinshaw Edulji Wacha. His book Poverty and Un-British Rule in India drew attention to England’s exploitation of the country. One of the few contemporary descriptions of England’s colonial exploitation comes from Naoroji. In an appeal from 1882, On Justice for India, addressed to the British parliament, and based on extensive statistical calculations of the transfer of wealth from India to Britain, Naoroji described how taxes, trading profits, the destruction of India’s handicraft sector, and monopoly prices on imports from England to India drained the country. In 1896, the Indian National Congress officially adopted Naorojii’s “drain theory” as their political criticism of colonialism. Naoroji considered that by dint of its oppressed position, India was subject to British capitalist exploitation without being thereby enabled to reap any of the fruits of capitalist development.
For Naoroji, there were several underlying bases for this unrecompensed transfer of India’s wealth to Britain. First, he argued, India is a vast country ruled by a handful of Europeans whose income is a “moral drain,” that is, a cost to British India. Second, India develops as a market for British manufactures and a supplier to Britain of its raw materials strictly because India’s economic policies are dictated by Britain and in the interests of the British economy and the British capitalist class. Third, the Indian government under British rule is forced to pay an ever increasing list of official overseas expenses which Naoroji calls Home Charges (see Table I). Fourth, rather than creating domestic employment and income, India’s public expenditure out of the proceeds of taxation is instead used to pay for the infrastructure required by Britain to more effectively plunder the country. Finally, India’s transformation into a “mere agrarian appendage and a subordinate trading partner” of Britain ensures that it has become a typical colony dominated from afar (Karmakar 2001, p. 69).
For Naoroji, the introduction of commercial relations in agriculture, capital investment in crop production, the imposition of a rural tax in kind, and the consequent monetisation of the Indian economy were not conducted on the basis of a thorough extirpation of the system of landlordism and a redistribution of landholdings amongst the peasantry, as in autochthonous capitalism, but on the incorporation of the landed class into a system of cash crop export dependency dominated by foreign capital. As such, Naoroji’s “drain theory” was a precursor to Marxist theories of the “development of underdevelopment” (Andre Gunder Frank) and semi-feudalism.
The transfer of capital from India to Britain effected by colonial subordination precluded India from implementing development opportunities in the form of infrastructural investment, education, and so on. This view was later echoed by United States Marxist economist Paul Baran (1957, p. 163) who, having estimated that around 10 per cent of India’s national product was transferred to Britain each year in the early decades of the 20th century, wrote that “[far] from serving as an engine of economic expansion, of technological progress, and of social change, the capitalist order in these [underdeveloped] countries has represented a framework for economic stagnation, for archaic technology, and for social backwardness.”
Nauroji estimated that Britain exacted an annual “tribute” from India of huge proportions. Following the Mutiny of 1857, India’s First War of Independence, he estimated that the annual transfer from India to Great Britain amounted to a total of £30 million (Karmakar 2001, p. 67). Accepting Bank of England data (see Table II), we can say that between one third and one half of Britain’s gross fixed capital formation (that is, the value of acquisitions of new or existing fixed assets by the business sector, governments, and households—excluding their unincorporated enterprises—less disposals of fixed assets and typically including land improvements; plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings), with the attendant productivity gain of British labor, was financed exclusively through the drain of India’s wealth from colonial tribute.
British Income in the Absence of Empire
American economist Michael Edelstein specialising, inter alia, in the economics of the British Empire in the 19th century, has attempted to measure what Britain gained from the underdeveloped parts of its Empire. He has done so through positing a counterfactual condition, namely, that the aforementioned countries had remained independent.
Edelstein argues that if the Empire territories had remained independent of British rule they would not have participated in the international economy to the same extent that they, in fact, did. Thus, he writes, the British Raj brought a more peaceful, unified, and commercially oriented political economy to India than would have been the case if the country had remained independent. While we might argue that India was by no stretch of the imagination a peaceful place under British rule, or that it may have been more commercially engaged outside it than Edelstein supposes, his working assumption that Britain’s trade with India and the other non-Dominion regions would have been a quarter of its existing level in 1870 and 1913 in the absence of British rule (Edelstein 1994, p. 203) is plausible.
What, then, is Edelstein’s assessment of the gains made by Britain from trade with its oppressed colonies?
“Summing the 75 per cent reduction to British exports to the non-Dominion colonies and the 30 per cent reduction to British exports in the Dominion regions (weighted by their respective shares in British colonial exports), British colonial exports in 1870 and 1913 would have been 45 per cent of their actual levels under this ‘strong non-imperialist’ standard of the gains from Empire. (The shares of white-settler and non-white-settler colonies in British exports to the colonies were approximately 45 per cent and 55 per cent, respectively. With their ‘strong’ non-Empire levels hypothetically reduced to 0.7 and 0.25, respectively, of their actual levels, British exports to both types of colonies would have been = 45 per cent (0.7) + 55 per cent (0.25) = 45.25 per cent of actual levels.)
“The ‘strong’ gain is the difference between the actual British Empire exports and this hypothetical 45 per cent level in the absence of Empire. British exports of goods and services to the Empire were approximately 7.9 per cent and 11 .9 per cent of GNP in 1870 and 1913; therefore the ‘strong’ gain from Empire was 4.3 per cent (i.e. 55 per cent of 7.9 per cent) of GNP in 1870 and 6.5 per cent of GNP in 1913” (Edelstein 1994, p. 204).
According to the Bank of England figures listed in Table II, gross fixed capital formation (GFCF) was 7.55 per cent of Britain’s GDP in 1870 and 7.13 per cent of its GDP in 1910. Using Edelstein’s “strong non-imperialist” standard, we may therefore suppose that around 57 per cent of Britain’s fixed capital investment in 1870 (4.3 / 7.5 × 100) and 91 per cent of its fixed capital investment in 1910 (6.5 / 7.13 × 100) was funded by its trade with the colonies.
British–Indian Merchandise Trade and Capital Accumulation
Specifically colonial trade differs from domestic and other foreign trade. Crucially, the colonial market is kept compulsorily open while the metropolitan market is strictly protected; in the case of Britain against Asian textiles, for instance, draconian tariff duties were applied for 150 years. Moreover, as Indian Marxist economist Utsa Patnaik notes, “colonial goods for export were purchased out of local tax revenues raised from the colonized population as in India, or by the export-goods equivalent of slave rent as in the West Indies” (Patnaik 2006, p. 36). In effect, either the money paid to the colonial goods exporter by the colonial power came out of high taxes that the latter had itself paid to the colonial state, as in the case of India, or the export goods were the commodity form of economic surplus directly taken in the form of rent (slave rent as in the West Indies, and land rent as in Ireland). Finally, India’s foreign exchange earnings were appropriated by Britain so as to settle its trade deficits with continental Europe and the USA (see below).
As shown in Table I, the nominal balance of trade includes more than direct merchandise trade, making it appear that Britain ran a trade surplus, not deficit, with its colonies. For no matter how great the trade surplus became (in 1913 India had the second largest trade surplus earnings in the world at £71 million), much larger fictitious invisible political charges were imposed to nullify the increased export earnings and, in fact, produce a small deficit on current account. Thus, as Patnaik highlights, countries with large and growing merchandise export surpluses such as India and Malaysia had more than their exports earnings siphoned off by Britain through politically imposed invisible burdens and had to borrow, while the country with a large and growing trade deficit, Britain, was able to siphon off the exchange earnings of its colonies and more than offset its current account deficit with sovereign regions, so that it actually exported capital to these regions on an increasing scale (Patnaik 2006, p. 41).
Nonetheless, as Patnaik shows, the unpaid trade surpluses extracted from the oppressed nations of the British Empire allowed British capital accumulation to advance rapidly. By calculating the direct merchandise import surplus from India and the West Indies into Britain and using this as the measure of surplus transfer from these colonized regions, Patnaik (2006) estimates the level of Britain’s rates of capital formation that were thereby made possible. She finds that the combined colonial transfer expressed as a percentage of Britain’s savings, is at least 62.2 in 1770, 86.4 in 1801, 85.9 in 1811, and 65.9 in 1821 (Patnaik 2006, pp. 49–50, quoted in Cope, 2014, pp. 276–278).
Britain’s capital accumulation was intimately connected to its plunder of the colonies. Value transferred from the Third World, over and above the prevailing domestic level, raises the profitability of First World business not only by cheapening the costs of constant and variable capital, allowing for much higher rates of consumption of both, but also, in the colonial era at least, by allowing for increased rates of capital formation through unpaid trade surpluses.
Colonialism, Popular Consumption, and Labor Reformism
It is clear from the above that European capitalists derived enormous wealth from colonialism. The British economy was in part the product of commercial hegemony achieved through imperialism, allowing Britain to become industrialized with a large proletarian population. However, the question remains: to what extent did the European proletariat itself benefit from colonialism? We argue here that despite creating much of the surplus value produced by their respective nations in the earlier part of the industrial capitalist era, the European proletariat between 1875 and 1950 (roughly the era of high imperialist colonialism) was nourished by colonized peoples’ labor, their incomes were dependent on the proceeds of colonialism, and their employment was a function of the maintenance of colonialism. The divide between the workers of the colonial nations and those in the colonized nations widened as imperialism advanced so that both the living conditions and the political horizons of each group of workers became increasingly polarized. We will examine here how colonialism raised the living standards of all European workers, particularly those organized workers poised to exploit the scarcity of their skills, as well as their “racial” and religious affiliations, vis-à-vis the colonized.
Capital and revenues from the colonies made wage increases for the metropolitan working class possible. Wages in England increased relative to prices by 26 per cent in the 1870s, 21 per cent in the 1880s, and 11 per cent in the 1890s. It was skilled workers who particularly benefited. A skilled worker earned approximately twice that of an unskilled worker, still living just above subsistence level.
The working class had, following the political reforms of the second half of the 19th Century, organized into powerful trade unions. This allowed the upper layers of skilled workers to obtain better wages and working conditions as well as expansion of trade union rights. This wage increase—which occurred first in England and later in France, Germany, and other Western European countries—contributed to the expansion of consumption power and to the reduction of the recurring overproduction crises that capitalism had hitherto suffered.
The only way wage levels could rise without the profit rate falling below what was necessary for capital accumulation, was by the exploitation of an increasing number of people employed in the colonial areas as workers in plantations, mines, and factories. Here, wages were set at subsistence level or less. The superexploitation of labor was the basis of the higher profits for capital invested in the colonies. The fall in the rate of profit that would have occurred as a result of rising wages in Europe was thereby compensated for by the increasing amounts of surplus labor performed in the colonies. On the one hand, capital benefited from rising wages at home by raising effective demand for commodities, while on the other hand, the low wages in the colonial areas maintained high profits. In this way colonialism solved the contradiction of capitalism in the North by dissolving the stagnating effect of higher wages within the enhanced exploitation of the proletariat in the South.
Economist Joan Robinson (1970, pp. 64–6) described the link between colonialism, the development of capitalism in Europe, and working-class consumption patterns:
“It was not only superior productivity that caused capitalist wealth to grow. The whole world was ransacked for resources. The dominions overseas that European nations had been acquiring and fighting over since the sixteenth century and others also, were now greatly developed to supply raw materials to industry. … The industrial workers at home gained from imperialism in three ways. First of all, raw materials and foodstuffs were cheap relatively to manufactures which maintained the purchasing power of their wages. Tea, for instance, from being a middle-class luxury became an indispensable necessity for the English poor. Secondly the great fortunes made in industry, commerce and finance spilled over to the rest of the community in taxes and benefactions while continuing investment kept the demand for labor rising with the population. … Finally, lording it around the world as members of the master nations, they could feed their self-esteem upon notions of racial superiority. … Thus the industrial working class, while apparently struggling against the system, was in fact absorbed in it.”
The most important commercial crop at the beginning of the 19th century was sugar. Produced by slave labor, its sale generated enormous profits for sugar merchants, plantation owners, and investors. Sugar consumption in Britain doubled between 1690 and 1740. By the 1830s and the advent of industrialised textile production, however, its market value had been exceeded by cotton. Britain was unable to produce cotton and imported all of it from America, where it was produced by slaves, and from Egypt and India, where it was produced by subsistence peasants. Raw cotton, sugar, rum, and tobacco imports were shipped by the tonne into prosperous British ports like Bristol, London, and Liverpool (see, for instance, Lane, 1987); all originated in the expanding slave plantations of America and the Caribbean.
Many of Britain’s primary products were producible exclusively in colonized tropical countries, though some were “temperate” food grains from colonies such as Ireland and India, as well as from the settler-colonial United States. In 1800 and at the height of the industrial revolution, an estimated 18 per cent of beef and pork consumption, 11 per cent of butter and margarine consumption, and 12 per cent of wheat and wheaten flour consumption in Britain was met by Irish imports (Jones 1981, p. 67). British importing of Irish grain, cattle, butter and so on contributed to the hellish starvation in Ireland in the 1840s and 1850s, from which that country’s population has still not recovered almost two centuries later. These temperate foodstuffs came to constitute 31 per cent of all imports of food and drink in 1844–6 and fully 43 per cent in 1854–6 (Davis 1979, p. 37). The most important items of direct mass consumption for which there was substantial or complete import dependence were wheat (of which India was probably the third most significant source) and wheaten flour, rice, cane sugar (beet sugar production in Continental Europe being fairly insignificant), tea, coffee, and tobacco. Of these, only the first was produced in Britain but production was not growing as fast as population between 1700 and 1850.
From the middle of the 19th century, a substantial general rise in incomes, particularly, as Davis notes, those of a large minority of the population (farmers, many kinds of skilled workers, the professional classes, and rentiers), led to a sudden leap in demand for semi-luxury food and drinks and a sharp increase in the amount consumed per head. In this period Britain shifted to “the kind of import dependence in which starvation, rather than inconvenience or even poverty, became the alternative to importing” (Davis 1979, p. 52).
Whereas standard long-run real wage series simply divide the nominal wage by the price of an unchanging consumption basket, Hersh and Voth (2009) show that after Europe’s “discovery” of America, its consumption habits were profoundly transformed and dramatically improved. They calculate that income gains from colonial goods imports such as tea, coffee, and sugar added at least the equivalent of 16 per cent, and possibly as much as 20 per cent, of household income to British people’s welfare by the middle of the 19th century. For McCants (2007, p. 436), the intercontinental luxury trades of the early modern period transformed the European economy. Moreover, it was not purely the consumption habits of Europe’s elites that drove this transformation, but those of its working and middle classes:
“Who was drinking all of this tea and coffee? Surely not just wealthy elites, as the volumes are too high to even entertain the possibility of limited social access to hot caffeinated beverages. Some of the import volume was ‘lost’ to re-exports, but the ultimate consumers of these re-exports were, of course, just other Europeans (or their colonial counterparts). Eighteenth century commentators of all national stripes did not hesitate to ascribe consumption of these caffeinated luxuries, usually as a complaint, to the teeming masses of their social inferiors. Probate inventory evidence on the social diffusion of the artefacts associated with this consumption has been accumulating over the past several decades, and it suggests that it was indeed widespread across the social landscape” (McCants 2007, p. 446).
Investigating the consumption habits of European nations over the course of two centuries, popular consumption historian Carol Shammas has defined an item of mass consumption as one consumed by over a quarter of the population, showing that tobacco passed the mass consumption threshold by the middle of the 17th century and sugar at the end of the 17th century (McCants 2007, p. 449).
The mass consumption of these and other consumer imports proceeded apace with the liberalisation of trade, the incorporation of new producer countries in the international market, and the decline of prices all predicated on the expansion of Empire. McCants (2007) summarizes the main trends:
“The consumption of tea, coffee, sugar, tobacco, porcelain, and silk and cotton textiles, increased dramatically in western Europe beginning as early as the closing decades of the seventeenth century, only to accelerate through much of the eighteenth century. The consumer setbacks associated with the period of the French Revolution and a continent at war, especially as triggered by the Napoleonic blockades, should properly be seen as a severe interruption to the trend which would otherwise have extended rather more seamlessly from the early modern trade system to the ‘transport revolution’ of the nineteenth century. Use of the new commodities brought by this trade spread rapidly, both in geographical and social space. … [The] presence of many of these so-called luxury goods is well documented down into the ranks of the working poor by the middle of the eighteenth century. There can be little doubt then, that European demand was fuelled not only by the rich with their growing ‘surplus incomes’ but by the much more numerous lower and middling classes of Europe’s multitude of urban centres, followed by their rural counterparts.”
Over the course of the 1700s perhaps 11 million slaves were exported by European merchants from Africa to the slave colonies on the opposite side of the Atlantic to produce many of these luxury items or their raw materials. As many as one in five slaves died during the journey, after enduring cramped, filthy, and dangerous conditions. Many more would die later on the plantations as a result of disease, overwork, and maltreatment. The expansion of the transatlantic slave trade can be located in the growth of popular consumer demand, behind which lay the sale into bondage of many millions of Africans.
The Political Consequences: From Revolution to Reform
There has been considerable research into the 19th century English labor aristocracy. Both contemporary political opinion and historical research agree that it was the upper layer of organized skilled workers who constituted the labor aristocracy, and that its size and importance changed with economic conditions in the second half of the 19th century. The crucial point is that colonialism and imperialism opened up the possibility of increasing welfare for the metropolitan working class within the framework of capitalism. Reformism became a successful political line and, in tandem, the revolutionary line subsided.
The new economic trends changed the conditions of class struggle. The economic and political improvements that the capitalist class could not provide in the first half of the century—because it was impossible within that regime of accumulation—began to be provided towards the end of the century. Ruling class largesse (such as it was) was definitely not offered voluntarily. But in the first half of the century wage rises and political enfranchisement of the proletariat was a life and death question for capital. Now it became possible for capital to accede to these demands. Higher wages, improved working conditions, and extended political rights strengthened the faith of the working class in reformism and made it ever safer for capitalists to give the working class more power. Revolution was no longer on the agenda in Western Europe.
Hobsbawm (1964, p. 341) observed the relationship between colonialism and the development of a strong reformist current within the working class, stating: “The further we progress into the imperialist era, the more difficult does it become to put one’s finger on groups of workers which did not in one way or another draw advantage from Britain’s position […].”
From Internationalism to Nationalism
Marx and Engels coined the battle cry: “Proletarians of all countries, unite!” in The Communist Manifesto in 1848, expressing their hope for working-class solidarity across national boundaries—and even between imperial powers and their colonies—in a common struggle for a socialist revolution. However, they became disillusioned with the prospects for the same. They pointed out several times the relationship between colonialism and Britain’s position as an imperial power and the embourgeoisement of its working class, that is, the proliferation of middle-class living standards and ideologies amongst the workforce. This can be seen, for example, in Engels’s letter to Marx dated October 7th, 1858 (page 90), Engels’s letter to Kautsky dated September 12th, 1882 (page 123), or Engels’s letter to Bebel dated August 30th, 1883 (page 125 of this book).
The labor movement in the imperialist countries had not only difficulties demonstrating solidarity with the people in the colonies; they had also difficulties coming to terms with oppressed ethnic groups or nations struggling for equal rights at “home.” This issue is played out most clearly in the United States over the question of slavery. In England, the Irish immigrants’ struggle for equal rights is a parallel. The Irish immigrants were seen as competitors to the English workers and were met with hostility. National chauvinism—the belief in national superiority—played a prominent role in the politics of the English working class. In a letter to Meyer and Vogt of April 9th, 1870 (page 108), Marx compares the British working-class attitude to colonial Ireland and the Irish working class with white Americans’ attitude to slaves in the American South.
Marx and Engels’s political practice in this period was centered on the First International Working Men’s Association, which in reality consisted of trade unions and political organizations from the Northwestern part of Europe. The divergent wage levels between the imperial powers and the colonies, and between different ethnic groups within the imperial center, were already an important issue of the time as, for instance, between English and Irish workers in England and between German and Czech workers in Germany. In his speech to the Lausanne Congress of the First International in 1867, Marx ( 1975, p. 422) declared:
“A study of the struggle waged by the English working class reveals that, in order to oppose their workers, the employers either bring in workers from abroad or else transfer manufacture to countries where there is a cheap labor force. Given this state of affairs, if the working class wishes to continue its struggle with some chance of success, the national organizations must become international.”
Marx already had an eye for the significance of differences in national wage levels for the prospects of developing an international class struggle—and that at a time in history where the wage gap was much less stark than today. Marx’s strategy in relation to this situation was clear: international solidarity and struggle. Instead, defense of imperialism would become cemented in the British working class in the years ahead.
Imperialist Reformism and the Labor Aristocracy
In Victorian England, we see precisely the kind of social imperialism avant la lettre of which the Western left would find itself approving as superprofits increased:
“The domestic Radical programme, like the Fabian program of a few years later, rested on the assumption that home and foreign affairs had in practice very little connection. At home, the task of the radicals was to promote a more even distribution of wealth; but the wealth that was to be redistributed was taken for granted, without any examination of its sources. It was regarded, in effect, as natural and assured that Great Britain, as the leader of world industrialism, should go on getting richer and richer, and should devote her surplus capital resources to the exploitation of the less developed regions of the world, drawing therefrom an increasing tribute which Radical legislation would proceed to redistribute by means of taxation more equitably between the rich and the poor in Great Britain” (Cole and Postgate 1949, pp. 411–412).
According to Kirk (1985, p. 9), the ranks of the labor aristocracy were broadened in the second half of the 19th century with the rapid expansion of the capital goods sector and its high demand for skilled males, new labor aristocrats in the metal trades joining older ones in building and printing in the capitals of England and Scotland. The political moderation of the mid-Victorian labor movement, especially its trade union component, was due largely to the increased dominance of these skilled males therein, and its having laid in the hands of “moderate and ‘responsible’ men who, whilst laying strong claims to the rights of male citizenship, wished to achieve a stake in society” (ibid, p. 11).
At least in terms of the third quarter of the 19th century, Kirk argues that Hobsbawm is correct to draw a close connection between the “distinct if modest” improvement in all but the environmental conditions of the working class and increased political moderation. The evidence points to a clear rise in the living standards of a significant section of the British working class from around 1860 and an increasing differential between many skilled and lesser- and unskilled male workers during that period (McClelland 2000, p. 104).
With some important qualifications and corrections, it is valid to posit “an overall link between economic improvement and reformism during the third quarter of the century” (Kirk 1985, p. 81). Thus cotton operatives were generally much better off in material terms in 1875 than they had been in 1850, with the post-1864 years being a period of substantial, indeed, in many cases, spectacular rises in money and real incomes. Given this overall improvement, Kirk argues, “it is surely not coincidental that reformism took increasingly deep root in the cotton towns” (ibid, p. 82). Certainly many labor leaders consciously attributed their newfound moderation to the material and institutional gains of the years after 1850. That there had been real improvements in the standard of living of the working class was explicitly vouched for in the analysis of working-class reformers and their allies at the time (see, for example, Ludlow and Jones, 1867).
Alongside structural changes in the capitalist mode of production (Stedman Jones 1975), rising living standards brought about by falling prices, and the ability of trade union organisations to ensure that wages did not fall concurrently (of which more below), Kirk accounts for working-class conservatism by highlighting conflicts following a massive and unprecedented increase in the level of Irish Roman Catholic immigration into the cotton districts. In the years after the catastrophic famine of the late 1840s, this led to tensions between sections of the immigrant and host communities. Kirk establishes that a “working class fragmented [we would emphasize, stratified—ZC and TL] along ethnic (and wider cultural) lines greatly facilitated the (re)-assertion of bourgeois control upon the working class, and helped to attach workers more firmly to the framework of bourgeois politics” (Kirk 1985, p. 310). Thus, “[ethnic] conflict operated, against the background of the apparent inevitability of capitalism, to restrict further the potential for class solidarity in Lancashire and Cheshire, and to provide sections of the bourgeoisie with the opportunity to assert their authority, in a fairly direct way, upon workers” (ibid, p. 335).
Stedman Jones (1971, pp. 241–2) argues that the extension of the franchise to part of the male working class in Britain with the Reform Act of 1867 (the Second Reform Act) was the means employed by the ruling class to forestall “an incipient alliance between the casual ‘residuum’ and the ‘respectable working class,’ as fear grew on a national level of a possible coalition between reformers, trade unions and the Irish.” Indeed, this analysis is borne out with the example of fiscal policy with respect to sugar duties:
“Government strategy was driven by a number of different elements, not least the fiscal problems of the state. It was necessary to increase revenues by imposing income tax, beginning to shift the burden of taxation from indirect to direct taxes and, at the same time, keeping income tax low through increasing revenues by lowering duties on consumption goods and thus boosting, in particular, working-class consumption. This has to be seen in the broader context of, on the one hand, dealing with the Chartist insurgency by attempting to attach the working class to the state through encouraging consumption and some measures of social reform and, on the other, of dealing with the interests of manufacturing and the effects of the economic depression of 1837–42 through attacking the Corn Law problem. The latter would also entail addressing the crisis in Ireland by moving towards free trade as the putative solution.
“Within the wider framework, [British Conservative Chancellor of the Exchequer and slave plantation owner Henry] Goulburn situated his aims so far as sugar was concerned. Sugar had become an essential element of working-class consumption so his aim was ‘to secure to the people of this country an ample supply of sugar.’ But he also wished to make that supply ‘consistent with a continued resistance to the Slave Trade, and with the encouragement of the abolition of slavery.’ Finally, he sought ‘to reconcile both with a due consideration to the interests of those who have vested their property in our Colonial possessions.’” (Hall et al 2014, p. 145)
However militant the labor aristocracy’s struggles against employers over the past century (and these are frequently and massively exaggerated), they were never directed against the division between oppressor and oppressed nations, against the imperialist system that guaranteed the amount of colonial loot to be divided amongst the warring parties.
Imperial Trade Unionism
The bargaining power of metropolitan wage labor improved as the outmigration of the unemployed to settler and non-settler colonies reduced the size of the reserve army of labor, and as the huge inflow of colonial transfers boosted domestically generated productivity, profits, and investment, thus serving to raise mass living standards.
The connection between labor reformism and colonialism was, however, even more direct. As primary wealth-creators, the major producer industries of the Victorian period were agriculture, textiles, coal, iron and steel, and engineering. These industries were also the major employers, the major export earners and, in the latter part of the century, the major targets for the newly emerging trades unions. In 1889 trades unions had 679,000 members, the majority of whom were in the primary industries. By 1900 there were over two million union members in Britain. Of equal importance was the diversification of industry in this period, along with the ever-increasing range of imported products. According to data compiled by Clegg et al (1964), the majority of the unionized workers in the late 19th century were in iron and steel, coal mining, and cotton and woollen textiles.
Clough (1993) explains how the economic and political benefits accruing to the skilled working class of Victorian England organized in these industries were directly attributable to their exceptional position in the international division of labor at the time, that is, to British colonial imperialism:
“If we look at the sectors where skilled workers and their organisation were strongest, we find them to be closely connected to Empire: textiles, iron and steel, engineering, and coal. Textiles because of the cheap cotton from Egypt, and a captive market in India; iron and steel because of ship-building and railway exports, engineering because of the imperialist arms industry, and coal because of the demands of Britain’s monopoly of world shipping. In a myriad of different ways, the conditions of the labor aristocracy were bound up with the maintenance of British imperialism. And this fact was bound to be reflected in their political standpoint.”
Meanwhile, Hatton et al (1994) have found that the effect of union membership on earnings at this time was of the order of 15–20% and that this effect was similar at different skill levels. A broadly similar pattern is observed for industry groups, although the difference in the impact of unions on earnings across industries was greater than across skill groups.
Socialist Internationalism and Anti-Imperialism Today
Since decolonisation, there has been a shift from value transfer based on colonial tribute to that based on imperialist rent, that is, “the above average or extra profits realized as a result of the inequality between North and South in the global capitalist system” dominated by Western monopolies (Higginbottom 2014, p. 24). The mass embourgeoisement of the metropolitan working classes via receipt of value transferred from the exploited nations and minority communities and the attendant political pacification is not admitted by socialists in the imperialist countries. The point to be grasped by the genuine left—those struggling to see an end to capitalism and imperialism alike—is that so long as imperialism functions, internationalist labor movements in the core imperialist countries will be strictly delimited.
In The Eighteenth Brumaire of Louis Bonaparte, Marx remarked that “[t]he Roman proletariat lived at the expense of society, while modern society lives at the expense of the proletariat” since almost all of Rome’s wealth derived from landlordism, slavery, and imperial tribute. The Roman proletariat (from the Latin proles, “offspring”) had little in common with the proletariat of capitalist society. It was considered useful for little but siring children to serve as soldiers or settlers for the empire. As such, the proletariat was a parasitic class that was maintained at the expense of the empire’s peasants, slaves, and colonized peoples. In that sense, it was much like the First World working class of today, which is largely maintained by the surplus labor of proletarians, peasants, and slaves in the exploited nations.
Fighting for higher wages and better living conditions for First World workers is reactionary outside of the struggle against imperialism. Government deficit spending, expanded welfare measures, and protected industry in the affluent countries are not necessarily socialist measures. Those groups, whether ostensibly left-wing or right-wing, which act to preserve the inequality of imperialist relations invariably promote national chauvinist solutions to problems of unemployment and declining living standards (Baran 1978, p. 247). The increasingly respectable fascist movement promises the highest levels of parasitism for white workers, national business interests unhappy with neo-liberalism, and the petty-bourgeoisie opposed to the fiscal requirements of globalized finance capital. The denial of gigantic imperialist value transfer adds fuel to the fire of right-wing populism.
Edited by Constantignoble ()
so if you get a gateway error while posting, give it 5-10 minutes to update before assuming it failed
Edited by Constantignoble ()
Edited by Constantignoble ()
09/08/2018 — Amber B.
Practical Notes on Service Work: Implications of Unproductive Labor
As of 2016 more than 80% of active workers in the united $tates are employed by the service—or tertiary—sector, a large variety of jobs which are defined primarily against the traditional backdrop of “productive” labor employed in agriculture, industry or resource extraction. This is where a bulk of the so-called “unskilled” workforce is employed, particularly in retail and trade jobs, as salespersons, stockers and cashiers. With such prevalence—more than 15 million people being employed in retail trade alone—it demands more than just a stereotyped explanation of conditions and tasks. Even in the First World, we cannot, nor should we, rule out the importance of transforming workplace struggles into revolutionary ones. That said, we must understand exactly what peculiar relations exist here, to say the least, and what problems they pose/how we might solve them to transform the everyday cycle of economistic struggle into revolutionary class struggle on the side of the global proletariat.
There are a number of important factors to consider about the type of work and the environment when approaching the question of struggle among service sector workers. On its face, we must consider what their relationship to production is and how it is important to the politicization of their conditions. Service work is locked firmly in the tertiary sector, or that sector that Marx described as primarily involving the realization of commodities, rather than their production, wherein industrial capital sacrifices part of the surplus-value extracted in the production process to the sphere of circulation as the profit of the “merchant”. This ranges from the hourly waged workers in retail, to self-employed professionals who contract with advertising firms (although these are sometimes lumped into a quaternary sector dealing with information, nevertheless, they are parasitic outgrowths on productive capital). Of course these two jobs have little in common despite the sectoral similarity. Nevertheless, it is clear that those in the service sector are not productive of surplus-value, but simply aid in its realization as profit. Therefore, despite being generally organized in a capitalistic setting, these workers are not productive in a capitalist sense, that is, of surplus-value.
This may appear on its face to be a pedantic point, since to a low-wage service sector employee, their conflict with management remains constant. However, the division between unproductive and productive labor has a fundamental impact on our political practice. The problem is twofold: (1) Since the workers do not produce surplus-value, their contribution to the concentration of capital and the expansion of the capitalist system is external, indirect. Productive capital surrenders part of the surplus-value to pay for circulation, and their wages are mere faux frais of that sphere of distribution. (2) Since they do not produce surplus-value, they are not exploited in the strict Marxian sense, and therefore the politics of their contradictions with management are put into a different politico-economic context. So what does this mean for the reality of class struggle in a service/retail environment? Before we can answer this question more exactly, we must more precisely locate that section among which it would be valuable to agitate. There is very little to be done at this moment for the upper echelons of this sector—some self-employed, all comfortably petty bourgeois. These are the individuals employed as artists, proprietary salespeople, skilled craftspeople and consultants.
Rather, for the purposes of this analysis we are interested in those employed regularly in a capitalistic setting, receiving a wage as the primary payment for their work. These are the cashiers, sales associates, fast food workers, janitorial staff, etc. who still have a contradictory relationship with a bureaucratic structure above them. Even still, a number of challenges face us in actually mobilizing these workers politically, and away from the economistic self-interest that tends to define most unconscious (or petty bourgeois-conscious) workers’ struggles. In the united $tates and the First World more broadly, one of these is certainly the relatively high wages of the workers employed in this sector. Many workplaces now pay far above the minimum wage, with Walmart (the united $tates’ largest private employer) offering a starting rate of $11 per hour to all its associates, and even higher depending on one’s department. Not extravagant by any means, but they certainly aren’t revolting any time soon.
The recent increases in wages, and the promise of further increases, have severely hampered the development of worker organization and class struggle in these firms. Simply put, high wages in some firms have placed negative incentives on struggle, even around serious issues, as workers simply do not see the cost of struggling for their resolution as “worth it” when measured against these high wages. This is by no means the deciding factor, but clearly it does play a role, especially when so many are living above just mere subsistence. The overall condition of the workers is not reducible to wages, but at the same time we cannot discount them. The ability for workers to live in relative comfort and security has a huge impact on the impetus for class struggle, and so long as imperialism functions as it does, emphasizing the consumptive power of First World people over their productive power, this is not likely to change. Even across sectors, we cannot deny the impact that high wages have had in diminishing the support for class struggle, and qualitatively changing the standard of living enjoyed in the First World in comparison to the global majority in the Third World.
But even for those low-wage service workers, who live significantly less comfortably, what impact does their unproductive status have on the prospects for struggle? Does the technical lack of exploitation mean anything in the face of the hardships they experience? We must answer yes, in fact it does. The bourgeoisie will always, in the last instance, move to protect production over the unproductive sectors in society, on the basis that it is only production which can lead to accumulation. So follows the old saying, reiterated by Smith and Marx, that one grows rich from workers, but poor from servants. In a general crisis, the heights of bourgeois society would rather terminate a vast majority of those employed in the tertiary sector than allow permanent damage to the productive chain. This is why Marx says that it is ultimately the proletariat, who produce all surplus-value in society, that has the power to destroy class society by first seizing the means of production. For service workers, their status in the eyes of the bourgeoisie as unproductive workers makes their labor much more expendable.
It is inevitable that some will read “unproductive” as a moral categorization. That is unfortunate. It does not mean that these workers are unimportant in society, but rather that they have been rendered “unproductive” in the eyes of the bourgeoisie, who place primary importance on surplus-value extraction as the engine of accumulation. For us, the support of these workers is still important when it can be developed. However, their position is not the same as those in the industrial or even the agricultural sector, and therefore we cannot approach their predicament in the same way. The wages of productive workers are pegged, in many ways, to the values they create, as well as the historically determined reproduction cost of their labor, however the wages of unproductive workers are instead pegged only to this historical determination, hovering alongside or below the wages of the productive sector, and are dependent upon surplus from the productive sector. So in terms of concrete political work, this complicates our demands. For productive workers in the abstract, it is greater control over their production and underscoring the deviation in compensation and the value they produce. For unproductive workers, the issue is more complex.
Even so, there are many vectors through which revolutionaries can insert themselves at the forefront of workers’ grievances. The bourgeoisie in core countries, even while it pursues an overall policy of maintaining social peace, still comes into conflict with workers in their own countries on a regular basis. Class contradiction is restrained through the concessions to the First World working class. Its results are often greatly maligned by the bourgeoisie, but they have not been eliminated. One of the larger and more serious claims against the oppressive relations in the service sector is the outright theft of wages or guaranteed compensation. Even in the First World, this is extraordinarily common, and is one of the prime examples of ways in which management repays their privilege through strict service of the bourgeoisie’s interests.
There still remains a serious limitation, however. The propensity for these struggles to inform an economistic strategy is born out of the fact that capital makes no legal claim on stolen wages. Ultimately, bourgeois rights enforce the rights of individuals to be paid for their work, and it is one of the fundamental realizations of Marx that people can be exploited even while they are paid for their work. This is not truly the case with service workers and the petty bourgeoisie at large, so the issue of wage theft is further magnified in their political demands. The problem is that legal struggles can return the stolen funds, plus damages, and no higher ideological point is necessary. This is not the case with the general exploitation present in the capitalist system, and capital certainly does make legal claim on the surplus-value produced by the workers who have no legal right to demand it returned to them in any bourgeois court. So on the question of wage theft alone, a very serious campaign must be waged against simple “fair trade” appeals, that stop at the demands for compensation. We must illuminate to the workers what forces provide the impetus for wage theft among the management, who oftentimes do not directly pocket the money owed to their workers, but do so on behalf of the big bourgeois, who cycle down privileges to them.
Drawing further from this realization, another possibility for revolutionaries is underscoring the fact that the division between mental and manual labor that—especially in larger firms—is oftentimes practically irrelevant and serves a primarily political purpose. For the most part, there is no specific task performed by management which even “unskilled” workers cannot do, especially when combined with the relative high-technology in most of these firms. Most of the complicated tasks handled by management are automatically performed by computers, and for the most part the skill level needed to interact with this technology is seriously overstated. For instance, Walmart’s “point of sale” software automatically reorders items when they are sold, tracks sales, inventory and other statistics useful to the operation of the store. What’s more, these figures are available to any worker who cares to look at them. Primarily, the division of labor and abundant bureaucracies of these firms play a political role, providing the corporation overall with loyal representatives to carry out their interests against those of the workers. Their role is more to do with discipline than distribution.
This is definitely something that could be explored as the basis for the transition from economistic demands to something more revolutionary, but it is still dependent upon the leadership and solidarity of productive labor to push toward a final conclusion. This is for two reasons: firstly, despite handling the final distribution of commodities, they do not occupy the strategic engine of capitalist accumulation that is production. The takeover of the centers of distribution alone cannot suffice to actually put society in the hands of the proletariat. Only productive capital in the hands of revolutionaries is capable of transforming society in such a fundamental way, and this is not something which can be annexed by workers of the tertiary sector without leadership fundamentally emanating from it. In addition to this, there is the ideological gap existing between them, with the ideological impulses of retail workers especially more resembling that of the petty bourgeoisie and proprietor. Territory won by them in control over their firms put them in greater charge of capital not produced by them, and profits earned through the sale of commodities produced elsewhere. Were the unproductive mass of First World workers elevated into control over their industries, they would merely oversee, collectively, value-chains beginning in south, east and southeast Asia, and ending in their own consumption. Their livelihoods, still dependent upon productive capital, help to build loyalty to the bourgeoisie without direct leadership and solidarity with the proletariat.
This is true even in moving away from retail to other service work—like cosmetic and medical work, for instance—the dependency upon productive labor is the same. It is clear that a direct link must be formed throughout the process of struggle directly to workers in the productive sector, and in the First World that means emphasizing those links to the proletariat in the Third World, whose sweat produces the commodities First World workers consume, and whose surplus-labor forms the greater part of the wages that cycle down through the processes of super-exploitation and imperialist rent. That does not mean immaterial and esoteric calls for symbolic international action, but deep and serious work that ties labor action in these sectors to the productive sector.
In actuality, workers in distribution especially can have a tremendous effect in amplifying the consequences of strikes in the productive sector. Yet this cannot be merely coincidental. It must be the focus of our work, and we must continue to stress to the workers the necessity in actions organized across sectors, rather than confined ones that aim themselves only at the distinct (and in many cases petty bourgeois) interests of workers in only one sector. This also implies conflict between nativist, loyalist and racist workers, who are the majority, and progressives/revolutionaries. This is merely the microcosmic expression of internationalism, which takes the macrocosmic form of active national/land and anti-imperialist struggle. Building international ties, as well as uniting all who can be united, will be difficult. We do not discount the power of the subjective element.
Overall, the greatest single challenge to overcome in organizing workers in the service sector on a truly revolutionary basis is their relationship to imperialism and the international division of labor. Any effective struggle within this sector must be solidly linked to proletarian leadership in the productive sector, without question. In the First World this is complicated by the sheer size of the service sector in comparison to the productive sector, as the imperialist campaign for super-profits has lead the largest deliberate “deindustrialization” project in history.
The productive sector that remains in the First World has been fragmented by the labor aristocracy and their broad class control over the spheres of struggle among those still trapped in horrid working conditions, and even still this sector has been greatly reduced in size. Steadfast work must be done to counter labor aristocratic consciousness and class influence in the productive sector, work that can only be carried out by communists. If an organized and politically conscious working class in First World countries cannot be united with their Third World counterparts—that is, transformed from a parasitic enemy contingent into an active accomplice—then the effort has been wasted, and vital communist energies diverted to a deleterious project.
These notes by no means exhaustively answer the question of what deeper issues lay in organizing the service sector, it serves only to open discussion on the topic. Still many more peculiarities in class need to be discussed and further elucidated to fully grasp the overall problems in organizing within the service sector. What has been underscored here, however, is the need to firmly weld the movement of service workers to the broad movement for social and internationalist control over production. It remains true that only the proletariat is capable of leading the whole of humanity to communism, therefore the leading role of the proletariat and its vanguard—as well as the its location geographically—cannot be minimized.
my thoughts are that i feel that it lacks a discussion of how women fit into this great contraction of wages in the service sector (i.e. less surplus value sacrificed to the sphere of circulation) since a cursory glance over the gendered occupation structure shows that men maintain a stranglehold on productive jobs (and other traditionally high paying non-productive jobs), excluding women while avoiding non productive jobs themselves - what will this mean now and in the future?
Edited by tears ()