Theories of imperialism before the Globalisation debate (draft)

James Heartfield

There are three decisive periods of internationalisation of the world economy, 1890-1910,
1968-75 and 1989 to 1995. Each in turn has provoked a substantial debate: the
‘imperialism’ debate, the ‘trans-national capital’ debate and the ‘globalisation' debate.
Here I concentrate on the middle of these, the debate of the 1970s.

Key protagonists of the debate were to be found in the radical intelligentsia in America,
Europe and the Third World. In America the Monthly Review contributors Paul Sweezy,
Paul Baran and Harry Magdoff were influential, as was Anwar Sheikh at the New School
for Social Research. From Belgium the Trotskyist Ernest Mandel’s work commanded
respect beyond the small left groups. In Germany, the fringe of the Student movement
Elmar Altvater, Wolfgang Müller and Christel Neusüss contributed to the analysis of the
state. The French planning commission engendered a radical school of global analysis
that began with Christian Palloix, and gave rise to the ‘regulation school’ of Michel
Aglietta and Alain Lipietz. In England the Conference of Socialist Economists and the
Nottingham based ‘Spokesman’ group drew in such figures as Bob Rowthorn, Hugo
Radice, John Holloway, Sol Picciotto, Andrew Glyn, Robin Murray and Michael Barrett
Brown. In the Third World Samir Amin from Senegal, and Andre Gunder Frank working
in Latin America began the critique of development theory and world systems theory
with Immanuel Wallerstein. The Third World contribution was enhanced by Arghiri
Emmanuel, the former Greek partisan who was an advisor to Congolese leader Patrice
Lumumba before teaching in France.

The key participants in the debate were markedly outside the mainstream of the
Communist movement, which previously contributed most of the critical literature on
capitalism, imperialism and colonialism. The hegemony of the Communist bloc was in
any event loosening with the splits created by Euro-communists, Maoists, Titoists and
Autonomists.

Also the debate participants had a fairly tangential relation to popular social movements.
Some had influence upon nationalist movements in the Third World, others were attached
to government planning bodies or Social Democratic organisations, or to research
institutions in the expanding University Sector.

The Character of the debate

Unlike the earlier debate around imperialism, there was no decisive conclusion to the
debate over transnational capital. Bernstein, Kautsky, Hilferding, Luxemburg, Bukharin
and Lenin were all forced by political events to come to a definitive conclusion, in which
the Leninist view was adopted – rendered a dogma even – by the ascendant Communist
movement. Then the political division of the world into rival camps forced participants to
declare their stance, and debate the issue to conclusion of agreement or enduring hostility.
The debate in the 1970s, though, had no such conclusion. The political projects that the

1
participants supported were for the most part defeated, and the gathering reaction in the
1980s meant that differences were generally forgotten, or at least passed over as radicals
dug-in to last out the storm.

Lenin's Ghost

The post war discussion of the world economy was overshadowed by Lenin's book
Imperialism. According to Rostow, 'Lenin's doctrine of imperialism in particular has
strongly influenced the minds of Asian intellectuals, especially those who are now leaders
in the Asian nations.' (Rostow, 1955: 10). According to the State University of New York
professor of Economic History Bernard Semmel 'the neo-Marxist formulation which has
seen modern Empire Building as rooted in the development of capitalism … especially in
its Leninist form … has become the accepted dogma not only in the Communist world,
but of large sections of the "uncommitted" third world'. Moreover, the Leninist theory 'it
must be remembered had succeeded in convincing all sections of opinion in Europe and
America, at least of its plausibility, in the period between the two world wars, indeed for
a generation it had been accepted virtually as a "law" of economic development.'
(Semmel: 3) According to radical economist Bill Warren Lenin's Imperialism was
'possibly one of the most influential single documents of the twentieth century' (Warren,
1977: 1).

It was to be expected that the neo-classical economists and even the Keynesians would be
keen to exorcise Lenin's ghost, but it was also haunting more radical thinkers, due to the
'raising of Lenin's ideas into a canonical dogma during the period of Stalin's sway within
the world Communist movement' (Tarbuck, 1972: 42). Political strategies outside of the
Communist movement's work, such as radical nationalist, reformist or unofficial labour
agitation would strain against the carefully-nurtured 'Leninist' orthodoxy.

Methodologically, Lenin's work is ill suited to a dogmatic reading, but it got one
nonetheless. Critics and defenders alike tended to miss the underlying argument that
capitalism was showing morbid symptoms of its own transitional character. Lenin listed
six features that indicated that capitalism had fulfilled its historic mission and become
'over-ripe'. The features were the concentration of production and monopolies, increased
role of banks in financing industry, the emergence of a financial oligarchy, the export of
capital, the division of the world market amongst the capitalist combines and the division
of the world among the great powers (Lenin, 1996. On page 90 Lenin reduces the six to
'five essential features', collapsing the second and third.). It was normal for writers as
varied as Bill Warren, Michael Kidron (1974), Michael Barratt Brown and Giovanni
Arrighi to go through Lenin's six features as if they were a checklist to see if his analysis
still applied.

With this checklist approach it was relatively easy to find that one, two … or all of the
features of the imperialist epoch no longer applied, and that Lenin was, therefore, out of
date. In fact Lenin's own method, the search for Capitalism's intrinsically transient nature,
implied that the results of his analysis (the 'six features') would be of a provisional nature,

2
and could hardly be expected to become permanent features. Just as the official
Communist parties made Lenin's living analysis into a static dogma, so too did the radical
critics reduce Imperialism to a set of rigid definitions, that predictably failed to capture
the transitional character of the epoch. For that reason it would be foolish here to defend
the letter of Lenin's Imperialism, but worthwhile to learn from its historical method.

HISTORICAL ANALYSIS

The historical analysis of imperialism provoked controversy more or less immediately.

Lenin's specified the late nineteenth century as the moment of a qualitative change in
which monopoly took precedence over free trade indicating the morbid character of the
epoch, and the historical redundancy of the market system. If even the capitalists did not
believe in free trade then why should anyone else pay homage to it? Lenin was
challenged by Joseph Schumpeter in an essay in 1919 which, pointing to many Victorian
champions of free trade argued that the retreat to colonial protection was merely an
aberration – an irrational atavism – rather than the necessary expression of capitalist
decay as Lenin had argued (Schumpeter, 1966: 64-98).

Economic historians like Bernard Semmel, along with John Gallagher and Ronald
Robinson (Gallagher et al 1965) muddied the historical waters, diminishing the
distinctiveness between the late Victorian imperialism, and the mid-Victorian free trade
era, calling into question Lenin's transitional epoch. According to Semmel, 'the reputed
mid-Victorian policy of "anti-imperialism" is a myth'. Believing that Britain's economic
expansion in the mid-nineteenth century was marked by a liberalisation of trade, Lenin
had fallen for 'Manchester school Cobdenite cant' (Semmel: 203). Semmel was quite
deliberate in his desire to undermine the Leninist argument, insisting that there were other
alternatives than the choice between imperialism and revolution (222). Gallagher and
Robinson, by contrast, were genuine in their desire to qualify the association of mid-
Victorian England and the expansion of freedom, in trade or elsewhere. For Lenin, of
course, it came as no surprise that free trade was qualified even at its height; for him free
trade and monopoly were not polar opposites, but more like two sides of the same coin:
imperialism 'ties up monopoly with free competition, but it cannot do away with
exchange, the market, competition, crises etc.' (Lenin CW24: 464). The problem with the
historiography, though, was that in the detail, the bigger picture was obscured. As the
fundamental difference between one era and the next was blurred, historical transition
was assimilated to an undifferentiated continuum of capitalist wickedness. Such an
analysis might make one feel a frisson of moral superiority, but it did not help identify the
forces of historical change at work in the here and now.

Where the economic historians challenged the specificity of Lenin's supposed 'imperialist
epoch', others too saw little new in capitalism's imperialistic adventures, pointing to the
experience of plunder under mercantile economies that Marx called 'primitive
accumulation'.

3
Primitive accumulation

Samir Amin and the school of world systems theory in particular were hostile to the
historical treatment of the imperialist epoch. Amin and his collaborators took issue with
the historical specification of the period from 1870 onwards as definitive of a parasitical
exploitation of the colonies. 'Imperialism is not a stage, not even the highest stage, of
capitalism: from the beginning, it is inherent in capitalism’s expansion,' Amin told the
World Social Forum meeting in Porto Alegre, Brazil in January 2001 (Amin, 2001). Forty
years earlier, André Gunder Frank had written similarly 'the capitalist system that we
know has never existed without colonialism and/or imperialism, and there is no reason to
think that it ever will' (Frank, 1975: 55).

Amin, André Gunder Frank, Immanuel Wallerstein and Giovanni Arrighi feel that
restricting the criticisms to the period after 1870 was whitewashing capital's bloody
record. Certainly Marx had indicated that in its early development capital had plundered
the non-capitalist world, seizing slaves and precious metals by force as its fund for
'primitive accumulation'; hence 'capital comes dripping from head to foot, from every
pore, with blood and dirt.' (Marx, 1974: 712). Inspired by Marx, Eric Williams expanded
the history of Britain's triangular 'trade' of slaves, sugar and cotton starkly challenging
Britain's abolitionist record, reminding us of the bloody origins of Cadbury's Barclays
and many other old money family firms. André Gunder Frank held fast to Williams'
insight 'it was … capitalist slavery', as proof that coercion was not a hangover from the
past, but an insight into the existing social system (Frank, 1975: 27) For Amin, too, it was
not enough to situate primitive accumulation in the past:

'Whenever the capitalist mode of production enters into relations with pre-capitalist
modes of production, and subjects these to itself, transfers of value take place from the
pre-capitalist to the capitalist formations as a result of the mechanism of primitive
accumulation. These mechanisms do not belong only to the prehistory of capitalism; they
are contemporary as well.' (Amin, 1974: 3)

But Amin and Frank neglected this passage from Eric Williams:

‘But it must not be inferred that the triangular trade was solely and entirely responsible
for the economic development. The growth of the internal market in England, the
ploughing-in of the profits from industry to generate still further capital and achieve still
greater expansion, played a large part. But this industrial development, stimulated by
mercantilism, later outgrew mercantilism and destroyed it.’ Williams, p106-7

Certainly the persistence of coercive indentured labour in the colonies calls into question
the moral basis of the Victorian empire. However Amin misunderstands the meaning of
Marx's discussion of 'primitive accumulation'. Marx was not piling up atrocity stories to
damn the capitalists – at least not just that. He was intervening in a discussion about
'original accumulation' in political economy, challenging the orthodox view that initial
capital funding came from prudent saving. To say that primitive accumulation was a

4
permanent condition of capitalism made no sense, since Marx was interested in analysing
how 'the dull compulsion of economic relations completes the subjection of the labourer
to the capitalist'.

'Direct force, outside economic conditions, is of course still used, but only
exceptionally. In the ordinary run of things, the labourer can be left to the "natural
laws of production," i.e., to his dependence on capital, a dependence springing
from, and guaranteed in perpetuity by, the conditions of production themselves.'
(Marx, 1972: 689)

By focussing on the empirical fact of coercive relations at different periods, Amin

assimilates the entire era of capitalism to the distinctive period of primitive accumulation
and thereby robbed the analysis of primitive accumulation of its distinctive meaning. In
the rough draft of Capital, Marx wrote that 'the conditions and presuppositions of the
becoming, of the arising, of capital presuppose precisely that it is not yet in being but
merely in becoming; they therefore disappear as real capital arises, capital which itself,
on the basis of its own reality, posits the conditions for its own realisation'. (Marx, 1973:
459-60) More prosaically, once underway, the fund for capital investment comes from
the process of production, and the exploitation of the working class, not from 'primitive
accumulation'.

Frank and Amin indiscriminately lumped together a succession of distinctive eras of

capitalist society: the period of mercantile expansion running from 1649 to 1776, that saw
Cromwell's militant overseas expansion into the West Indies, the Americas and the
subjugation of Ireland, as well as the creation of the East Indies company; the high tide of
free trade that ran from the repeal of the Corn laws and the dissolution of the East India
company in 1830 through to the 1870s; the period beginning in the 1870s, when Joseph
Chamberlain and others succeeded in creating an imperial tariff, and the scramble for the
colonies. This last was the era that Lenin distinguished in his Imperialism as 'a definite
and very high stage of capitalism' (Lenin, 1996: 89).

Amin's historical de-specification of capitalist imperialism was widely adopted. Radical

Keynesians like Michael Barratt Brown (1970) joined 'class struggle' Marxists like
Michael Kidron in debasing the category. While Amin saw imperialism as a perennial
feature of capitalism, Barratt Brown and Kidron saw it as a perennial feature of all human
history. Kidron wrote

'it is difficult to see what value there is in still using the word imperialism to
describe the big power aggression and coercion of today unless it is in the
reassurance to be derived from familiar sounds. The one feature held in common
by all imperialisms to date – Roman, Tsarist, or British – was their direct control
of the state in subject territories. Today such control is rapidly becoming
vestigial.' (Kidron: 159)

Of course Kidron was right at least about phraseology. There is no need to make a fetish
out of a word. But he was wrong to take imperialism out of history, as a formal definition

5
that could equally describe ancient Rome, backward Russia or decadent British
capitalism. Lenin was not interested in an abstract definition outside of history, but in
'capitalist imperialism', that is capitalism at the point at which 'certain of its fundamental
attributes become transformed into their opposites' (Lenin, 1996: 89).

Lenin's concept of imperialism, as a transitional stage of capitalism corresponds with the

dynamic analysis of capitalist development framed by Marx. In his rough draft of
Capital, Marx summarised:

'As long as capital is weak, it still relies on the crutches of the past modes of
production, or of those that will pass with its rise. As soon as it feels strong, it
throws away those crutches, and moves in accordance with its own laws. As soon
as it begins to sense itself and become conscious of itself as a barrier to
development, it seeks refuge in forms which, by restricting free competition, seem
to make the rule of capital more perfect, but are at the same time heralds of its
dissolution and of the dissolution of the mode of production resting on it.' (Marx,
1973: 651)

Here the actual course of capitalist development, its refuge behind mercantilist tariff
barriers, its emergence as free trade, and its retreat into monopoly and protection are
pictured as the expression of capital's own transition. Perceptively, Marx anticipates
Lenin's theme that capital will 'take refuge in forms' that are at odds with its own laws,
such as monopoly, financial oligarchy, cartels and the export of capital. The specific
features are not taken out of history, but related to the historical development of capital;
they are, as Lenin explains, transitional forms.

A FEAST OR A FAMINE?

'Those economists who, like Ricardo …having in view only the development of
the forces of production and the growth of the industrial population … have
therefore grasped the positive essence of capital more correctly and more deeply
than those, who, like Sisimondi, emphasized the barriers of consumption …
although the latter has better grasped the limited nature of production based on
capital, its negative one sidedness. The former more its universal tendency, the
latter its particular restrictedness.'

(Marx, 1973: 410. David Ricardo 1772-1823 stock broker and MP for the pocket
borough of Portalington championed free trade in England after Adam Smith and
published Principles of Political Economy in 1817; Jean Charles Léonard
Simonde de Sisimondi 1773-1842 patrician reformer and historian was elected to
the Legislative Assembly in Geneva and published the New Principles of Political
Economy in 1819.)

6
Marx thought that capitalist production combined both a progressive and a reactionary
side. It was progressive in so far as it tended to develop the productive forces, and
Ricardo, who made no distinction between the technical production process and the
social form of capital, saw only that progressive side. By contrast, Sisimondi emphasized
the destructive side of capital to the exclusion of its developmental tendency. This too
was an error in Marx's view. Concentrating exclusively on the crises of capitalism,
Sismondi and those economists who followed him failed to account for the real, if one-
sided social advances that took place under capitalism.

Marx's own account of the economic dynamic takes as its starting point the dual nature of
capital accumulation as at once the production of useful goods and of surplus value, value
over and above the value paid back to labour in the form of a wage, which is appropriated
by the capitalist. Of the many ways in which the capitalist might increase his surplus
value, the most effective was to increase productivity, thereby increasing output, such that
a greater share would accrue to the owner of capital. In this way, the narrow motivation
of the capitalist coincided with the progressive goal of industrial growth and extending
human civilisation. But the means of increasing productivity, investment in labour saving
machinery, would also undermine the capitalist's profit rate. As a lesser proportion of
capital was advanced against value-creating labour ('variable capital'), in favour of raw
materials, machinery and plant, which produced no new value ('constant capital'), the rate
of profit would tend to fall. Marx takes the static categories of political economy and
infuses them with the Heraclitean proposition that all things pass away. 'The real barrier
of capitalist production is capital itself.' (Marx, 1984: 250) Capital can be said to reach a
point of 'overaccumulation' when the portion of capital that yields new surplus value is
too small relative to the size of the total capital, to inaugurate a new round of investment.

Since capital combines the progressive and restraining tendencies, the limit point of
economic crisis does not necessarily spell 'the end'. Rather the crisis contains the
elements of its own resolution. A collapse in sales leading to lay-offs and plant closures
can have the effect of cheapening the written-off capital (1973: 446) to allow new rounds
of accumulation. The crisis leads to a social struggle to reduce wages in capital's favour.
Lenin's 'five features' of imperialism are all means to get around the barriers thrown up by
the overaccumulation of capital, through combination, the centralisation of finance,
export of capital to embrace new production, re-division of the world market and
colonisation. This was the organic totality to the argument that eluded Lenin's 'check-list'
critics.

Lenin's theory of imperialism understandably emphasized the destructive side of

capitalism. Written at the height of a World War in which millions died re-dividing the
world between colonial powers, it would have been eccentric to try to whitewash
capitalism. But though Lenin's Imperialism has been read as arguing that in the epoch of
imperialism no further development of the productive forces was possible, that was not at
all Lenin's claim. On the contrary, Lenin opens his argument with an account of the
'enormous development of industry' made possible by the new monopolies (Lenin, 1996:
11).

7
The discussion of capitalist development after the Second World War tended to lose sight
of the necessary interrelation of progressive and reactionary trends in capitalism, falling
either into a Ricardian emphasis upon unrestrained growth, or a Sismondian emphasis
upon perennial crises.

8
Growth and Modernisation

The remarkable recovery of the shattered economies of Europe and Japan after the
Second World War, and the hegemony of the United States were object lessons in
capitalism's potential for growth (just as the preceding carnage exemplified its potential
for destruction). In January 1969 – just before the long boom came to an end – the
American Council of Economic Advisors wrote

'The Nation is now in its 95th month of continuous economic advance. Both in strength
and length, this prosperity is without parallel in our history. We have steered clear of the
business-cycle recessions which for generations derailed us repeatedly from the path of
growth and progress.' (in Galbraith, 1991: 255)

Mainstream, mostly Keynesian, economists like Walt Whitman Rostow at MIT, Simon
Kuznets and John Kenneth Galbraith all lauded the new potential for growth. In doing so
they examined growth as such, indifferent to its specific social form as capital
accumulation, as Ricardo had. The implication was that there was no such distinction to
be made, capital accumulation and industrial production were synonymous, and,
therefore the capitalist social relation was eternalised, taken to be a permanent condition
of human existence.

Rostow's Stages of Economic Growth set out a typology of five stages from 'traditional
society', through the 'preconditions for take off', the 'take-off' itself, the 'drive for
maturity' (marked by the diversification of the economy) and 'the age of mass
consumption' (1960: 4). Rostow could not help but acknowledge the possibility of
economic failure and 'historic patterns of investment did not of course exactly follow …
optimum patterns'. Following Keynes' theory of the perverse inclinations of investors,
Rostow suggests 'they were distorted by imperfections in the private investment process,
by the policies of governments and by the impacts of wars' (12). But these disturbances
were incidental to Rostow's 'dynamic theory of production'.

Rostow's book was self-consciously sub-titled A Non-Communist Manifesto and he made

his intentions clear saying that 'if this system is to challenge and supplant Marxism as a
way of looking at modern history it must answer, in its own way, the question posed
under the rubric of "imperialism" by the Marxist analysis, as elaborated by Marx's
successors' (106). Principally Rostow insists that the national conflicts that Lenin
associated with inter-imperialist rivalries between capitalist powers were in fact unrelated
to capitalism. It was 'a fact given from outside this analysis … that the whole transition
we are examining took place historically within a system of nation-states and of national
sovereignty' (107). By placing the nation state 'outside this analysis', Rostow meant that it
was an incidental to economic growth, a deus ex machina, that did not in any way call
into question the fundamental advantages of capitalist growth. Rostow trivialised the
'colonial game' that had 'become a reflex not of economic imperatives, but of inherently
competitive sovereignties' (111). 'To the extent that the great struggles for power in the
twentieth century have an economic basis', Rostow lectured, 'that basis does not lie in
imperialism, or in compulsions arising from an alleged monopoly stage of capitalism'.

9
Rather the two world wars were the consequence of an exceptional condition: 'the
contours of the Eurasian arena of power' (121) which Rostow called the 'Struggles for the
Eurasian power balance' (114) – conveniently locating the source of the problem not just
outside of the normal conditions of growth, but also outside of the American continents.

In total, Rostow's theory of take off serves as an apology for capitalism in the twentieth
century. Great power rivalries are, rather as Schumpeter suggested, external to the
system, and accidental effects of vestigial nationalism. Rostow even puts a fairly positive
gloss on colonialism, arguing that though the colonial powers 'failed to optimise the
conditions for take-off, they could not avoid bringing about transformations in thought,
knowledge and institutions … which moved towards take-off' (112. Rostow might be
right in the sense that colonial regimes provoked nationalist movements to overthrow
them.)

However, it should be said in Rostow's defence that in seeking to challenge Marxism, he

did accommodate to elements of the materialist conception of history, as he
acknowledged in his passages on 'the broad similarities between Marx's historical method
and the stages of growth analysis' (148). They are, he says 'both views of how whole
societies evolve, seen from an economic perspective' (155), which of course was a
departure from the neo-classical emphasis upon equilibrium, or static state economics. Of
course, Rostow did not need such a lesson from Marx, or indeed any other theorist of
economic stages, whether Adam Ferguson (1966) or Auguste Comte (1910). Rather,
Rostow's analysis of take-off took its force from the actual take-off of the economies of
the United States, of Europe and of Japan, post war. This is where Rostow's theory found
a resonance in reality, and took its moral force. Like Ricardo, Rostow could talk about
take-off because there was a real trend towards economic growth in capitalism, which he
emphasized to the exclusion of the counter-trend. Economic recovery was an exemplary
influence upon so-called 'traditional societies' in Asia and Africa, and also upon radical
critics of capitalism in the West.

Indices for Gross National Product at Constant Market Prices (1938 = 100)

1948 1950 1955 1961

EEC Six 90 113 151 203
Source: Lamfalussy, 1963: 15

In Germany Konrad Adenauer was credited with performing an 'economic miracle'. 'Let's
be frank about it; most of our people have never had it so good,' Prime Minister
Macmillan told Britons on 20 July 1957. With such a positive assessment of the economy,
radical critics found it difficult to state their objections. In the face of all the evidence the
Communist Parties' adopted a common line that there was a 'law of the absolute
deterioration of labour conditions' (Kuczynski, 1972: 17, and for a critique, see
Rosdolsky, 1977: 300-307). The Communist Parties' opposition to the American
'Marshall Plan' for European reconstruction went so far as to strike out the importation of
US goods for recovery, but led to their isolation. Radical critics unrestrained by
Communist Party orthodoxy adapted their assessment of the economic conditions to

10
accommodate the new reality of positive growth. In doing so, they tended to reproduce
the positive assessment of the mainstream economists. Reconciling the fact of growth to
an inherited economic theory that stressed decay – especially in the orthodox version
promoted by the Communist Parties – led to a one-sided emphasis upon the surface
appearance of growth, at the expense of a more rounded understanding of the capitalist
dynamic.

Paul Baran and Paul Sweezy's Monopoly Capital exemplified the radical case against
capitalism in the era of post-war growth. Baran and Sweezy thought that monopoly
capital had eliminated the cut-throat competition of the old free-market economics,
allowing undisturbed growth, on condition that the problem of the 'absorption of the
growing economic surplus' could be met. Dismissing Marx's account of the dynamic of
capital accumulation, Baran and Sweezy argue 'when we pass from the analysis of a
competitive system to that of a monopolistic system a radical change in thinking is called
for'. They expand: 'With the law of rising surplus replacing the law of the falling
tendency of the rate of profit, and with normal modes of surplus utilization patently
unable to absorb a rising surplus, the question of other modes of surplus utilization
assume critical importance' (114). Drawing on the palpable experience of growth all
around them, Baran and Sweezy extrapolated unlimited development. The only 'problem'
that the monopolies faced was one of how to absorb the ever-increasing surplus. In
Britain, Michael Kidron endorsed the argument that releasing the pressure caused by
accumulation could preserve the system, arguing that 'in principle a leak could insulate
the compulsion to grow from its most important consequences' (1974: 16). The solution
to such a problem was at hand in 'the sales-effort', a phenomenon that according to Baran
and Sweezy 'springs up, without any prior notice, like a deus ex machina' (114). 'Price
competition has largely receded as a means of attracting the public's custom, and has
yielded to new ways of sales promotion: advertising, variation of the products appearance
and packaging, "planned obsolescence", model changes, credit schemes and the like'
(115).

The idea that increased demand encouraged new investment certainly corresponded to the
experience of post war growth in America, Japan and Europe, as it did to the propositions
of the now well-established Keynesian economics. But it left open the question, what
exactly were the critics now complaining about? Where unemployment and hunger in the
thirties had underscored the arguments against capitalism, what was so wrong with
perpetual growth? The criticism moved from the terrain of a material challenge to the
system to a moral revulsion at the emergence of the consumer society.

In 1955 theologian Reinhold Niebuhr's Christianity and the Crisis bemoaned America's
'ever-expanding economy' in which the pressure was on Americans to 'consume, consume
and consume whether we need or even desire the products forced upon us'. The Church's
prescient economic analysis suggests that the system requires that we 'be persuaded to
consume to meet the needs of the production process' (in Packard, 1962: 23). Journalist
Vance Packard took up the Church's cause in his books The Hidden Persuaders, The
Waste Makers and The Status Seekers, which were source material for Baran and
Sweezy's Monopoly Capitalism. Protestant austerity informs the argument that 'the model

11
changes that are incessantly imposed upon us, the slums that surround us, the rock-and-
roll that blares at us exemplify a pattern of utilization of human an material resources
which is inimical to human welfare' (139). It is pertinent to contrast Marx's own positive
assessment of the way the capitalist 'development of the productive forces, requires the
production of new consumption' (1973: 408):

'the cultivation of all the qualities of the social human being, production of the same in a
form as rich as possible in needs, because rich in qualities and relations - production of
this being as the most total and universal possible social product, for, in order to take
gratification in a many-sided way, he must be capable of many pleasures, hence cultured
to a high degree – is likewise a condition of production founded on capital.' (409)

Far from decrying such enhanced consumption, Marx includes it in the 'great civilizing
influence of capital' (409). Marx, however, understood that the limitations to this
civilizing influence (apart that is from the moral corrupting influence of rock and roll)
was that capital accumulation did not arise by increasing the share of the social product
falling to labour, but by holding it down. Keeping wages 'in a rut corresponds with the
wants of capital' (1974: 689). Any rise in living standards would be strictly limited by the
need to sustain a profit margin.

The moral critique of consumerism adopted by Baran and Sweezy appeared radical, but
in large part it accepted the assessment of the President of the National Sales Executives
that 'Capitalism is dead – consumerism is king!' (Packard: 23). What this actually meant
was that capitalism as such is no longer a debatable question. The only issue that remains
is 'consumerism', for or against.

Impressionistically, one other 'leak' or 'absorption' of surplus, apart from consumerism,

suggested itself as a basis for capital expansion, the evidently growing expenditure on
arms. According to Michael Kidron, 'the drain has been systematized through the
permanent arms economy' (Kidron, 1974: 19). For Baran and Sweezy the answer to the
question 'On what could the government spend enough to prevent the system from
sinking into the mire of stagnation?' was 'On arms, more arms and ever more arms.'
(Baran and Sweezy, 1968: 213) It was true that arms expenditure could indeed provide a
temporary stimulus to production. The effect was first noticed in the Spanish-American
war of 1898, whose positive effect on the economy was credited with converting the
American chambers of commerce to the benefits of imperialism (Etherington). Harvard
economist Sumner Schlicter explained in 1949 that war 'increases in demand for goods,
helps sustain a high level of employment, accelerates technical progress and thus helps
the country to raise its standard of living' (in Baran and Sweezy, 1968: 212). Such
judgements were based on the experiences of high US growth in wartime and world
growth subsequently. Future generations, though, could only wonder that anyone had
ever thought that re-directing money from productive investment to government waste
could ever provide a permanent delay of economic crisis. 'The mechanism is essentially
simple' explained Kidron, ominously. 'Capital is taxed to sustain expenditure on arms and
so deprived of resources that would otherwise go to further investment.' (Kidron, 1974:
19) And this is supposed to be good for capitalism!

12
The theories of uninterrupted growth were remarkable for their historical amnesia. The
preconditions for the renewed accumulation in Europe and Japan were hardly painless.
Rather, the preceding economic and political crisis was one of unprecedented barbarism.
While it suited apologists like Rostow to dismiss the long crisis between 1914 and 1945
as a peculiarity, the radical critics perhaps ought to have known better. 'From the
standpoint of Marx's theory,' wrote Mattick, 'the prosperity which began, with some
delay, after the war is not surprising, since it is the function of crisis to lay the
groundwork for a new upswing' (1981: 132). German Marxist Elmar Altvater and his
associates analysed the 'historical legacies of Fascism as the pre-requisite for the West
German "Economic Miracle"': 'The high rate of surplus value was a direct consequence
of the conditions under fascism;' – namely the militarisation of labour – 'the enormous
destruction of capital during the Second World War similarly had a positive effect on the
rate of profit' (Altvater et al, 1974: 6).

Also lacking in the assessments of the radical theorists of post-war growth was an
understanding of the limits of state spending as a means to promote effective demand.
Following the Keynesian economists, radicals tended to identify with the social
programmes associated with state spending, and so were reluctant to appreciate the
economically inhibiting effect they would have. In 1969 Paul Mattick was virtually alone
in warning that 'while the "end product" of capital production is an enlarged capital, the
"end product" of government-fostered production is only an enlarged production.'
(Mattick, 1971: 118). In fact the Marshall Programme-induced growth of the post war era
showed that European economies in particular were relying upon state expenditure as a
crutch to facilitate private accumulation, one that would find its limits in the inhibiting
effects of the burgeoning government debt. 'The positive effect of state intervention on
the economy is thus only temporary and turns into its opposite if the expected stimulation
of profitable production takes too long or does not occur', wrote Mattick (1981: 143).
'State-induced production, far from being a means of overcoming crisis must in the
course of time call the capitalist mode of production into question'. (1981: 141)

The error that persists throughout the growth theorists, whether establishment figures like
Rostow, or radical critics like Kidron, Baran and Sweezy is their Ricardo-like
concentration upon growth as such, irrespective of its historically limited social form as
capital accumulation. So Baran and Sweezy say, ‘we prefer the concept "surplus" to the
traditional Marxist concept "surplus value"’ (1966: 10). But surplus in the abstract is an
ever-present condition of every society, whilst for Marx ‘the specific economic form in
which surplus is pumped out of the direct producer determines the relations between
rulers and ruled’ (Marx, 1984: 791). The political movement that was associated with the
assumption of uninterrupted growth was that of 'Modernisation', represented by the
Kennedy and Johnson administrations in the US, and in the UK by Harold Wilson, who
promised the Labour Party's 1963 conference ‘Britain is going to be re-forged in the
white heat’ of the technological revolution. These administrations, like the theories,
would fall foul of the very real interruption of economic growth at the closing of the
decade.

13
Optimism reversed

The reappearance of economic crisis at the beginning of the 1970s forced a U-turn on
those economists who had previously put a positive gloss upon the prospects for growth.
For the Keynesians, the hour for boosting demand-led growth had arrived – just when
governments were recoiling from the expenditure involved (see Hutton, 1986, and
Pilling, 1986). Amongst the radicals, the difficulty was to explain how the crisis that they
had dismissed as outmoded had returned. So Paul Sweezy breezily wrote 'this whole
subject of stagnationist tendencies of monopoly capitalism is virtually forbidden territory
for academic economists' (1972: 51), having himself dismissed the subject in his own
Monopoly Capitalism just five years earlier. Shamelessly, Sweezy cited the same reasons
for a new crisis as he had for the previous period of growth: 'a soaring military budget …
touching off an accelerating inflationary process' (1972: 51). It would be as wrong,
however, to say that military, or any other kind of spending caused the crisis as to say that
such spending had eliminated crisis. Both explanations suffer from a preoccupation with
the surface phenomena of the economy, thereby missing the character of capital
accumulation as source of both growth, and at the same time of the limits to growth.

In the period of post war growth, the argument that growth was due to high wages was
common both to Keynesian and radical economists. Increased demand stimulated growth
they said. But once crisis trends reappeared, high wages were credited with jeopardising
capitalist growth. Andrew Glyn, then an economist at the British treasury, wrote British
Capitalism, Workers and the Profit Squeeze with Oxford economist Bob Sutcliffe in 1972
(see also Glyn et al, 1984). In it they attribute the crisis of profitability to the high wages
and combativity of the working class, both in Britain and throughout the developed
world. Their intention was to laud the blow against capitalism struck by the workers. But
in structure the argument was similar to that put by the resurgent neo-classical economists
of the right: excessive wage demands had caused the crisis.

In theory, Glyn and Sutcliffe's economic model, with the social product divided between
workers and capitalists according to their relative strengths could account for a fall in the
mass of profits. But what it leaves out of account is the effect of investment in new
technologies, leading to higher labour productivity, and, Marx agued, the substitution of
value-producing living labour ('variable capital') by non-value producing machinery, or
'constant capital', or what he called a 'rise in the organic composition of capital'. Where
Marx saw the 'accumulation of capital' as the origin of its own barriers, Glyn and
Sutcliffe set it aside.

In an appendix dealing with Marx's theory, Glyn and Sutcliffe argue 'the dramatically
falling rate of profit does not seem to have been caused to any significant extent by the
increasing organic composition of capital but rather by an increase in labour's share of the
product.' (1972: 231) The rate of profit, though, is a ratio not just of profit to wages, or
variable capital, but to all the capital advanced, including that against constant capital. A
falling rate of profit can arise from increased investment in the non-value producing
constant capital. Glyn and Sutcliffe must assume – against all likelihood – that if there is
any increased productivity it has fallen wholly to the working class. The point of Marx's

14
theory is to show that even where there is increased productivity, leading to a greater
mass of profit, this will still be expressed in a falling rate of profit. Glyn and Sutcliffe's
theory, though radical in its idiom, echoes the neo-classical characterisation of the
economy as a zero-sum game in which every gain by one side is a direct loss by the other.
They have accommodated the appearance of crisis into their system, but at the cost of
eliminating the dynamic and therefore transient character of the capitalist system, the way
that its crises indicate its historically limited character.

The impact of crisis upon the radical theory of growth caused much re-thinking. But it
did not improve the underlying methodological approach of the radical critics of
capitalism. They continued to fixate on the surface impressions of change, rather than
trying to reconstruct theoretically the dynamic of growth and decay in the capitalist
system. The impressionistic approach involved for the most part simply chalking up
negatives against the positive claims of capitalism. The danger was that there was no
alternative theoretical investigation taking place, merely an adaptation both to events and
to the mainstream analyses. The fragmentation of radical economic theory was evident in
the lack of accounting for previous errors, and the coexistence of a variety of
contradictory premises – wages too high/too low, spending too high/too low – without
any attempt to reconcile them into a coherent theory. However, alongside the positive
theories of growth that had predominated amongst radicals oriented to the politics of the
developed world, there was another strand to the radical critique of capitalism that was
oriented to the less-developed world. From this quarter came the theory of
underdevelopment.

THEORIES OF UNDERDEVELOPMENT

In academia, the study of the economies of Africa, Asia and Latin America was separated
from mainstream economics as 'development studies'. By implication the distinction
between these economies and those in Europe, America and Japan was that they had yet
to follow the path of development pioneered out by the latter. As we have seen, Rostow's
optimistic growth theories were drafted with an eye to the less-developed world, to set
out the benefits of capitalism.

Nobel-prize winning Swedish economist Karl Gunnar Myrdal was one of the first to
point to the inconsistency in the argument. The doctrine of equality implicit in the
promise of catching up with the developed world, he wrote 'has for centuries been
something of an anomaly in a world characterised by gross inequalities'. Further he
suggested that this was perhaps because the world was ruled by 'vested interests serving
those inequalities' (Myrdal, 1957: 11). Myrdal's analyses, and the three volumes of
empirical material on the impoverishment of Asia (Myrdal, 1968), undermined the
argument that development would spread. Rather, he suggested there was growing
amongst development economists 'the vague notion of the vicious circle' that called into
mind Matthew XXV: 29, 'unto everyone that hath shall be given, and he shall have in
abundance; but from him that hath not shall be taken away'.

15
In the first instance the challenge facing development economics was empirical – the
evident poverty in Asia, Latin America and Africa. Trying to explain these findings led
development economists to emphasise the opposite trend to the development in Europe
and Japan, the underdevelopment of what was coming to be called, the Third World (after
the First, developed world, and the second, Communist world). As the separation between
these global regions hardened into separate 'worlds', the proposition that development
would spread was challenged, and explanations were sought for the persistence and
reproduction of the different experiences of growth and 'underdevelopment'.
'Development economics', wrote Amin, 'starting from observations of historical reality,
aims to build a theory of underdevelopment' (1974: 14). In contrast to the 'Ricardian'
emphasis upon uninterrupted growth to be found in the theory of the take-off, the theory
of underdevelopment isolated the 'Sisimondian' trend towards stagnation. This emphasis
had the advantage of seeking out explanations for 'underdevelopment'; but it had the
disadvantage of making underdevelopment into a dogma that had to be defended against
contrary arguments and contrary evidence.

Underdevelopment theory had the advantage of emphasizing the barriers to

accumulation, albeit that it only saw these barriers operating in the 'Third World'. Amin
points out that 'it is the centre that takes the initiative in trading relations – the centre that
imposes upon the periphery the particular forms its specialisation assumes' (1976: 258).
Contrary to the assumption that the less developed countries could repeat the growth
pattern pioneered by the developed, Amin showed that they were limited by their
insertion into a world market already shaped by the needs of the advanced capitalist
economies. The contrast, explained Amin, was palpable: 'an advanced economy forms a
coherent whole made up of substantial sectors that carry out substantial exchanges
between themselves'. The same coherent economic development, is not available to an
'undeveloped economy' which tends to be 'made up of sectors that carry out only
marginal exchanges among themselves, their exchanges being made essentially with the
outside world' (1974: 16).

The problem Amin highlights is that of the 'law of uneven development'. Capitalist
development takes place not to meet human needs, but under the blind drive for profit.
With the ownership of society's productive apparatus the monopoly of a few, it is
inevitable that the capitalists will seek to retain their wealth, and so development takes
place only insofar as it suits the already dominant businesses. These being, historically,
located in the first world, the trend is for development in the Third World to take place
one-sidedly. As Marx noted 'a new and international division of labour, a division suited
to the requirements of the chief centres of modern industry springs up, and converts one
part of the globe into a chiefly agricultural production, for supplying the other part which
remains a chiefly industrial field'. (1974: 425) Uneven development distorted economic
development in Third World economies, making them dependent on one or two exports,
like the sugar colonies of Fiji and Jamaica, or the oil exporters of the Middle East.
Communications were developed not for the general welfare of the populace, but to speed
the export of goods. In African colonies 'all roads and railways led down to the sea'
(Rodney, 1995: 228). Far from alleviating the impoverishment of the Third World, the
actual course of economic development was reproducing it, and even deepening it.

16
Exploitation of the Third World?

The persistence of uneven development seemed to suggest a compelling conclusion.

'Exploitation' wrote Andre Gunder Frank 'is the cause of development and
underdevelopment' (1975: 80). 'The metropole exploited the periphery in such a way that
the metropole became what we today call developed while the periphery became what we
now call underdeveloped' (Frank, 1975: 90). The conclusion that the developed world
exploited the developing world was apparent in the unequal allocation of resources. One
could extrapolate the underlying exploitation from the resulting distribution, but what
was the mechanism of exploitation? Here the theory of underdevelopment confronted a
significant problem.

Certainly it was possible to point to the historical experience of plunder of third world
resources, but what about exploitation today? One readily available explanation was to be
drawn from Lenin's Imperialism, 'the inherent tendency of central capitalism to export
capital' (Amin, 1974: 100) leading to the parasitic repatriation of profits from the third
world to the first. Certainly the trend to capital export to the colonies of Africa and Asia
had been an important source of surplus value for European capitalists from the end of
the nineteenth century right through to the interwar years. While European production
stagnated, white settlers invested capital in rubber plantations in the Dutch East Indies
and Belgian Congo, sugar plantations in the West Indies, oil wells in Iran and the Middle
East, gold and diamond mines in Southern Africa, tin mines and beef in Latin America.
All of these enterprises exploited indigenous labour, and yielded up profits to European
and American investors. Indeed, these investments continued to contribute surplus value
produced in the Third World to the profits accrued in the first.

However, throughout the quarter century following World War II, coeval with the
divergence between the European boom and the underdevelopment of the Third World,
the pattern of capital export was reversed and capital actually flowed in the opposite
direction, from the Third World to the First. Analysing figures supplied by the United
Nations' and International Monetary Fund Arghiri Emmanuel argued that 'there was
actual export of capital from the underdeveloped countries for the purpose of investment
in the developed ones'. Emmanuel found that 'net contributions of capital between 1946
and 1950 were negative' and the officially recorded drain of capital from Latin America
and the former colonies of the franc zone between 1952 and 1961 was around $800
million. The real figure for Latin America alone was in the region of $3 billion, according
to the IMF (Emmanuel, 1972a: 46).

Far from suffering the effects of renewed exploitation, industry in the Third World was
being sacrificed to the needs of renewed capital investment in the reconstruction of
Europe. 'The accumulation rate was high only in Europe and Japan', wrote Mattick in
1974, 'in the United States it remained below its historical average, while the rest of the
world stagnated' (1978: 19). Plans for investment in the British colonies were frustrated
by the 'shortage of capital goods', while French private investment was half the size of
public expenditure (Coquery-Vidrovitch, 298-9). The consequences were dire:

17
'Capitalism could revolutionise agriculture in Europe, but it could not do the same for
Africa', wrote Walter Rodney (1995: 239). In fact, between 1960 and 1980 Ghana,
Nigeria, Congo Chad and Tanzania all experienced a stagnation, if not deterioration in
agricultural output (Owusu: 332). Drought and famine were the consequences,
particularly in the Sahel between 1968 and 1974. Cynically, Mattick considered that 'the
end of colonialism was brought about not only by the revolutionary nationalist
movements growing out of impoverishment but also by the dwindling profitability of the
colonies, which made it easier for their possessors to give them up.' (1981: 198)

The imperialism of trade

Disastrous as these consequences were, they did not indicate an increase in the
exploitation of Africa by Europe and America, but rather the destructive effects of uneven
development. Arghiri Emmanuel, though, proposed another mechanism through which
the wealthy North might exploit the underdeveloped Southern continents: 'unequal
exchange', or the 'imperialism of trade' (Emmanuel, 1972a). As we have seen historians
had already raised the spectre of 'Free Trade Imperialism' as practised by Britain in the
nineteenth century, confident in the knowledge that its superior productivity gave it a
ready advantage. Then US President Ulysses Grant explained America's protectionist
policy: 'within 200 years, when America has gotten out of protection all that it can offer,
it too will adopt free trade' (Chang). Rather sooner than Grant predicted, the US
promoted 'free trade', or at least the opening up of European colonies to American goods,
through the General Agreement on Tariffs and Trade, similarly confident of its
competitive advantage. 'The Open Door policy is not imperialism, it is free trade', said
Truman (in Nairn, 1972: 61). The discussion of Free Trade Imperialism took as its
underlying inspiration less Lenin's critique of monopoly capitalism than it did the
protectionism promoted by Frederick List in the nineteenth century.

The preoccupation with the terms of trade was understandable. The prices of primary
goods, like iron ore, rubber, tin, coffee, the principal exports of developing countries were
falling, while those of manufactured goods, the principal exports of developed countries
were rising.

Terms of trade for Primary Products

1951 1954 1958 1963 1966 1967 1968 1969 1970 1971
119 108 93 87 85 82 81 82 81 81
Source: Rowthorn, 1980, 'Terms of Trade' = price of primary products/price of
manufactures

Ironically, the terms of trade under colonial rule were more favourable, when high tariffs
led to the protection of Egyptian industry, and the substitution of indigenous goods for
imports (Chentouff: 34). Similarly, 'parts of Latin America during the partial
disintegration of the world economy between 1930 and 1945 … experienced a weak form
of industrialisation based on import substitution' (Froebel et al, 1981: 12). Harold Isaacs

18
also records rapid industrialisation in coastal China from 1914 to 1922 (Isaacs, 1988). By
contrast the opening up of trade post-war tended to push less developed nations back into
primary production. The effect of the unfavourable terms of trade for the developing
world was that they were giving up more of their goods for less of the developed world's
goods, leading to a net transfer of resources northwards. Arghiri Emmanuel takes this
datum and seeks to show that it represents not just a transfer of material resources, but
also an exploitation of Third World labour by the First World. In 'unequal exchange', the
less developed world gives up goods that are labour-intensive and gets back goods that
are the product of highly mechanized processes, and hence represent much less labour
expenditure. As such there is a net transfer of labour from the Third World to the First
(1972a: pp52-60). Amin substantially adopted Emmanuel's argument as the most
important contribution to the analysis of underdevelopment (1974: 23). Lenin's charge of
parasitism was saved, even though the mechanism he attributed it to was abandoned in
the theory. Emmanuel's policy solution is drawn from the positive experience of import
substitution behind tariffs in the inter-war years: Taxing exports and redirecting
production to manufactured goods 'that can replace imports' thereby 'channelling the
excess surplus value into the hands of the national community' (Emmanuel, 1972a: 267).
In other words, local elites should exploit the workers low wages', rather than foreign
ones.

Emmanuel is correct in seeing an exchange of labour-intensive goods for capital intensive

ones in the terms of trade. However, the theory lacks the explanatory power he gives it.
All exchange, let it be said, is unequal, except on Lewis Carroll's mythical island in
which each makes a living taking in one another's washing. 'Coats are not exchanged for
coats' (Marx, 1974: 49), nor is rubber for rubber, nor engines for engines. Without
inequality, there is no exchange. Furthermore, inequality of labour input, too, is a
precondition of the exchange of capitalistically produced goods. If prices (as opposed to
values) reflected only the labour input, then there would be no tendency to invest in new
means of production (Marx and Engels, 1941: 241). And as a consequence, Henryk
Grossmann wrote back in 1929, 'foreign trade is not based on the exchange of
equivalents' (1992: 170. Emmanuel knew Grossmann's argument, Emmanuel, 1972a:
176).

More importantly, though, the theory of unequal exchange misunderstands the real
importance of raw materials to production in the developed world. It is not as a store of
exchange value that primary products are demanded by capitalist industry in such vast
quantities, but as the use-value that can become the material repository of new value
through the production process. Oil refineries, steelworks, chemical plants, and
supermarkets are all dependant upon inputs of primary products, many from the
developing world, but they make high value goods through first world production
processes. Even Amin concedes the whole argument when he writes of 'unequal
exchange' that 'this transfer is of marginal significance to the centre'. The caveat that
follows, though, shifts the critique to an entirely different terrain: 'but it is not so at all for
the periphery' (1974: 23). Here Amin effectively abandons the claim that the developing
world is substantially supporting a parasitic developed world, and instead makes the
moral objection that the latter is indifferent to the suffering of the former.

19
Of course, it is quite right to say that the developed world pressed home its advantageous
terms of trade, favouring low prices when it suited industry to lower costs, but penalising
'dumping' of cheap manufactured goods that Third World countries sold in competition
with First World goods, like garments (Emmanuel, 1972a: 69). Europe's shift from coal to
oil-based energy in the 1960s, along with the increase in petrol sales, created a temporary
reversal of the terms of trade as oil prices soared in the 1970s. Rowthorn records that the
sequence above was reversed so that the terms of trade for primary products rose from 81
in 1971, through 84 in 1972, 105 in 1973 reaching 139 in 1974 (Rowthorn, 1980: 114).
Predictably, this happy accident for the oil-exporting countries of the Middle East was not
embraced as an example of the law of comparative advantage by Western economists, but
denounced as a 'cartel' (Amin, 1990: 53) – even though the price hikes were kicked off by
US oil producers, taking advantage of Nixon's credit injection into the economy
(meanwhile recession in 1980 dampened demand, leading prices to fall again).

First and Third World Workers

Running alongside the theory that the underdeveloped world supports the developed
world, is the corresponding theory that the workers of the underdeveloped world support
the workers of the developed world. In 1963 Frank posed the question 'is the American
worker a member of the proletariat (considering he may be exploited by the bourgeoisie
but participates, may be, in the fruits of the exploitation of the Brazilian peasants)' (1975:
90). Again, the evidence for exploitation could be read off the appearance of dramatic
inequalities in income. Emmanuel found divergences of from 20 to 40 times between
America workers and those in the Africa, Latin America and Asia (Emmanuel, 1972a:
47). Today we can find differences of the same magnitude between British average wages
and a Malaysian rubber plantation worker, on £50 a month (Guardian, G2, 24 June 2002).

Development economist David Yaffe wrote 'The high monopoly profits for a handful of
very rich countries makes it economically possible to create privileged sections among
the workers' and 'these workers' are 'a labour aristocracy' (1979: 4). Yaffe says 'today’s
privileged sections of the working class' gain from Britain's 'massive earnings from its
foreign investments and foreign trade in services', demonstrating that 'Britain is still a
leading imperialist power, second only to the United States' engaged in 'a new form of
colonialism' (Yaffe 2001, 2002) It is true that Britain's earnings from financial services
use accumulated capital funds to access wealth created around the world. For the most
part, however, those foreign investments are not in the less developed world, but other
developed nations. The reference to Britain's 'labour aristocracy' though is redundant. The
'aristocracy of labour' arose in craft production, where access to a trade was limited by
controlling the transmission of the skill. These labour aristocrats commanded special
privileges not just against the employers, but also against their fellow workers, to whom
they were 'primarily associations of contractors' (Clegg: 15), or gangers. The unique
position of the labour aristocracy was swept away by the introduction of mass production
around the period of imperial expansion in the late 1880s (Hobsbawm: 284).

20
Moreover, the wage differentials between the developed and less developed world having
opened up most markedly in the period of repatriation of capital from Africa and Asia to
Europe, the mechanism by which British workers might participate in the exploitation of
the Third World could hardly be profits on exported capital, as Yaffe suggests, following
Lenin's evocative description of 'crumbs falling from the imperialist table'.

Pierre Moussa suggested another possible mechanism in his Les Nations Proletaires,
published in 1959. 'The desire for high wages on the part of the worker in the
industrialized countries has doubtless caused a certain deterioration in the terms of trade
for the underdeveloped countries', Moussa argued. Here the mechanism of exploitation is
again the terms of trade, only now it is not just the elite of the developed nation that is
participating in the spoils: 'The wage earners have striven to annex the surplus value due
to technical progress and have largely succeeded in doing this' (in Emmanuel, 1972a:
102). But again, the mechanism is unclear, just as the conviction that it must be the case
flows so commonsensically from the disparity. Commonsense, though, is an imperfect
instrument, reflecting the prejudices of the day. In this case, it is the same prejudice that
the working class of the developed world have been corrupted by their 'excessive' wages,
that we came across in the religious objections to the consumer society. It is not just from
the perspective of the Third World worker that Western wages seem high, but also from
that of the Western intelligentsia, whose own privileged position is constantly threatened
by working class advances. Good taste, though, will generally prevent that point being
made explicitly, and rather it is in relation to the Third World that working class wages
are denounced as excessive.

Common sense also suggests that with far lower wages, 'the proletariat of the periphery
suffers an increasing degree of exploitation as compared with the worker at the centre'
(Amin, 1974: 25). Surely it is true that the work of the African, Latin or Asian peasant is
more onerous than that of the first world wage slave. But Amin uses the Marxist concept
'degree of exploitation' which is not a moral, but a scientific category. What is being
measured is not whose lot is worse, but which worker gives up a greater share of his total
produce as surplus. Two factors are decisive, the intensity and productivity of labour.
Emmanuel allows that 'it is possible to estimate the intensity of labour – output of labour
given the same equipment – of the average worker in the underdeveloped regions at 50 to
60 per cent of the average worker in the industrialised areas' (Emmanuel, 1972a: 48,
citing UN and industrial estimates). This, incidentally, is no slur on the character of the
Third World worker, only on the conditions of his working. But it still only accounts for a
factor of two, not 20, still less the 40 discovered by Emmanuel. What of productivity as a
factor?

Amin asserts that 'with equal productivity, the proletariat at the centre averages higher
rewards than the workers in the periphery' (1974: 26). But this is meaningless, since it
assumes the same level of productive technique in the developing as the developed world
(in which case there would be no such distinction between First and Third Workers in the
first place). But the productivity of labour is decisive, and far more elastic than its
intensity. If the British working class create new value of £832 432m, out of which
£521,968m is paid back in wages (v) leaving a surplus of £310,464m for the capitalists,

21
that gives a rate of exploitation (s/v) of 59.4 per cent (these figures are taken from the
national accounts for the year 2000 simply as an illustration, the empirical figures are not
identical to Marx's analytical sub-divisions). On a much lower degree of productivity
10,231 Indo-Fijian cane growers leasing native land produce a crop worth $86,033,409,
out of which they pay rents of $6,851,257 (s), leaving $79,182,352 (v) and a rate of
exploitation (s/v) of just 8.6 per cent, even though the earnings of the individual growers
are just $7739 a year (figures taken from the Fijian Native Land Trust Board, and see
Heartfield, 2001). Without doubt, the cane-growers lot is the more onerous and less
rewarded, but the pampered British worker is more exploited, where we understand by
exploitation the ratio between the share of the social product between worker and
exploiter.

Marx explained the point, somewhat abstrusely, under the heading 'National Differences
in Wages': 'it will be found, frequently, that the daily or weekly, &c., wage in the first
nation is higher than that in the second, whilst the relative price of labour, i.e., the price
of labour as compared both with surplus value and with the value of the product, stands
higher in the second than the first.' (1974: 525) The proof of Marx's proposition lies in the
much greater differential between rich and poor in the developed world than the
developing.

Even allowing that the 'super-profits' on European capital exported to the Third World, or
arising from 'unequal exchange' were re-cycled to first world workers, as, say, welfare
payments, these payments would have to exceed the total amount of surplus value before
we could say that the working class in the First World was exploiting the Third World.
None of this, of course, is to deny that more developed productive technique gives first
world workers a far higher standard of living, measured not in the relative terms of
income distribution between the classes, but in the absolute terms of material goods. This
difference in productive technique is the outcome of the law of uneven development, and
the explanation for the much cited example that the US consumes a quarter of the world's
resources – generally forgetting that it produces a quarter of the world's manufactured
goods, too.

Overall the legend of the exploitation of the worker of the Third World by those of the
First reflects a desire to minimise the claims of the latter against their own employers.
Amin coins 'the principle that the centre-periphery distinction constitutes the central
contradiction of the modern world' (1988: 113). Indeed, the implication is that the First
World worker is corrupted by the charms of the imperialists. 'What lies "outside"
imperialism is not – is no longer – the working classes of the home countries of
imperialism', writes Emmanuel, 'but those of the world outside these frontiers'
(Emmanuel, 1974: 79). 'Outside' here meaning something like 'pure' and 'part of the
solution, not the problem'. Kwame Nkrumah similarly suggests that imperialism has
abandoned the principle of 'subjugation of the working class within each individual
country' by introducing 'high working class living standards'. In this way the developed
countries succeeded only in 'transferring the conflict between rich and poor from the
national to the international stage'. (1965: 255) Commanding as Nkrumah's image is, the

22
return of class conflict in the seventies and eighties suggested that the conflict within the
imperialist countries was still very much centre stage.

Absolutising Underdevelopment

Theories of underdevelopment analysed the reasons why the promised development of

the Third World did not materialise. In the first instance the failure of development was
analysed with a mind to encouraging growth. But as the problem persisted, evidence of
underdevelopment was uncovered to exemplify the hollow claims of development.
Eventually it seemed that the development grapes were sour, anyway, and the scholars
began to argue that development itself was the problem. What had begun as an attempt to
criticise underdevelopment ended up setting it in stone.

The underdevelopment theorists began by seeking out explanations for the failure of
development. The insight that later developing nations were not expanding into an empty
market, but one already dominated by developed ones is the rational side of the theory. A
whole array of measures hostile to Third World development, from aid conditions that
perpetuated first world market domination, to political interference against nationalist
movements were illuminated by that insight. However, the conclusion that First World
nations would throw up barriers to Third World development was expanded into an
argument that development itself was impossible, and even undesirable.

Part of the difficulties the underdevelopment theories faced arose out of their desire to
express an alternative to capitalism within the basic categories of development theory.
But these categories are not easily amenable to such an argument, since they express the
fundamental identity of development and capital accumulation. Seeking to 'reverse the
discourse', the underdevelopment theorists remained embroiled in the underlying
assumptions of the development theory they were criticising. The recurrent theme of
refusing the path of development set out by the West conflicts with the force of the
argument that development has failed to materialise; furthermore, a theory that
emphasized the limits to development exclusively would tend to contradict the reality of
the economic upturn in the Newly Industrialising Countries, specifically in East Asia.

André Gunder Frank took issue with the central argument of Rostow's followers:
'Americans and others in the metropole can see the problem of economic development
only as one of diffusion of capital, technology, institutions etc., from the metropole to the
less developed countries and that this is "good".' (1975: 65) Amin parodies the seemingly
Panglossian 'take-off' argument 'For the dominant Eurocentric current, the answer is thus
"Imitate the West, the best of all possible worlds"' (1988: pxii). Despite the allusions to
Marx and Lenin in both of these authors, the argument that there is no repeating the
capitalist road of development puts them at odds with that tradition. It was Marx who
wrote in the preface to the first German edition the reprimand to the reader who thought
that the pattern of English industrialisation would not be repeated for him: 'De te fabular
narratur!' (it's your story being told'):

23
'Intrinsically, it is not a question of the higher or lower degree of development of the
social antagonisms that result from the natural laws of capitalist production. It is a
question of these laws themselves, of these tendencies working with iron necessity
towards inevitable results. The country that is more developed industrially only shows, to
the less developed, the image of its own future.' (1974: 19) Similarly, Lenin upbraided the
critics who thought that there could be no capitalist development in Russia in his works
The Development of Capitalism in Russia (1899) and The Characterisation of Economic
Romanticism (1897). Frank, though, rejected that argument, insisting that 'Marxist and
non-Marxist writers are wrong in believing that the ones can follow the paths of the
others out of feudalism' (1975: 46).

Frank is obliged to take on both Marxist and non-Marxists for the simple reason that the
theory of development popularised by WW Rostow borrowed from Marx on this score.
As we have seen, it was in part to pose an attractive alternative to Marxism in the Third
World that Rostow emphasized growth (a departure from the equilibrium economics that
predominated before the Second World War). But where Rostow identifies growth
exclusively with capitalist growth, Marx saw the development of social productivity as
leading beyond the specific social form of capitalism. Ironically, given their appeal to the
left, the underdevelopment theorists violently disagree with Rostow on the point where
he shares ground with Lenin and the Marxist tradition. At the same time, most of the
themes of the underdevelopment theorists are already in Rostow, such as the de-
specification of imperialism in history ('colonialism arose from the fifteenth century on',
Rostow, 1960: 108).

Despite the pointedly different predisposition towards development, the

underdevelopment theorists tended to share Rostow's methodological identification of
development with capitalism. In taking over the categories of development theory, they
had taken over its intellectual framework as well, albeit with a very different attitude to
its results. Samir Amin tries to force this intellectual system to yield up a case for
socialism, but it is inadequately theorised: 'the thesis is that "alternative development"
(alternative that is to a simple adjustment to the demands of expansion of the world
system) is not only necessary for the great majority of Third World peoples, but also
possible' (1990: 4). Here the ambiguity of Rostow's category 'development', its
identification of capitalism with growth is reproduced in the category 'expansion of the
world system'. If the latter means expansion of means of production, then it could be
advantageous to the 'great majority of Third World peoples'. But if it merely means the
expansion of capital values through debt repayments, for example, then it might well not.

Unable to break free from the intellectual framework of development theory, the
underdevelopment theorists' attitude to 'development' became increasingly shrill,
substituting rhetorical hostility for substantial critique. Having begun by rejecting the
path of development adopted by the First World, they ended by rejecting development as
such. So, in a collection of essays for Frank, his student Herb Addo draws out the logic of
the critique with the title 'Developmentalism: A Eurocentric hoax, Delusion and
Chicanery': 'was this thing called development desirable; and was it feasible?' (Chew,
1996: 127).

24
Underdevelopment theorists had attacked the idea that the emergence of capitalism in
Europe was due to any natural superiority on the part of the people or the region, insisting
rightly that natural explanations were misplaced. But ultimately, the underdevelopment
school, in seeking to give a theoretical analysis as to why development could not take
place in the Third World did end up giving a naturalistic explanation for the divergence.
This was the inevitable result of the tendency to exclusively emphasise the limits to
growth, so eternalising the condition of underdevelopment. In Eurocentrism Amin once
again finds himself angrily dismissing the argument that the West's development should
be reproduced in the Third World:

'But the project is impossible. Isn't the proof of this impossibility contained in the popular
opinion that the extension of the Western way of life and consumption to the five billion
human inhabitants of the planet would run up against absolute obstacles, ecological,
amongst others.' (1988: 111)

But just as Amin is finding natural limits to the extension of development, in actual fact
patterns of development not dissimilar to those in the West were indeed being reproduced
in parts of the Third World. Underdevelopment theory was not only contradicted by its
own rejection of development, but by the real growth taking place in the Newly
Industrialising Countries.

The New International Division Of Labour

At the end of the Second World War, Japan's 'economic miracle' was included in the
general discussion of take-off under post-war reconstruction. In point of fact the
conditions for the East Asian economic miracle were already evident in the Japanese Co-
prosperity Sphere, and the challenge of Shanghai and Hong Kong in the early twentieth
century. The disintegration of the European colonial order in the East under the challenge
of Japanese militarism created the room for national independence on the part of
mainland China, Indonesia, and Burma. Economic 'take-off' however, took place in
nations that took advantage of the increased demand created by US military spending in
the containment of radical nationalist movements, first South Korea, followed by the off-
shore states of Hong Kong, Singapore and Taiwan, then later growth took off in
Malaysia, Indonesia and Thailand. Most recently southern China's remarkable growth has
buoyed the region following the slump in Japan in 1997. 'East Asia has a remarkable
record of high and sustained economic growth', enthused the World Bank, 'from 1965 to
1990 the twenty three economies of East Asia grew faster than all other regions of the
world' (World Bank, 1993: 1) – by more than five per cent each year, compared with just
2.3 per cent for all the OECD countries.

Nigel Harris, radical economist now working for the World Bank underscored the point
back in 1986 in his provocative book The End of the Third World. Harris summarised the
views of the development economists who 'tended to agree that capitalism had become
transformed to the point where it could no longer repeat the process of the dispersal of

25
development that had occurred in the nineteenth century' (1990: 25). But contradicting
the 'gloom' was the fact of sustained economic growth in the NICS, so much so in fact
that 'by the end of the 1970s the less developed countries … were exporting more
manufactured goods than raw materials' (1990: 28). The prospect was that there was a
new international division of labour emerging, in which NICs in East Asia had broken out
of the niche of primary production to compete with the West in the markets for ships,
advanced electronic components, microchips and computers, as well as a variety of
manufactured consumer goods. Rather than building up home industries in isolation, the
NICs had succeeded by orienting production to export markets, raising revenue for
reinvestment from sales and on international capital markets (see Yew, 2000).

Global share in manufacturing value added

80

70
Per centage of world total

60

50
South and East Asia
40 North America
30 Western Europe
20

10

0
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98

Year

Amin was driven to discounting those who saw a new international division of labour
being created saying they 'base their arguments on what might be called "exceptions" in
recent Third World development' (1990: 178). At least the argument still counted in some
places. 'Agreement on failure in Africa is sadly general' even if 'opinions are more varied
in regard to Asia and Latin America' (1990:1). Eventually, though, the record of growth in
East Asia became unavoidable and the development economists were forced to pay
attention to what was going on, but even then the acknowledgement was grudging. Folker
Froebel et al tie themselves in knots trying to minimise what was going on. 'What is
decisive is that this new development has the same consequences: underdevelopment',
they write, carried away with the phraseology. Further 'the dependent and uneven
development of the underdeveloped world is now, in addition, being reproduced in the
industrial sphere as well' (Froebel et al, 1980: 403).

Where the underdevelopment theorists tried to dismiss the New International Division of
Labour as simply more of the same underdevelopment, others were prepared to make it
the basis of a whole new theory of Transnational Capitalism.

26
THE MYTH OF TRANS-NATIONAL CAPITALISM

The emergence of large corporations with foreign subsidiaries in the post-war period, like
the United Fruit Company, with its extensive Latin American holdings, Lonrho and
Unilever with interests in Africa, and what Anthony Sampson called 'the Sovereign State
of ITT' (Sampson, 1973), suggested that trans-national capital had broken through the
boundaries of the nation state. In this sense Tom Nairn was right to say that 'capitalist
forces of production have long since outstripped the confines of nation-states' (1972:
115). With the world market, we can talk of production on a world scale – and, indeed, an
international division of labour. In its content, capital is international, but it assumes a
national form. Nowhere was this more evident than in the character of its
internationalisation.

The discussion of trans-national capital really took off in the 1970s, because it was
around this time that Foreign Direct Investment on the part of American and European
capitalists became significant as a proportion of capital formation. Though US and
European firms had holdings in the less developed world in the post-war period, these
were relatively insignificant as a proportion of their total capital, and were largely
undertaken to secure access to raw materials. From the 1970s onwards the trend
identified by Lenin, of the export of capital, reasserted itself. But for the most part this
was not understood as a weakness arising from over-accumulation and a plethora of
capital, but as a strength, of the liberation of capital from national limitations.

UK outward FDI as a per cent of Gross

Fixed Capital Formation

20

15
Per cent

10

0
63

66
67

70

72

75
76

79
64
65

68
69

71

73
74

77
78

Year

In a pair of essays published in the early seventies Robin Murray – projecting the trend
back in time – argued that: 'The period since 1950 has been characterised by a major
increase in the internationalisation of capitalist economies, in the form of trade,
investment, and finance capital' (1975: 95). Murray argued that 'it is the corporate rather
than the national division of labour that dominates and determines the features of the
international economy' (45). Italian scholars Alberto Martinelli and Eugenio Somaini
agreed. 'Within each foreign subsidiary the fact of belonging to a single giant enterprise

27
weighs more than the fact of being located in a given country', they wrote (1973: 71).
Allowing the importance of a number of state 'functions', Murray insisted that there was
'no necessary link between a capital and its state, that capital was rather a political
opportunist and that existing states often suffered a decrease in their powers as a result of
internationalisation' (104). Murray's setting out of the theory of 'trans-national capital'
was compelling for its reversal of the orthodox Leninist view that the internationalisation
of capital would enhance the belligerence of nation states. Rather, Murray suggested,
nation-states would be at the mercy of capital mobility. According to Martinelli and
Somaini 'the multinational corporation acts in fact according to an overall strategy aiming
at the highest long-term profits of the whole business and not of its single parts' (1973:
71).

The argument that trans-national corporations, or multinationals, had the advantage over
states corresponded to the outlook of state socialism, and its fear of the 'capital strike',
that capital would withdraw from the country if radical reforms were enacted, threatening
capital accumulation. This, was the backdrop to Labour MP Chris Mullin's political
thriller A Very British Coup, in which a radical Labour government is undermined by the
withdrawal of capital from the country, and also to the real events in Chile in October
1972, when the radical Allende government was challenged by a 'Subversive Strike of the
Bourgeoisie' (Raptis, 1974: 47). This is the proposition behind much of the 'Globalisation'
debate today, that national reforms are necessarily negated by the mobility of
international capital. Some, like Tom Nairn, positively welcomed what they presumed to
be the historical redundancy of the national state. Commenting on the City of London's
support for British entry into the European Economic Community, Nairn wrote that 'the
ruling class had at last moved … towards a world where national "sovereignty" will be
openly relegated to the shelf of archaisms' (Nairn, 1972: 74).

However, Bill Warren's qualification made at the time is pertinent: 'The idea of national
states cowering before the Paul Chambers of this world is wholly fanciful' (Warren, 1971:
85). In Chile, the 'strike of the bourgeoisie' had the effect that popular councils took over
the organisation of production and distribution creating a situation of 'dual power'
(Raptis, 1974: 50). Pointedly, it was the state, in the shape of the armed services, not
capital that overthrew Allende the following year. It was the British Labour Party's
experience of government in the 1970s that made it conscious of the problem of capital-
flight – but for the most part this was a consequence of over-accumulation and falling
profitability, rather than a plot on the part of the 'Gnomes of Zurich' to undermine Harold
Wilson's government.

One weakness in Murray's theory was that it made national differences merely incidental
to capital accumulation. But one would have to ask what is the use of a theory that
abstracts from this most important feature of social organisation. In the first place,
national differences are themselves a product of the law of uneven development that
necessarily meant that different national territories attained internal market consolidation
at different points in history. As the Bolshevik leader Leon Trotsky wrote 'national
peculiarity is nothing else but the most general product of the unevenness of historical
development' (1982: 24). Uneven development itself led to conflicts that forced the

28
demarcation of national territories. In the face of British pre-eminence in manufactures,
Germany and the US adopted protectionist measures in the mid-nineteenth century, as
Britain in turn hid behind protectionist measures when it lost its edge at the century's
closing.

Beyond mere national differences, the role of the state is one that is highly mystified in
the theory of 'trans-national capital'. German activists Wolfgang Müller and Christel
Neusüss took a more logical approach, one that came to be known as 'state-derivation
theory' (because it derived, logically, the necessary existence of the state, from the
Marxist theory of capital, see Holloway and Picciotto). In an essay they argued that the
state 'is based on the emancipation of property as private property of the original unity of
common property, and that on this basis it "has become a particular entity alongside and
outside civil society' (Müller and Neusüss, p36, quoting Marx and Engels' German
Ideology). The modern state, then, is not incidental to capitalism, but its proper
organisation of public authority. As long as social production assumes the form of
dissociated concerns, the capitalists' 'common good' could only be expressed as an
external force bearing down upon them.

The state then was essential to the reproduction of capitalist social relations, not a mere
accessory to be abandoned at will. Moreover, another 'state-derivation theorist' Elmar
Altvater explained, state activities would tend to extend further into society, since 'part of
the material conditions of production cannot be reproduced by these capital units,
because their production is unprofitable', and these 'represent a kind of "vacuum" which
the state must necessarily fill' (1973: 100). 'The socio-economic order cannot survive
nowadays,' wrote Ernest Mandel 'without increasing and repeated intervention by the
state' (Mandel, 1970: 51). The experience of the 1980s seems to confirm this. Despite a
commitment to reduce public expenditure, the Conservative government under Margaret
Thatcher failed to reduce state spending as a proportion of GDP, which remained fully 40
per cent, throughout her term of office.

Swasti Mitter's argument that 'even the governments of a rich country can have only
limited influence over the decision-making processes of these giant corporations',
corresponds to the frustration of social-democratic policy-makers, whose hopes that the
state might act to restrain capital in favour of labour were disappointed (1986: 9). It
certainly is true that the capitalist state proved a poor vehicle for introducing socialism.
But that does not mean that the state is an insignificant influence on private capital. On
the contrary, we see time and again that new capital formation is more or less dependent
upon state guarantees and subsidies, and that many new technologies, from the internet to
biotechnology would never take place without extensive state support (Hutton, 2000).
While the neo-conservative ideologues dreamed of liberating the market from the big
government, the real story was that industry and government had become ever more
intertwined.

The advantage of the 'state derivation theory' was that it demonstrated that state activities
were not just incidentals, but intrinsic to the accumulation of capital, part of an
underlying unity. Nonetheless, the perception that transnational capital could move at will

29
in the world to take advantage of more attractive, even subservient conditions was
underscored by the migration of production lines to third world states in the 1970s. In
particular it was the argument that capital could move at will to take advantage of low
wages that gave rise to the couplet 'Mobility of capital, immobility of labour' (or 'freedom
of capital, control of labour', Elliot and Atkinson, 184).

Mobility Of Capital, Immobility Of Labour?

Formally speaking, capital is largely free to move across borders, while labour is largely
restrained. Under the pressure of market liberalisation, most capital controls have been
gradually removed since the 1980s, so that to all intents and purposes there are few legal
constraints upon investing in countries throughout Europe, America, Japan and most of
the developing world. Even the post-communist world from Vietnam to the Baltic has
had to open up its capital markets to foreign penetration. By contrast the legal constraints
upon labour migration are extensive and onerous. Primary immigration to the United
Kingdom, as to other European countries has all but been abolished, with only stringently
applied rules on 'asylum' allowing any avenue for entry. The United States, by contrast,
regulates immigration on a 'Green Card' system.

The perception that capital can move freely at will is magnified by the movement of the
international money markets that have played a much greater role since the end of the
Bretton Woods system of fixed exchange rates in 1972. On top of the international trade
in currencies, markets trade stock, government debt (bonds), 'futures', 'options' and more
complex financial instruments. On paper, the sums changing hands overnight between
New York, London, Hong Kong and Tokyo amount to trillions of dollars. But in truth, the
importance of these international transactions is greatly exaggerated. The overwhelming
share of this 'trade' never changes hands at all, since much smaller amounts are involved
in 'settling up' at the end of the day's trading. What really changes hands are mere titles of
ownership, contracts, usually in the form of telephone calls. The actual transfer could be
reduced to a given wattage of electricity, probably no more than five minutes output of
any average sized power station.

The perception that capital is free to move at will to take advantage of any circumstance
fails to understand that 'capital is not a thing, but a social relation between persons'. Marx
recounts the tale of the entrepreneur who exported machines, rations and 3000 people to
Swan River, Australia, at a cost of £50 000, only to have his hands abandon him to make
their own living from the land (Marx, 1974: 717). There is no doubt that capital would
like to imagine itself liberated wholly from the realm of production, but in the end it is
only a social relationship reliant on labour to produce a surplus. Far from being wholly
free, certain conditions, then, must be met before capital can move.

Firstly, it must find available a ready source of labour that has no other preferable means
of subsistence, and is sufficiently educated and disciplined. Secondly, it must seize hold
of a real production process, which will yield a sufficient surplus. Thirdly, it must realise
its goods on a market, and so must introduce itself into an expanding social division of

30
labour, of definite proportions. For example, it would make little sense to open a
multiplex cinema on the Pacific island of Raratonga, whose population would not support
it.

As an example of a successful importation of capital – 200 American manufacturing

companies worth $19billion in 1997 – the island state of Singapore is instructive. Its
population of two million, mostly expatriate Chinese, concentrated on an island of six
square miles could not support itself with subsistence farming. The militant People's
Action Party leadership had strong authority in the working class, which it used to
discipline workers in foreign-owned firms. Dr Albert Winsemius of the United Nations
Technical Assistance Board advised that to get the investment needed, the government
had to 'get rid of the Communists; how you get rid of them does not interest me as an
economist, but get them out of the government, get them out of the unions, get them off
the streets' (cited in Drysdale, 1996: 252). Singapore was already a processing centre for
exports, with its own indigenous capital raised trading Malay and Indonesian produce,
but those countries' assertive nationalism threatened that position. Finally, the postwar
expansion of the East Asian market due to the reconstruction of Japan, and the rapid
industrialisation of South Korea, largely under the pressure of US military demand,
meant that there was an expanding market for Singapore-based production. Lee Kuan
Yew, offered Singapore as 'a base camp for entrepreneurs, engineers, managers and other
professionals who want to do business in the region' (2000: 58). By contrast, Indonesia
had the right location, but its 200 million strong workforce was scattered and largely self-
subsisting; Bulgaria's workforce is highly disciplined and urbanised, but in a region that
offers few market opportunities.

All too often we can see examples of regions or sectors that are targeted for investment,
without yielding the profits to justify the initial enthusiasm. In the early eighties surplus
capital was invested in Latin America, mostly in government debt, giving rise to a spiral
of speculation that was largely unrelated to any new productive developments in South
America. In the mid nineties investors rushed into Eastern Europe and the former Soviet
Union, though the region's principal export market, Western Europe, was insufficient to
justify increased production. Towards the end of the decade, surplus capital finding no
new room for investment in productive processes in East Asia ended up fuelling a
speculative boom in Japanese real estate. Since then, investors have moved on to the 'new
economy' of telecommunications and the internet. In each case, 'capital movement' failed
to incorporate itself into new production.

But before all of these 'pull-factors', there is a more important 'push-factor' to consider.
Why would capital want to migrate from its American and European location to
undertake risky ventures far from home? The rapid growth of the Newly Industrialising
Countries was spurred by the export of capital from economies that were experiencing
falling profitability due to an over-accumulation of capital. Folker Froebel and his co-
authors, though, saw it quite differently:

'From the standpoint which is adopted in our analysis it would be quite inappropriate to
attribute this new international division of labour to a fall in the rate of profit in the

31
traditional industrial countries, which is forcing capital to relocate production to new
sites.' (1980: 46)

It is 'inappropriate' because they think it makes more sense to derive the falling profits
from the expanded international division of labour, than the other way around. So Froebel
et al reverse the relationship between over-accumulation and capital export argued by
Lenin:

'The phenomenon of crisis which are at present observable in the "centre" and which are
often described as the expression of a world-wide cyclical recession, should, according to
our approach, be explained as fundamentally the manifestation of the trend towards a new
international division of labour.' (1980: 46)

But this is to attribute social change to technical causes. Indeed, Froebel and his
colleagues see all the major determinants of the change – but one – as of a technical
rather than a social character. So they identify the following preconditions for 'profitable
manufacture of industrial products' in the developing world: the 'division and subdivision
of the production process' that makes it possible for non-skilled labour in the Third World
to substitute for skilled labour in the first (1980: 13); and improved transport and
communication techniques that makes possible production at a distance from
consumption (Ibid.). Swasti Mitter makes a similarly technical analysis of the 'changing
material conditions of production' due to 'introduction of new technologies in both
production and marketing' (1986: 10). The enlargement of the technical division of labour
allows the relocation of capital.

According to Froebel et al, then, the local difficulties faced by the West European,
Japanese and American economies are merely tangential to the overall expansion of
world capital, now focused on East Asia. This, though, would be to understate both the
extent of the recession in the developed world, and the developed world's relative
contribution to the world economy, of which it remained the lion's share. Recession in the
West meant recession in the greater part of the world economy. While it was certainly
true that international hopes were focussed on the East Asian 'miracle' in the 1980s, those
hopes were driven by a degree of despair about the industrialised West. Froebel argues
that 'these economic and social problems in the Westernised industrial countries are
occurring in the context of higher world wide turnovers and of profits by individual
companies' (1980: 4). While it is always true that some companies succeed relative to
others in a bear market, the overall effect was a marked collapse of profitability, first in
1974-5 and then again in 1980-81, along with a severe contraction of output (Mandel,
1980). Prime Minister Lee Kuan Yew describes how, 'after several years of disheartening
trial and error, we concluded that Singapore's best hope lay with American multinational
corporations' (2000: 57). But for the boards of the US companies that he pitched to,
investment in Singapore was a desperate measure to compensate for falling profits on
capital invested at home.

32
'The rate of accumulation is the independent variable the rate of wages the dependent
variable'

Though Froebel, Heinrichs and Kreye, along with Swasti Mitter tend to see the
enlargement of the division of labour as a technical process, they do identify the social
relation between wage and profit as ultimately determining. For Froebel and his co-
authors the other precondition for profitable third world manufacturing is 'a practically
inexhaustible reservoir of disposable labour' (1980: 13). 'This vast industrial reserve army
of extremely cheap labour feeds' the process of industrialisation, they write (1980: 5).
Swasti Mitter went on to imagine a world in which 'the non-European countries lumped
together in an undifferentiated category as the "Third World" would provide cheap
labour, and the "First World" would provide the capital' (1986: 8). The de-
industrialisation of the West, Mitter suggests – echoing Glyn and Sutcliffe – is a
consequence of militant wage demands: 'by the 1970s organized labour in the United
States had truly become a fetter on profit-making there' (1986: 25).

In Japan Makoto Itoh argued similarly that 'excessive capital accumulation causes a rise
in wages' that brings on crisis (Itoh, 1988: 309). Radical economist Walden Bello in the
Philippines developed an entire theory of the spread of capital outwards from Japan, to
Korea, to Thailand and to Malaysia, all based on the search for low wages. As capital
moved out from Japan, to Korea, it tended to bid up the price of labour there, until Thais
and Malays 'replaced the NICS as a source of cheap labour' (Bello, 1992: 94). The
proposition that cheap labour is a kind of 'comparative advantage' for less developed
nations is now well-entrenched.

For these radical critics of the new international division of labour, then, it appears that it
is the rate of wages that determines capital accumulation. This is the reverse of the
conclusion that Marx came to when he wrote that 'to put it mathematically: the rate of
accumulation is the independent, not the dependent variable; the rate of wages is the
dependent, not the independent variable' (Marx, 1974: 581). For Marx, rapid
accumulation will tend to raise the market price for labour; low accumulation will do the
opposite. But beyond these supply and demand effects, the extent and the pace of
accumulation will establish the price of necessities, according to the productivity of
labour in the consumer goods industries. The average price of these daily necessities in
turn will determine the minimum wage a worker needs to reproduce his labour-power,
and therefore the wage. Finally, labour conditions will determine the 'wear and tear' of
labour, and therefore the cost of its replenishment. And whilst it is always possible that
workers' wage demands would prevent the production of surplus value, Marx envisages
that the intrinsic barrier to capital accumulation will arise out of the diminution of the
component of capital laid out against labour, leading to a falling ratio of profit to the total
capital advanced. Of course it appeared to individual capitalists at a time of recession that
wages were 'too high', but then all of their costs were problematic in conditions of falling
profitability.

The theory that capital accumulation was determined by the wage rate had a pre-history
amongst development economists. Arghiri Emmanuel also reversed Marx's argument –

33
rather more self-consciously than Mitter, Froebel and the others – under the heading
'Wages, the Independent Variable of the System' (1972a: 64). But because he is
examining the period in which capital migrated from the less developed world to Europe,
Emmanuel concluded that it was high wages that attracted capital: 'Capital is not attracted
by a low level, like the liquid in communicating vessels, but is on the contrary, sucked up
by a siphon effect towards active markets and high levels of consumption' (1974: 77).
Mitter and the others, examining the period after the onset of recession in the West, in
which capital flowed in the opposite direction, drew the opposite conclusion that low
wages attracted capital. Both, of course are simply looking at the wrong determinant. It
was the overaccumulation of capital in the post-war boom that led to a crisis of
profitability, forcing capital to seek new points of production across the globe.

Just as Froebel, his co-authors, and Mitter had emphasized the importance of an
'inexhaustible supply of labour' in an adjacent subsistence sector as a factor holding
wages to a minimum, so too did Emmanuel (1972a: 88). But Emmanuel also indicated
the opposite case, that the coexistence of a subsistence economy alongside a wage
economy would force wages upwards, as happened in America in the nineteenth century,
with the open frontier. Emmanuel quotes Chevalier and Brassey: 'Wages can never
remain at a low level in the United States, while the working man can transport himself
and his family from the irksome employment of the factory to the free life of the Western
plains' (1972a: 88). Plainly, the coexistence of a subsistence economy is not itself the
cause of cheap labour.

The argument that capital pursues cheap labour is not just disproved historically, but
geographically as well. Even though wages are low in East Europe and even more so in
Africa, India and the South Pacific, that has not led to a rush of capital investment in
those regions. Furthermore, the negative view of wages in the 'Export Processing Zones'
made by Mitter, Froebel and the others, though justified at the time, were not perennial
conditions as was argued. Rather, wages in Korea, Singapore and other NICS have indeed
followed the pattern, rising with the acceleration of accumulation. In Singapore, income
per head exceeds Western averages at $30 000. Also, industries in these regions have not
been oriented entirely to Western markets, but on the contrary been a bridgehead for the
regional expansion of new markets, giving these new workers access to a far wider range
of consumer goods. There is no reason to be complacent about labour conditions in the
new international division of labour, but no reason to be wholly morbid about them
either.

Overall the couplet Free mobility of capital; restraint of labour, promotes a false image of
capital footloose and fancy free, as well as an unduly pessimistic view of labour's
opportunities to organise. It is a view that underestimates the substantial constraints upon
capital, constraints that arise from its own nature. Most pointedly the 'mobility of capital'
myth disguises the real character of capital export, that it is a generally a counter-crisis
measure, undertaken to escape falling profitability. But for these writers it seemed that
capital movement was the supreme example of its freedom. The 'New International
Division of Labour' critics were rather too in awe of capital's transformation of

34
production, and gave too little credence to the ability of the new working class to win a
share of the new production that did take place.

INTER-IMPERIALIST RIVALRIES

The experience of post-war co-operation under American hegemony cemented the view
that inter-imperialist rivalries analysed by Lenin had been overcome. In 1971 Bob
Rowthorn judged that the majority of Marxists 'amongst whom are to be found Sweezy,
Magdoff, [Pierre] Jalée and [Martin] Nicolaus, believe that the United States is not only
the dominant imperialist power today, but that it will become increasingly dominant in
the future' (Rowthorn, 1980: 48). With an unprecedented degree of cooperation amongst
the leading powers, it seemed natural enough to assume that the central conflict was
between the developed world and the underdeveloped, or between the 'Free West' and the
Communist bloc. However, as Geoff Pilling explains 'as the economies of Western
Europe expanded into the late 1940s through to the 1960s America found herself
increasingly challenged from already mature capitalist countries, each with their own
specific imperialist interests in world economy and politics' (Pilling, 1986: 151). With the
re-emergence of recession in the 1970s international rivalry became more acute, so that
theories of inter-imperialist rivalry, and even the inevitability of world war, again came to
the fore amongst radical thinkers.

In 1971, the US secretary of state for commerce explained the problem of the challenge
to American hegemony in the economic sphere:

'From 1870 to 1950, the US rate of productivity growth exceeded Europe by 60 per cent
and Japan by 70 per cent. Starting in 1950, the situation was reversed and US
productivity now lags well behind Europe and Japan.' (in Kaldor, 1978: 63)

The initial expression of conflict between America and the other great powers was in the
sphere of international exchange, where a reversal of the trade balance between Europe
and America in the 1960s left the former holding growing dollar reserves. The dollar was,
since the agreement at Bretton Woods in 1944, world money, 'as good as gold', but
American devaluation threatened to cut European reserves by fiat. The French treasury
first threatened the system by demanding the exchange of dollars for gold, threatening
America's reserves. Fixed exchange rates were dropped, and currencies floated on the
market. The break-down in international currency regulation was followed by the
competitive imposition of tariffs and American demands for 'voluntary restraint' of
imports – particularly damaging given the role of US domestic demand in boosting post-
war production.

Keynesian-inspired state spending projects entrenched a national outlook amongst

Europeans, though ironically American Marshall Aid had initially financed most of these.
French polemicist Jean-Jacques Servan-Schreiber's La Defi Americaine, published as The
American Challenge in 1969 put European resentment at the US into popular language.

35
Servan-Schreiber argued that the US was dominating its allies, and taking advantage of
them. He quoted one US executive to show that that the European Economic Treaty
established in 1957 was America's patsy:

'The Treaty of Rome is the sweetest deal to come out of Europe. It's what brought us here.
We're happy to be here. We're making money. And we're going to make a lot more.' (in
Kaldor, 61).

Anti-American rhetoric amongst European radicals at times reached a fever pitch, as they
saw an opportunity to popularise the appeal of the left in chauvinistic language. Belgian
Marxist Ernest Mandel argued that 'capitalism is ultimately the American "Trojan Horse"
in Europe' – as if Europe had not invented capitalism (Mandel, 1970: 134). In Britain, the
left-wing critics of Harold Wilson's Labour government attacked its 'Atlanticism' as a
betrayal of British sovereignty. According to Tom Nairn the 'pro-American elite' of the
party were willing to 'betray the nation's independence' to the 'most distinctly "capitalist-
oriented" nation on earth' (Nairn, 1972: 60). But 'despite the demagogic claims from
some quarters', wrote Geoff Pilling, 'America was quite incapable of reducing the
countries of Europe, Britain included, to colonial status' (Pilling, 1986: 151). Attempts
like Nairn's and Mandel's to make America into a cipher for capitalism as such only
rallied support for British or European capitalism against American, contributing to the
very rivalries that they criticised.

Just as international competition had been discounted in the immediate postwar period, so
now it was given a decisive role. At the Conference of Socialist Economists in 1972,
Andrew Glyn emphasized the 'part played by foreign competition in precipitating the
present crisis' (Glyn, 1971, 26). Ron Bellamy said 'the further growth of trade and
monetary antagonisms confirm, I think, the more sceptical view which some of us took
last year of the possibilities for creating a framework for the harmonious development of
the all-European firm' (Bellamy, 1971: 10). Bellamy drew the conclusion that European
profits could only be maintained 'by a war, and a carve-up of the socialist world', and 'by
a trade war etc. on the US and Japan' (Bellamy, 1971: 14). Bob Rowthorn also
emphasized the fragmentary prospects of the competition amongst America, Europe and
Japan: 'thus the medium term prospect is one of increasing intervention by the American
state in the face of growing non-American challenge, threatened or actual retaliation by
non-American states, and perhaps a partial reversal of existing tendencies towards
interpenetration as the world fragments into more self-contained regions'. (Rowthorn,
1980: 69) Sixteen years later, Alan Freeman was still predicting the coming crisis of US
hegemony, saying 'it is only a question of time before Japan and Europe begin to seek,
with increasing aggression and audacity, the military and territorial clout needed to
stabilise their industrial weight'. According to Freeman, there was a capitalist solution to
the problem, but one that 'necessarily involves a convulsive, violent and destructive
reorganisation of the world's territories and markets' (Freeman, 1988: 40).

Those who emphasized the element of rivalry amongst imperialist powers were not
wrong, but they were one-sided. In one sense, of course, there has been the
dismemberment of the 'socialist world' – though one that was welcomed by the citizens of

36
that world. Similarly, there have been trade wars amongst America, Europe and Japan,
but the military conflicts that were assumed to be an accompaniment to that development
are mostly played out between the combined forces of the West and its hapless targets in
the Middle East, Africa, Latin America and the Balkans. There were pressures towards
regionalisation, such that the US response to the consolidation of the European Union in
1992 was the North American Free Trade Area – but on the whole these have not led to
an increase in protectionism, but of trade liberalisation, albeit a selective liberalisation,
with farming still heavily protected. Most notably, the re-emergence of recessionary
pressures led to greater international trade and capital movements, not to national or
regional retrenchment.

The emphasis on imperialist rivalry, though, makes the error of seeing the barriers to
capital accumulation as national boundaries, rather than the capitalist social relation
itself. Since the establishment of a world market, capital is essentially international,
though it is national in form. Each capitalist shares in the exploitation of the totality of
world labour, through the formation of an average rate of profit. The preconditions of the
restoration of capital accumulation during a recession, though, are experienced on a
national basis. If it was necessary to write off large swathes of surplus capital to resume
the accumulation process, a consensus upon where the axe was to fall was not easily
come by. In the event, however, American pre-eminence saved the system of international
financial cooperation. The realisation that European and Japanese expansion was
dependent upon the US domestic market was an important impetus behind international
cooperation to avoid collapse. Characteristic was the extension of Japanese credit to
American firms after the 1987 crash to sustain US demand. Overall the capacity to secure
renewed capital accumulation depended upon a decisive defeat of organised labour in the
years from 1980 – 1985, when, following the deflationary Volker budget in the US,
working class living standards were held down, and industry substantially reorganised,
both in America and Europe.

Finally, the predictions of inter-imperialist rivalry spilling over into military conflict
depended on the assumption of a too-literal correspondence between political and
economic realms. Because there was rivalry between different Western economies, it did
not follow that these would necessarily be expressed directly in military competition.
That did not mean that military conflict was excluded. On the contrary, there was a
pointed effort on the part of the United States to politicise economic conflicts, so as to
realise its own advantages over its rivals, in a way that tended to add to the potential for
war. But this militaristic impulse was sublimated in conflicts played out in the developing
world.

BEFORE WE RUSH TO DECLARE A NEW ERA

The characteristic failing of radical theories of capital's internationalisation in the 1970s

was an impressionistic method. This was evident in the various writers' self-conscious
relationship to Lenin's Imperialism, and in particular his characterisation of the
Imperialist epoch as 'the highest stage of capitalism' (Lenin, 1996). Rather missing the

37
point of Lenin's method of emphasizing the historical transience of the capitalist mode of
production, and therefore its transitional forms, the later radical critics took his sub-
heading as a challenge to declare a new era.

So, in 1965 Kwame Nkrumah published Neo-Colonialism - The Last Stage Of

Imperialism; Michael Kidron wrote 'Imperialism: highest stage, but one’ (Kidron, 1974:
124); More modestly Ernest Mandel wrote his own Late Capitalism, saying 'we must
express our regret at not being able to propose a better term for this historical era than
"late capitalism"'. (Mandel, 1978: 4). Not surprisingly, there is already a book called
Globalization: highest stage of capitalism. Like the boy who cried 'wolf!', the heralds of
capitalism's imminent demise are in danger of not being taken seriously.

The error, though, was less that of overstating the historical redundancy of capital as a
mode of social organisation, than of rendering the transition from one era to another a
mere banality. The defining features of each 'new era' became more trivial than the last.
So Nkrumah was trying to understand the political forms that imperial domination had
adopted under decolonisation, while Kidron was excited by the arms race and Mandel
had some statistical evidence for a 'long-wave' of development taken from Kondratieff.
With the theorists of the New International Division of Labour, the transition that called
for a new theory was almost wholly of a technical nature, the enlarged division of labour
due to new technologies of transportation, production and marketing. In this way,
impressions of surface changes, either of a political or a technical character, were seized
upon as paradigmatic of a whole new form of social reproduction. Each time a corner was
turned, a whole new theory had to be coined. 'Innumerable "mini-theories" are produced
that contradict one another; words are refuted by more words; and no doctrine of
imperialism is accepted by more than a small group', complained Arghiri Emmanuel
(1972b: 36). Though the emphasis was novelty, the very exaggeration of change rendered
the possibilities of social transformation banal.

The 'regulation school' elevated this system of impressionistic characterisations of the

epoch into a whole system. The goal was to put a label upon the period, usually
emphasizing the most arbitrary characteristics. These different eras were called 'regimes
of accumulation', in the plural. So the development of capitalism in America became
characterised as Taylorism, after Frederick Taylor, who developed production line
techniques and time-and-motion studies. Then it was called Fordism, after the motorcar
manufacturer Henry Ford. 'Fordism is the stage that supersedes Taylorism' wrote Michel
Aglietta (1987: 116). The Fordist regime is characterised by mass consumption to meet
mass production. Crisis tendencies that Marx saw as successively undermining the basis
of capital accumulation were restricted to one specific regime of accumulation. So for
Aglietta the prospect is of a 'rupture in the cohesion of the regime of accumulation' rather
than of capital accumulation as such (1987: 285). The method of the regulation school is
to look for the mechanism that accounts for the successful reproduction of the system,
and, not surprisingly, the school finds what it set out to look for.

Indicative of the impressionistic method adopted by the regulationist school, the

prognosis of 'neo-Fordism' made by its founder Christian Palloix in 1976 was for a

38
further extension of monopolistic management of production and consumption, through
ever greater regulation of the working class (in Aglietta, 1987: 122). But just as the
regulationists had been unduly influenced by the appearance of the mass market and
monopolies, so they were spell-bound by the neo-conservative governments in America
and Britain when they threatened to de-regulate, and open up large monopolies to free
competition. The regulation school quickly amended its previous characterisation to dub
the 'new era' post-Fordism.

Impressionistically, the characteristics of 'post-Fordism' were a movement away from

mass production to 'lean-production' where small units took advantage of computer
ordering to produce 'just-in-time' goods. All of these were interesting enough
developments in technical terms, but told us little new about social reproduction. More
problematic, the decadent trends of the 1980s, the great destruction of means of
production and growth of mass unemployment were given the spuriously inevitable
character of a new regime of accumulation. Charles Leadbeater, before he went to work
for the Department of Trade and Industry popularised the notion of post-Fordism in
Britain, writing off millions of industrial workers as victims of ‘the decay of the old
social-democratic order of Fordism’ (Leadbeater, 1988). Theorisation of new regimes of
accumulation began to have an apologetic character; the theories served less to expose
the historical limitations of capitalism, than they did to assert that these symptoms of
decay were the price to be paid to restore a new regime of accumulation.

The fragmentation of the theory was written into the impressionistic typology of regimes
of accumulation. It came as no surprise then, that the different regimes of accumulation
did not only replicate in historical time, but geographically as well, with Alain Lipietz
adding 'Global Fordism', 'Incomplete Fordism' and 'Peripheral Fordism' to the mix
(1987). Meanwhile Aglietta decided to back all the horses with 'Four Scenarios',
including a 'tri-polar system', 'General stagflation', or 'renewed vigour', or perhaps a 'new
form of "Mixed Economy"' (Aglietta, 1982: 35-8). Not surprisingly, Alain Lipietz, now a
Green MP in France, looks back with a degree of disdain for the work he was involved in
at the time: 'The whole history of the New Left in continental Europe consisted in an
endless attempt to subtract Stalinism from received Marxism and add in the missing
elements: peasantry, Third World, psychoanalysis, subjectivity, urban social movements,
feminism, ecology.' In a fitting description of the regulation school, Lipietz continues:
'Marxology was mainly used in order to justify, from Marx's texts, this work of
amendment.' (Lipietz, 2000) But of course that only meant that he had misunderstood
Marx's texts in the first place, which were never meant to define all possibilities ahead of
time, but to grasp the essential movement of a given mode of social reproduction.

The debate over the internationalisation of capital in the 1970s had a necessarily
inconclusive character. The political defeats inflicted upon the projects these theorists
endorsed militated against the clarification of a unified theory of world capitalism.
Instead an eclectic mix of ideas was left suspended in mid-air, while radical movements
retreated into their bunkers to sit out the reaction. The situation is all the more confusing
since this confusion was the intellectual inheritance that the debates of the 1970s left as
its bequest to the next generation that debated the internationalisation of capital, the anti-

39
globalisation movement of the 1990s. Confused notions of 'underdevelopment', capital
mobility and the new international division of labour lacked specificity or clarity. The
conceptualisation of capital as a largely technical relationship and of anti-capitalism as a
moral objection are all trends that are evident in today's anti-globalisation movement.

James Heartfield, 28 August 2002

Heartfield@blueyonder.co.uk

40
Bibliography

Aglietta, Michel (1982) 'Capitalism in the Eighties', New Left Review 136, November
Aglietta, Michel (1987) A Theory of Capitalist Regulation: The US Experience, London
Verso, orig. 1976
Altvater, Elmar, Hoffman, Jurgen, Sholler, Wolfgang and Semmler, Willi (1974) On the
Analysis of Imperialism in the Metropolitan Countries, Bulletin of the Conference of
Socialist Economists, Spring
Altvater, Elmar (1973) 'Problems of state interventionism', in Kapitalistate, 1
Amin, Samir (1974) Accumulation on a World Scale, New York, Monthly Review Press
Amin, Samir (1976) Unequal Development: an essay on the social forms of peripheral
capitalism, Hassocks, Harvester Press
Amin, Samir (1998) Eurocentrism, New York, Monthly Review
Amin, Samir (2001) 'Imperialism and Globalization', Monthly Review: June
Brown, M. Barratt (1970) After Imperialism, London, Merlin, orig. 1963
Chang, Ha-joon (2002) 'History debunks the free trade myth', Guardian, 24 June 2002
Chentouff, Tayeb (1999) 'The Horn and Africa, 1935-45', in General History of Africa,
vol. VIII Africa Since 1935, ed, Mazrui, Ali, Oxford, James Currey/Unesco
Chew, Sing S., and Denemark, Robert, eds., (1996) The Underdevelopment of
Development: Essays in Honour of Andre Gunder Frank, London, Sage
Clegg, H, et al (1964) A History of British Trade Unions Since 1889, vol. 1 1994-1910,
Oxford
Comte, Auguste (1910) Republic of the West, Order and Progress, A general View of
Positivism, trans. Frederick Harrison London
Coquery-Vidrovitch, Catherine (1999) 'Economic changes in Africa in the World
Context', in General History of Africa, vol. VIII Africa Since 1935, ed, Mazrui, Ali,
Oxford, James Currey/Unesco
Dysdale, John (1996) Singapore: Struggle for Success, Singapore, Times International
Elliott, Larry and Atkinson, Dan (1998) The Age of Insecurity, London, Verso
Emmanuel, Arghiri (1972a) Unequal Exchange: A study of the imperialism of trade,
London, New Left Books
Emmanuel, Arghiri (1972b) 'White settler colonialism and the myth of investment
imperialism', New Left Review 73, May-June
Emmanuel, Arghiri (1974) 'Myths of development versus myths of underdevelopment', in
New Left Review 85, May-June
Etherington, Norman (1984) Theories of Imperialism: war, conquest and capital, Croom
Helm
Ferguson, Adam (1966) An Essay on the History of Civil Society, Edinburgh, University
Press, orig. 1767
Frank, André Gunder (1975) On Capitalist Underdevelopment, Oxford, University Press,
orig. 1963
Freeman, Alan (1988) 'The Crash', Capital and Class, 34, Spring
Froebel, Folker, Heinrichs, Jurgen, Kreye, Otto (1981) The New International Division of
Labour, Cambridge, University Press
Galbraith, J. K. (1991) A History of Economics, London, Penguin

41
Gallagher, John, Robinson, Ronald and Denny, Alice (1965) Africa and the Victorians:
The Official Mind of Imperialism, London, Macmillan
Glyn, Andrew (1971) 'The British Crisis and Entry into the EEC', Bulletin of the
Conference of Socialist Economists, Winter
Glyn, Andrew and Sutcliffe, Bob (1972) British Capitalism, Workers and the Profit
Squeeze, Harmondsworth, Penguin
Glyn, Andrew, Armstrong, Philip and Harrison, John (1984) Capitalism since World War
II, London, Fontana
Grossmann, Henryk (1992) The Law of Accumulation and Breakdown of the Capitalist
System, London, Pluto
Harris, Nigel (1990) The End of the Third World: Newly Industrialising Countries and
the Decline of an Ideology, London, Penguin
Heartfield, James (2001) 'Ancient feud haunts the cane-fields', Fiji Times, 8 July
Hobsbawm, Eric, Labouring Men, London, 1972
Holloway, John and Picciotto, Sol, eds. (1978) State and Capital: A Marxist Debate,
London, Arnold.
Hutton, Will (1986) The Revolution that Never Was, London
Isaacs, Harold (1988) The Tragedy of the Chinese Revolution, 2nd Revised Edition,
Standford, University Press
Kaldor, Mary (1978) The Disintegrating West, London, Allen Lane
Kidron, Michael (1974) Capitalism and Theory, London, Pluto
Kuczynski, Jürgen (1972) A Short History of Labour Conditions under Industrial
Capitalism in Great Britain and the Empire 1750-1944, London, Frederick Muller
Lamfalussy, A. (1963) The United Kingdom and the Six, London, Macmillan
Leadbeater, Charles (1988) 'Post-Fordism', Marxism Today, October
Lenin, Vladimir Ilyich (1996) Imperialism: The Highest Stage of Capitalism, London,
Pluto, orig. 1916
Lenin, Vladimir Ilyich, Collected Works, Volume 24, Progress Publishers
Lipietz, Alain (1987) Mirages and Miracles: The Crises of Global Fordism, London Verso
Lipietz, Alain (2000) 'From Marx to Ecology and Return? A Brief Reply',
Mandel, Ernest (1970) Europe versus America? Contradictions of Imperialism, London,
New Left Books
Mandel, Ernest (1978) Late Capitalism, London
Mandel, Ernest (1980) The Second Slump, London, Verso
Martinelli, Alberto and Somaini, Eugenio (1973) 'Nation States and Multinational
Corporations', in Kapitalistate, 1
Marx, Karl (1972) Capital: A Critical Analysis of Capitalist Production, Volume I,
Moscow, Progress
Marx, Karl (1984) Capital: A Critique of Political Economy, Volume III, London,
Lawrence and Wishart
Marx, Karl (1973) Grundrisse, Harmondsworth, Penguin
Marx, Karl and Engels Frederick (1941) Collected Correspondence 1846-1895, London,
Larence and Wishart, ed. Dona Torr
Mattick, Paul (1974) Marx and Keynes: The Limits of the Mixed Economy, London,
Merlin
Mattick, Paul (1978) Economics, Politics and the Age of Inflation, London, Merlin

42
Mattick, Paul (1981) Economic Crisis and Crisis Theory, London, Merlin
Mitter, Swasti (1986) Common Fate, Common Bond, London, Pluto
Müller and Neusüss (1978) 'The "welfare state illusion" and the contradiction between
wage labour and capital', in Holloway and Picciotto (1978) State and Capital: A Marxist
Debate
Mullin, Chris (1982) A very British coup, London, Hodder and Stoughton
Murray, Robin (1975) Multinational Companies and Nation States, Nottingham,
Spokesman
Myrdal, Karl Gunnar (1957) Economic Theory and the Under-developed Regions,
London, Duckworth
Myrdal, Karl Gunnar (1968) Asian drama: An inquiry into the poverty of nations, New
York, Twentieth Century Fund, 3 vol.
Nairn, Tom (1972) 'The left against Europe?', New Left Review 75, September
Nkrumah, Kwame (1965) Neo-colonialism, the last stage of imperialism, Melbourne,
Thomas Nelson
Owusu, Maxwell (1999) 'Agriculture and Rural Development Since 1935', in General
History of Africa, vol. VIII Africa Since 1935, ed, Mazrui, Ali, Oxford, James
Currey/Unesco
Packard, Vance, (1962) The Hidden Persuaders, Harmondsworth, Penguin
Pilling, Geoffrey (1986) The Crisis of Keynesian Economics, London, Croom Helm
Raptis, Michel (1974) Revolution and counter-revolution in Chile, London, Allison and
Busby
Rodney, Walter (1995) How Capitalism Underdeveloped Africa, Nairobi, East African
Educational Publishers, orig. 1972
Rosdolsky, Roman (1977) The Making of Marx's Capital, London, Pluto
Rostow, Walt Whitman (1955) An American Policy in Asia, with Richard Hatch,
Massachusetts Institute of Technology
Rostow, Walt Whitman (1960) The Stages of Economic Growth: A non-Communist
Manifesto, Cambridge University Press
Rowthorn, Bob (1980) Capitalism, Conflict and Inflation, London, Lawrence and Wishart
Sampson, Anthony (1973) The Sovereign State of ITT, New York, Stein and Day
Schumpeter, Joseph (1966) Imperialism and Social Classes, New York, Meridian
Semmel, Bernard (1970) The Rise of Free Trade Imperialism: Classical Political
Economy, the Empire of Free Trade and Imperialism, 1750-1850, Cambridge University
Press
Sweezy, Paul and Baran, Paul (1968) Monopoly Capital: An Essay on the American
Social Order, New York, Monthly Review Press
Sweezy, Paul and Magdoff, Harry (1972) The Dynamics of US Capitalism, New York,
Monthly Review Press
Tarbuck, Ken, ed. (1972) Rosa Luxemburg and Nikolai Bukharin, Imperialism and the
Accumulation of Capital, London, Allen Lane
Trotsky, Leon (1982) The Permanent Revolution, London: New Park
Warren, Bill (1971) 'The Internationalisation of Capital and the Nation State', New Left
Review, no. 68. July
Warren, Bill (1977) Imperialism and Neo-colonialism, Belfast, British and Irish
Communist Organisation

43
Williams, Eric (1966) Capitalism and Slavery, New York, Capricorn,
World Bank (1993) The East Asian Miracle, Oxford, University Press
Yaffe, David (1979) 'Imperialism, national oppression and the new petit bourgeoisie',
Revolutionary Communist 9, June
Yaffe, David (2001) 'The labour aristocracy and imperialism' part one, Fight Racism,
Fight Imperialism!' 161, June 2001
Yaffe, David (2002) 'The labour aristocracy and imperialism' part six, Fight Racism,
Fight Imperialism!' 166, April 2002
Yew, Lee Kuan (2000) From third world to first: the Singapore Story 1965-2000, New
York, Harper Collins

44