Notes on the Process of Bureaucrat-Capitalism

in the Third World Countries

Peru People’s Movement – Reorganization Committee
El Maoista Magazine, no. 1
September 2016

Translated by Ruairi Mac Aodha

heartsighs@protonmail.com
Contents

1. Understanding Bureaucratic Capitalism is

Essential to Democratic Revolution 1
1.1 The Domination of the Monopoly
Associations and Imperialist Coun-
tries Over the Oppressed Countries
Has Intensified 7
1.2 The Worldwide Hegemonist and
Counter-Revolutionary Plan of Yan-
kee Imperialism 11
1.3 The Exportation of Finance Capital
as FDI Takes Greater Importance 17
2. The Countries of Southeast Asia Transformed
From Colonies into Semicolonies: Incompleted
Revolution 24
3. What Is the Economic Heart of the Matter? 28
4. The Paradigmatic Cases of South Korea and
Taiwan 31
4.1 The Development of Bureaucratic
Capitalism in South Korea and the
Role of Imperialism 32
4.2 The Case of Taiwan: FDI and So-
Called “Technology Transfer” 43
4.3 Technology Transfer and the FDI
Package 54
5. The Understanding of Marxism-Leninism-
Maoism of This Process in its Entirety 66
1. Understanding Bureaucratic Capitalism is
Essential to Democratic Revolution

1
 In discussing bureaucratic capitalism, as upholders of
Marxism-Leninism-Maoism, Gonzalo Thought, we start
from the principal economic characteristic of imperialism:
namely, that it is parasitic and decaying monopoly
capitalism. According to Lenin, 1 “the deepest economic
foundation of imperialism is monopoly,” which has been
generated by finance capital; “...[first] the monopoly
associations divide the home market, then divide the world
market directly with each other and among a handful of
imperialist countries.”
In this regard, the most diverse representatives of
imperialism, along with its revisionist servants —
attempting to hide the economic essence of the development
of the world economy, in the most differing forms —
unceasingly repeat the imperialist propaganda about the
benefits of “globalization” and therefore of the “liberalization
of the markets, of world trade and foreign investment” for
the “developing countries” (as they call the oppressed or
Third World countries). They praise the growth of
participation of the “emerging countries” in world trade — a
growth that has culminated in the long recession suffered by
the world economy, which started in 2008. This ignores who
truly benefited from this growth, and that said growth of
trade in “emerging countries” was driven by the struggle
between the monopoly associations for markets through the
export of capital under different forms. In not a single case
has this growth constituted a step towards solving the
exploitation and backwardness suffered by the Third World
at the hands of imperialist oppression, semi-feudalism, and
bureaucratic capitalism.

1 Lenin, Imperialism, the Highest Stage of Capitalism, Zurich, 1916.

2
 In Peru, the rats of the revisionist and capitulationist
right opportunist line (ROL), say that Peruvian society is
now capitalist. But, as we will see further on, we have
global growth, including commerce from the oppressed
countries, driven by the growth of imperialist capital export
(by greater financial speculation and interbank loans,
investment funds, and by the so-called foreign direct
investment (FDI) of the great monopolists, as well as
through the other forms of imperialist capital penetration in
the struggle for “economic territory” i.e. markets) in as much
in the imperialist countries (by the law of uneven
development) as in the oppressed countries (by the market
for finance capital, for the export of their commodities, for
the sources of raw materials and for cheap labor).
Among the other forms of investment are licenses and
all other manner of the transfer of intangible or tangible
assets, from foreign companies to the companies in the
oppressed countries. It is also in this way that they establish
the bonds of subjugation to the imperialists’ internal
market (the so-called “vertical integration” of the imperialist
monopolies, or “global value chains” are other forms of
association of the imperialist monopolies with the
monopolies in the countries of bureaucratic capitalism —
monopolies which they themselves have generated). In
balance sheets they appear as “patrimonial payment to
abroad”, by technological transfer, for the payment of
licenses and royalties. They do not appear as investment
earnings or direct reinvestment.
Likewise, imperialist capital investment through “aid”
should not be forgotten (the “development aid”, which, for
example, the German State officially considers an
indispensable way to promote the export of its capital and

3
commodities). Hence, this “growth” implies greater
backwardness, oppression, and violence for the oppressed
countries. The data is unambiguous: from 1990-2008, world
trade grew more than world GDP. Why? Because much of
this “growth” is merely the trade of parts or inputs whose
final production was carried out within the so-called
transnational or multinational enterprises (TNEs/MNEs),
which extend their tentacles throughout the world. As
bourgeois academics would say, they “are vertically
structured on the international level” in the so-called “global
valorization chains” (GVCs). The Organization for
Economic Cooperation & Development (OECD) itself and
other international organizations of imperialism say that
this growth has been driven in our countries by foreign
direct investment (FDI) through the MNEs.2
This is actually the further development of the
accumulation of finance capital and the concentration &
centralization of capital by the great imperialist monopolies,
by the financial oligarchy. In other words, it is the further
development of the holding system (Lenin) through the
export of capital in the form of FDI to create subsidiaries
abroad, of which the most typical expression is the
“sweatshop”, or assembly floor of the final product (output).

2 WTO, OECD and UNCTAD, Implications of Global Value Chains

for Trade, Investment, Development and Jobs, September 2013
quotes: “The expansion of the operations of MNEs through foreign
direct investment (FDI) has been a major driver of growth of GVCs
[global value chains], as illustrated by the close correlation between
FDI stocks in countries and their GVC participation. The presence
of foreign affiliates is clearly an important factor influencing both
imported contents in exports and participation in international
production networks.” (pg. 7)

4
 We cannot allow them to come to us with their
fairytale of “the new international division of labor,” where
all countries are supposedly integrated into a single
production system. The imperialists contradict themselves,
as in the report of the OECD, WTO (World Trade
Organization), and others which we cited earlier, where it is
written that the creation of a single “global production
network” is a “pending task of high importance.”3
We crush and reject what the ROL says, because it is
contrary to Marxism and to reality in claiming that what is
happening in our countries is “primitive accumulation of
capital” — as if imperialism, which oppresses us more and
more and finds itself in full collapse, would allow individual
and independent capitalist development in our countries.
The money, means of production, and life & labor
force being accumulated via dispossession of the peasantry
and other working masses of our countries do not end up in
the hands of a nascent national bourgeois class, middle &
small bourgeoisie. Instead, this dispossession serves the

3 From the same report in footnote 2: “In a world of GVCs, fostering

the building of a complete value chain is a huge task. However, even
where this is not optimal or even possible, governments can
nevertheless encourage firms to join an existing global value chain,
which may have low entry barriers and enable firms to realise export
success relatively quickly and at low cost. Indeed, this can provide
increased opportunities: rather than being obliged to develop
vertically integrated industries (producing both intermediates and
final products), firms can become export-competitive by specialising
in specific activities and tasks. For example, China specialised in the
assembly of final products in the electronics industry and has
become the largest exporter of ICT products; other countries
specialised in the assembly of intermediates (e.g. sub-systems for
motor vehicles in Mexico), the production of parts and components,
or ICT services, e.g. India.” (pg. 18)

5
greater accumulation and centralization of capital in the
hands of the imperialist financial bourgeoisie, and a handful
of bloodsuckers of bureaucratic, comprador, and feudal
capital.
The immensely pauperized masses, stripped of
everything, find no employment and are becoming
overcrowded in the cities, leading to increase in crime &
vagrancy in Third World countries. All this is a product of
the three mountains (imperialism, colonialism, and
bureaucratic capitalism) that oppress our people and
impede the development of our countries. This supposed
“primitive accumulation” claimed by ROL, therefore, is only
revisionist poison to justify their capitulation to imperialism
and Peruvian reaction through their abandonment of the
people's war waged to complete the democratic revolution.
These monopolistic associations — not the oppressed
countries — were the real beneficiaries of this economic
growth. (“[The] percentage significance in world GDP
expanded, from an index of about 16% of the world's gross
product in 1990 (the year in which the percentage peak
previously reached in 1913 was reached again, our note) to
one of 27% of the world's gross product in 2008, the year
before the full impact of the crisis on world trade, which
occurred in 2009.”4
These imperialist monopoly associations (MNEs)
have redivided the world up amongst themselves. Between
1990 and 2008, these MNEs “increased their sales from USD
$6 trillion to more than $31 trillion, that is to say an over

4 2010 UNCTAD World Investment Report, quoted by Aaron Sydor

in Global Value Chains: Impact and Implications, published in Trade
Policy Research 2011 by Foreign Affairs and International Trade
Canada.

6
5x increase.” The MNEs had a capital increase of 1100%,
“namely circa $72 trillion in 2008, and employed almost 72
million workers,” according to the 2010 World Investment
Report of the United Nations Conference on Trade &
Development (UNCTAD).5 This report estimates that “the
500 biggest multinationals now have a participation rate of
circa 70% in world commerce.”
Thus, it is the grand monopolists who, through their
investments, directly divide up the sales and profits of world
trade amongst themselves. These MNEs belong to a handful
of imperialist countries such as the United States, Japan,
Germany, France, England, China, Italy, Russia, the
Netherlands, Sweden, Switzerland, etc. These are the ones
who benefit from the biggest share of the pie, as we will see
when we deal with the economic base of the imperialist
conflict.
Do not come to us with cheap generalizations about
“emerging countries.” There are no such countries. The only
countries that exist today are a handful of oppressor
countries, and the oppressed countries, which constitute the
vast majority.

1.1. The Domination of the Monopoly Associations

and Imperialist Countries Over the Oppressed
Countries Has Intensified

The struggle between monopolies for the territorial

division of the world has become increasingly acute since
World War II. These monopolies, often aided by the
government of imperialist countries, have been increasingly

5 2010 UNCTAD World Investment Report cited in footnote 4.

7
penetrating the economies of the oppressed countries i.e. the
“Third World”.
Although most of the Third World countries were
conquering their independence from colonial rule after
World War II, this only signified their transition to being
politically independent countries with formal sovereignty.
The economies of these countries remained within the world
picture as colonial economies, meaning they are subject to
the world market — which the imperialist countries exercise
monopoly dominance over, and manipulate according to
their own interests and needs.
While the political form changed, the socio-economic
formation of the colonial era was maintained; the
democratic revolution was not carried through to the end
because, in most cases, this revolution was not led by the
Communist Party. Without proletarian leadership in the
form of the Communist Party, the new democratic
revolution cannot be completed — both because the
bourgeoisie is historically unable to carry it out, and
because in our countries there is no strong national
bourgeoisie (nor could it have formed itself) that would be
the “boss of the country's economic life” (Mariátegui).
Consequently, both the national question and the
democratic question still await a solution. It is for this
reason that the grand intermediary bourgeoisie, subservient
to the interests of landlords and imperialism, was the class
that assumed power in these countries. Thereafter the
oppressed countries went from being colonial to semi-
colonial, where bureaucratic capitalism develops on the
semi-feudal base, as we will see when we deal with the
countries of Southeast Asia.

8
 In some cases they pass from being dominated by the
particular colonial power to being dominated primarily by a
different imperialist country; in others, the old colonial
power becomes the imperialist power that principally
dominates the newly independent country. This is not a
question of, as some claim, “new forms of colonialism” or
“neo-colonialism”. The inter-imperialist struggle expresses
itself through: economic measures such as loans, aid,
technology transfer, FDI, etc.; international organizations at
the service of imperialism such as the IMF, the World Bank,
the IADB, USAID, CARITAS, NGOs, the OECD, UNTAC,
WTO, etc.; or proxy wars.
The expansion of monopolistic associations in the
Third World shows how the development of imperialist
capital penetration has been going. Worldwide, the growth
of the subsidiaries of the parent company monopolies has
been very rapid; between 1946-1961, 3,550 new subsidiaries
(daughter companies) were founded, and between 1961-
1996, according to UN data, 260,000 were created, as stated
in an inquiry by Kurt Hübner, 6 where the following
conclusion is reached: “While the developed capitalist
economies represent the headquarters of the business
centers, the economies of the Third World, and also those of
Central and Eastern Europe, take on the function of the
headquarters of the subsidiaries.”
Thus, the capitalism generated by imperialism in our
countries is a capitalism which is subject to imperial
interests and therefore prevents true national development
— that is to say, it is bureaucratic capitalism.

6 Kurt Hübner, Der Globalisierungskomplex, Investigation, Berlin,

Editorial Sigma, 1998.

9
 Regarding the dominance which the imperialist
countries exercise over the oppressed countries (colonial and
semi-colonial), Lenin said:

The imperialism of the beginning of the 20th century

completed the division of the world among a handful of states,
each of which today exploits (in the sense of drawing
superprofits from) a part of the “whole world” only a little
smaller than that which England exploited in 1858; each of
them occupies a monopoly position in the world market thanks
to trusts, cartels, finance capital and creditor and debtor
relations; each of them enjoys to some degree a colonial
monopoly.”7

This is the economic essence of the question. The

imperialist countries draw superprofits from the oppressed
countries, over which each of them exercises or “enjoys to
some degree a colonial monopoly” despite the nominal
political independence or formal sovereignty of the
oppressed countries. That is the similarity that Lenin
establishes between the colonialism of the phase of
capitalism characterized by free competition, and the
colonialism in the phase of imperialism.
Maoism does not speak of “neo-colonialism”. While
some argue that the CCP established this term in one of the
letters of the “Great Polemic” in [Against the] Apologists of
Neocolonialism, it wasn't Chairman Mao who used that
term. Within said document, they also denounce
Khrushchevite revisionism, which was trying to deny the
existence of the colonial problem & imperialist oppression
over most countries of the world, therefore denying the
necessity for the Communists to lead the national liberation

7 Lenin, op. Cit.

10
movement. Those who attempt to utilize this term as a
legitimately Maoist term do so to oppose the economic
essence of the issue and deny the need for democratic
revolution through people's war. We will return to this topic
later.
Therefore, let's briefly look at how the imperialists
implement their plans to maintain the oppression of the
Third World countries and struggle amongst themselves for
hegemony. Let's take a brief look at the history of economic
development as it corresponds to the oppressed countries,
especially in Asia. When the conditions are met — as they
were with the anti-communist coup carried out by Deng’s
revisionism in China — Yankee imperialism expands the
application of the hegemonist economic plan, which it had
been implementing in order to intensify the restoration in
China.

1.2. The Worldwide Hegemonist and Counter-

Revolutionary Plan of Yankee Imperialism

Yankee imperialism, which emerges from the Second

World War as a hegemonic imperialist power, pushes
forward the landowners' path in agriculture in the backward
countries to enable greater penetration of their capital in
the countryside, by means specific to the conditions in each
country. This evolutionary path means new modalities of
concentration of the old landlords' properties and, therefore,
the perpetuation of serfdom under new forms.
To this end, the 1950s Yankee imperialism launched
its so-called “green revolution”. Yankee imperialists deployed
their “technicians” to various countries to propagate the
benefits of this plan, and they promoted the creation of

11
agricultural offices and their “agricultural clubs” for young
peasants. They then promoted successive agrarian laws
through governments, which were pompously labeled
“agrarian reform” but were in fact only agrarian measures to
promote the landlord path in the countryside. Therefore the
land problem — expressed in the existence of the latifundios
and of servitude under new forms — persisted, resulting in
the strengthening and renewal of the exploitation and
destitution of the immense mass of peasants in the world.

A. The Three Lines of Development of Bureaucratic

Capitalism in Latin America, the Three Necessities and the
Three Reactionary Tasks

In 1972, the Red Fraction of the PCP led by

Chairman Gonzalo, through the Popular Information Centre
which published People’s Voice, disseminated the “Analysis
of the 1971-75 National Plan of Development” of the
contemporary fascist military government. This analysis
established a clear position against the imperialist plan
known as “The Program of the Alliance for Progress”
(formulated by the “Carta de Punta del Este”, our note).
The analysis states:

The “Carta de Punta del Este” signified an important

turn in this process for Peru and for Latin America, which in
view of the repercussions of the Cuban Revolution, proposed the
restructuring of Latin American society as a preventive measure
against the anticipated revolutionary outbursts. It is important
to recall the proposals of this Alliance to understand the process
that the country is undergoing.
The “Carta de Punta del Este” proposed that the
American republics collaborate toward “faster economic progress

12
 and wider social justice for their peoples, respecting the dignity
of man and political freedom” in its preamble, and, in its
stipulated developmental objectives outlined “that the resources
dedicated to investment would represent a greater portion of the
national product”. It also proposed “the acceleration of the
process of rational industrialization to increase the overall
productivity of the economy, fully utilizing the capacity and
services of both the private and public sectors. Within this
industrialization process, special attention would be paid to the
establishment and development of industries producing capital
goods.” (Emphasis ours, that is to say, by People’s Voice)
On the agrarian question they proposed “[promoting]
within the particularities of each country, programs of integral
agrarian reform oriented to the effective transformation of the
structures and unjust systems of tenure and exploitation of the
land where it is required, with a view toward replacing the
latifundio and minifundio regime for a fair property system,...”
and establishing “peasant cooperatives and associations and
community development programs”. Regarding education, it
proposed to “eliminate illiteracy [...]; modernize and expand the
means for secondary, technical and higher education; increase
the capacity for pure and applied research, and foster the
trained personnel required by rapidly developing societies.”
Finally, on economic integration, it proposed “to expand
the current Latin American national markets, as an
indispensable condition to accelerate the process of economic
development on the continent and as an adequate way of
obtaining greater productivity through industrial specialization
and complementation, [...] This expansion of the markets will
allow a better use of resources proposed in the Alliance for
Progress.”

As is clear from the above quotations from People’s

Voice regarding “Carta de Punta del Este”, this
counterrevolutionary and hegemonist plan tried to ward off
the revolution, seeking to eliminate its peasant base through
so-called “agrarian reform programs”, which are more

13
accurately referred to as “agrarian reform laws”. Their
economic objectives were to further boost the penetration of
its capitals in the Latin American countryside. This
necessitates “[accelerating] the process of a rational
industrialization [...] especially regarding the establishment
and development of of capital goods producing industries”
to try to foster a dependent industrialization in the
oppressed countries like those in Latin America which,
consequently, would be subject to imperial interests
(bureaucratic capitalism).
The section regarding economic integration clearly
establishes the necessity for imperialism to develop
“industrial complementation and specialization” and
economies of scale for the greater export of capital and
commodities, through the establishment of its subsidiary or
“related” companies (parent, multinational or transnational
enterprises in the imperialist countries, and subsidiary
companies: daughters, granddaughters, etc., in the
oppressed countries). This all would later become known as
“global value chains”, “global production networks” or
“international fragmentation of production”.
This is the greatest form of dominance of the
imperialist monopolies over the oppressed countries, which
has been facilitated more with the free trade agreements &
common markets, and which is expressed in the increase of
intra-regional trade such as among the Mercado Común del
Sur (MERCOSUR) countries. Therefore, it is not an
expression of the economic development of these countries,
but an expression of that capitalism which is subject to
imperialism, which corresponds to imperial capital’s
necessity to struggle for external markets. This necessity is
driven by the crisis of the imperialist system itself and of

14
Yankee imperialism in particular — a crisis that has been
deepening since the late 1960s, whose contradictions are all
sharpening.
Therefore, the dividends which finance capital reaps
from its companies in its colonies, semicolonies, and
overseas countries, are growing increasingly larger — as
Lenin had already observed at the beginning of the last
century with respect to Japan. As a consequence of the
sharpening of imperialism’s contradictions, “towards the end
of the 1960s and the following years, Yankee imperialism
started to run into trouble and, on the other hand, in the
Latin American countries the industrial and financial plan
failed and entered thereafter into reassessment.” (People's
Voice, in the article cited previously)
The quotes from the “Carta de Punta del Este”
stipulate the three lines of development of bureaucratic
capitalism in agriculture, industry, commerce & finance, and
in education. Then, in the latter part of the 1960s and the
start of the 1970s, Yankee imperialism specified the three
reactionary tasks for the reactionary governments of the
Continent (which corresponded to the three needs of
imperialism): deepen the development of bureaucratic
capitalism; restructure the bureaucrat-landlord state; and
prevent revolution. Later, in the 1980s, bureaucratic
capitalism in Peru entered its general crisis, beginning to be
swept away by the People's War, and Yankee imperialism
specified that they should: reinvigorate bureaucratic
capitalism; restructure the bureaucrat-landlord State; and
annihilate the People's War. As the Party has established,
the completion of these tasks is a political and historical
impossibility.

15
 In order to have a historical vision of what is
happening and to understand what is going on in the world,
especially in the oppressed countries, we have to understand
the economic relations in the epoch of imperialism on the
basis of the division of the world between imperialist and
oppressed countries (political economy) and the economic
measures (economic policy). Look at how, in the face of the
biggest crisis of imperialism — from the early 1970s
onwards — imperialists started to change their
predominantly Keynesian economic policy for that of a stale
“monetarism” & “neoliberalism”, and began to privatize
aggressively.
As Chairman Gonzalo teaches us, it is necessary to
take into account the readjustments & the reconsiderations
of imperialism's plans, which arise in the new international
conditions, and above all, accord with the concrete
conditions of the economic process of bureaucratic
capitalism in each country and their experiences in class
struggle and political outlooks. He also tells us that we
must always see who is served by such-and-such proposal,
plan, or measure. In the case of the “Alliance for Progress”,
the plan primarily served and was within Yankee
imperialism's plans of world domination and secondarily
served the native exploiting classes.

B. In Asia: The Plan for Yankee Imperialism, the Dispute

for the Oppressed Countries, and the Fomentation of
Restoration in China

Pursuing its world plan in Asia, Yankee imperialism

pushed forward with its hegemonist and counter-
revolutionary world plan, increasing the exportation of its

16
capital from the mid-1960s onwards. Other imperialists such
as Japan tried to do the same, exemplifying the inter-
imperialist dispute over the semi-colonial countries in Asia,
and solidifying their positions as far back as that time.
Yankee imperialism was also actively watching
ongoing events in China, where it sought to gain influence
through revisionism while the Great Proletarian Cultural
Revolution was developing powerfully (in other words:
struggling to remain on the socialist path instead of passing
to the bourgeois path of restoration). Imperialism, reaction,
and revisionism colluded with the aim to do away with the
socialist revolution and the dictatorship of the proletariat in
China, a great base of support for the World Revolution.
With Deng’s anti-communist revisionist coup in 1976, China
became a large and strategically-located potential market
for the overseas enterprises of finance capital seeking to gain
super-profits through the export of capital.

1.3. The Exportation of Imperialist Finance Capital

as FDI Takes Greater Importance

As Lenin said, commodity production continues to be

the basis of the economy in the epoch of imperialism, but
such basis is already rotten, since finance capital seeks its
realization where it can reach higher rates of profit —
namely by overseas investments. As the crisis of imperialism
progresses, the struggle for economic territory, markets, and
sources of raw materials becomes sharper, mainly for the
semi-colonial countries. As a result, the export of capital is
increasing and FDI has become increasingly important since
the mid-1960s, meaning an intensification of the third
contradiction (inter-imperialist) and especially the principal

17
contradiction, which is that between the oppressed countries
on one hand and the imperialist countries on the other.
FDI is done as a “package”, as we will see when we
deal with the case of Taiwan. That is to say, it is the the
principal form taken by “productive capital” imported to the
oppressed countries (if FDI is seen from the perspective of
these countries), which generates a greater deformation of
its productive structure, since practically the only thing
that will grow is that which is related to the needs of the
world market.
When these needs change, whether for economic or
extra-economic reasons, what is left behind are unemployed
thousands, ghost towns, abandoned mineshafts, and trash of
all kinds — consequences which bear a high social &
economic cost as well a high cost for the resources of the
country, and more “need” for imperialist capital to
commence anew and end in the same way. This is the
vicious circle of imperialist domination, the maintenance of
third-world countries as colonial or semi-colonial and semi-
feudal countries wherein bureaucratic capitalism develops.
Through this FDI package, the imperialist
monopolies increase the import and export of imperialist
capital’s commodities as inputs for the production of a final
product. These “inputs” represent the total parts required
for the production of the “final product” to occur in the
FDI-receptor country — “production” which in the majority
of cases consists only of assembly or often only packaging.
This is what the bourgeois economists call “international
fragmentation of production”, “new international division of
labor”, etc.
Let us examine some very important information
regarding the economic development of Southeast Asia, and

18
how the development of imperialist investment took place in
this part of the world, through a study published by the
Australian National University in November 2009 (and
afterwards as the book The Rise of Asia, Trade and
Investment in Global Perspective, edited by Premachandra
Athukorala, Editorial Selection 2010, pg. 31 onwards):

“International production fragmentation has become one

of the defining characteristics of world trade over the past few
decades. The electronics MNEs based in the USA started the
process in the late 1960s in response to increasing pressures of
domestic real-wage increases and rising import competition from
low-cost sources. The U.S. government facilitated the process by
introducing an external processing tariff (“Outward Processing
Tariff” (OPT)), whereby businesses were authorized to export
material to be processed overseas and then reimport the final
product, paying fees only on the value aggregated overseas (not
on the intermediate exported goods). Geography, costs and
history all combined to persuade the American MNEs to explore
overseas production opportunities in the neighboring countries
of Latin America. However, unfavourable investment climate in
these countries – macroeconomic instability, political tensions,
trade union upheavals and uncertainty – led American
producers to switch to sub-suppliers located in East Asia.”
(Helleiner 1973, Grunwald and Flamm 1985, Feenstra 1998,
Brown and Linden 2005)

This is linked to what was seen earlier about the

“Carta de Punta del Este”, and as such, also with the rivalry
between monopolies and between imperialist countries for
the dominance of overseas economic territory to obtain
imperialist super-profits, as can seen in the following
quotation:

19
 “The preference of the global electronics production
networks for Southeast Asia began in 1968 with the arrival of
two US companies, National Semiconductors and Texas
Instruments, to set up plants in Singapore to assemble
semiconductor devices. By the beginning of the 1970s Singapore
had the lion’s share of offshore assembly activities of the US and
European semiconductor industries. Virtually every
international electronics producer was present in Singapore by
the mid-1980s, when the hard disk drive (HDD) assemblers
entered the country, further boosting its role as a global
assembly centre (see Chapter 4 in this volume). During the next
five years semiconductor production declined in relative
importance, and computer peripherals, especially hard disk
drives and computers, became the more important part of the
island’s electronic industry. By the 1980s, Singapore was the
world's largest exporter of hard drives, representing almost half
of all global production.” (McKendrick et al, 2000)

Yankee electronics monopolies were the first to

outsource this assembly to Singapore, but eventually, all of
the international monopolies of this industry were present
there competing for their share of the pie. Afterwards, these
monopolies extended out to the other countries, as can be
read below:

“From 1972, the MNEs with production facilities in

Singapore began to relocate some low-end assembly activities to
neighbouring countries (particularly Malaysia, Thailand and the
Philippines) in response to the rapid growth of wages and land
prices. Many newcomer MNEs to the region also set up
production bases in these countries, bypassing Singapore. By
the late 1980s, this process had created a new regional division
of labour, based on skill differences involved in different stages
of the production process and relative wages, and improved
communication and transport infrastructure. At the time, there
was widespread concern in Singaporean political circles [...]
However [...] the electronics industry [...] needs a large number

20
 of heterogeneous components in its manufacturing in Southeast
Asia, also greater economies of scale and more possibilities for
specialization for all participating countries. More recently,
regional production networks have begun to expand to Vietnam
[...2007]. Despite obvious advantages in terms of location and
relative wages, Indonesia has so far failed to benefit from this
new form of international specialization due to its unfavorable
internal investment climate [... 2006]”.

As can be seen, imperialist capital goes to the

oppressed countries to conquer markets for its investments
and commodities, to dominate the sources of raw materials,
and to exploit cheap labor — i.e. to stay ahead of
competitors in the struggle for world domination. In this
region of the world, the study says:

“A number of factors underpin the continued attraction

of the region as a place for assembly activities. Firstly, despite
rapid growth, manufacturing wages in all ASEAN [Association
of Southeast Asian Nations] countries, except Singapore, remain
lower or comparable to those in the European periphery
countries and Mexico [...] Secondly, the relative cost advantage
factor has been complemented by trade which is relatively more
favorable, investment policy arrangements and better ports and
communication systems to facilitate trade by reducing
maintenance costs of “service links” (which means that
everything is subject to FDI, our note) [...] The site selection
decisions of multinational companies operating in assembly
activities are greatly influenced by the presence of other key
players in the market in a given country or neighboring
countries. In the context of a long period of successful operation
in the region, many of the multinational companies (particularly
those based in the United States) have significantly improved
the technical activities of their ASEAN regional production
networks and have assigned global production responsibilities to
subsidiaries located in Singapore and more recently to those

21
 found in Malaysia and Thailand) (Borrus et al., 2000;
McKendrick et al., 2000)
In general, the experience of the ASEAN region seems
to support the view that subsidiaries of multinational companies
have a tendency to become increasingly embedded in host
countries; the longer the companies are present, the more
favorable the global investment climate of the host country
becomes. (Rangan and Lawrence, 1999; Athukorala and
Yamashita, 2006). Over the years, Singapore's role in regional
production networks has gradually changed — from assembly of
low-skill components and testing for the manufacture & design
of components and provisioning, to serving as the headquarters
of production unit services located in neighboring countries. The
appeal of Singapore as a regional center for cross-border
production networks has continuously improved by the emphasis
of government policy on the development of infrastructure,
expanding the human capital base, maintaining labor relations
in a manner very favorable for international production, and
macro-economic management.” (McKendrick et al., 2000; Brown
and Linden, 2005)

The quote above expresses that the State is at the

service of imperialism and should provide everything to
imperialist finance capital. It demonstrates the semi-colonial
character of each and every one of these countries: the State
must provide all the infrastructure for foreign investment
and for the native grand bourgeoisie and the landlords; the
State must provide healthcare, education, social services,
etc., all in order to ensure that labour power is reproduced
at the lowest price possible, along with contractual security
and all other types of security; the government must ensure
low wages, long hours and bad working conditions, taking
care to increase the international reserves of the country so
as to guarantee the investment and return of foreign capital
profit, etc. This all relates to the “liberalization” of

22
production, trade, finance and labour power. This process
does not mean that a reduction in size of the State occurs;
quite the contrary, it means that state sovereignty is
extended for some (the imperialist countries) and is reduced
for others (the Third World countries).
Continuing on, the study says:

“The data [...] helps to understand the growing

importance of the trade in parts and components for world
trade in machinery and transport equipment and the central
role played by Southeast Asian countries in this trade. World
trade in parts and components increased from about 20.9% of
total manufacturing exports in 1992/93 to 24.2% in 2004/05
(Trade in parts and components accounted for almost one third
of the total increase in world manufacturing exports between
these two years). In the development of East Asia, all the
countries included in the table have recorded increases in world
market shares, with the six Southeast Asian countries growing
faster than the regional average. In East Asia, the ASEAN
countries, particularly Malaysia, Thailand, the Philippines and
Singapore, stand out for their high dependence on export
dynamism and product fragmentation. In 2004/5, component
trade made up 58.4% of the total exports from Southeast Asian
countries, up from 46.7% in 1992/3.”

In conclusion, upon the basis of a semi-colonial and

semi-feudal economy in these Southeast Asian countries, the
development of bureaucrat capitalism has been fostered by
the necessity of imperialism to export commodities &
capital, as well as its need for cheap labor and raw
materials.

23
2. The Countries of Southeast Asia Transformed
From Colonies into Semicolonies: Incompleted
Revolution

24
 One must bear in mind that through the colonial
expansion of the European countries, the economies of
Southeast Asia “since the middle of the 19th century” found
themselves involved in the “expansion of the capitalist world
system,” as stated in a report by Hans-Dieter Evers (which
we have chosen to serve as a contrast, being a source of a
different kind).8 That is to say, they became colonial
countries and their process of slow evolution to capitalism
(semi-feudalism) commenced.
In the same report, we read: “In 1920, imports and
exports accounted for over 50% of the colonial gross product
of the Dutch East Indies and a similar figure can be cited
for the State of Malaysia [...] The change from subsistence
production to market-oriented production, the extension of
agricultural credit and the growth of international trade
characterizes Southeast Asia from the mid-19th century
onwards (Evers 1978). The question is: where do the
benefits of this increased productivity and enhanced farm
income go? A large part is of course transferred to the
colonial motherland and contributes to the industrialization
of the West, and part of the profit is channeled back to
Southeast Asia in terms of foreign investment; but, part of
it is appropriated by the local strategic groups (the grand
bourgeoisie in formation, our note) which is growing and is
seeking a greater portion of this surplus product.” 9
In brief, we quote from this “work document” because
despite the class limitations of such academics, it

8 Hans-Dieter Evers, Working Paper No. 14, Sequential Patterns of

Strategic Group Formation and Political Change in Southeast Asia,
Faculty of Sociology in the University of Bielefeld, Bielefeld,
Germany, 1982.
9 Evers, op. Cit, pg. 13

25
demonstrates that with the establishment of the colonial
economy “new groups emerge based on the new sources of
income”,10 “which seek to establish a superstructure [...] that
is more suited to their interests.” These so-called “strategic
groups” are nothing other than the factions of the native
grand bourgeoisie in Southeast Asia.
After the Second World War and with the conquest
of independence, colonial and semi-feudal society would
transform into semi-colonial and semi-feudal society, upon
which bureaucratic capitalism develops — which the author
of the paper refers to as the development of “colonial
capitalism” in Southeast Asia.
The report continues: “But, the restructuring of the
economies of Southeast Asia, the change from subsistence
agriculture to export-oriented production, and the dominant
position attained by foreign investors, not to mention the
European, Japanese and American military intervention,
has changed life in Southeast Asia in the most remote
villages, even if pre-colonial aspects of the socio-cultural
structure are maintained.”11
This is significant! Despite the report’s class
limitations, this demonstrates the objective fact, that
imperialism evolves feudalism and upon that base develops
a capitalism tied to its interests (bureaucratic capitalism).
When these countries conquer their formal political
independence, they remain economically tied to the
imperialist economy, and they remain within the framework
of the world economy — as Mariátegui established for the
Peruvian case, a colonial economy. It is for this reason that
they become semi-colonial countries. There is no national or

10 Evers, op. Cit, pg. 3

11 Evers, op. Cit, pg. 21

26
middle bourgeoisie in these countries which is sufficiently
strong or robust enough to assume the role of the “boss of
the national economy” (Mariátegui).
Consequently, those who hold economic and political
power in these newly independent countries are the grand
bourgeoisie and the landlords in the service of imperialism.
For this reason, they are countries that have political
independence or formal sovereignty. In the era of
imperialism and the proletarian revolution, the old
bourgeois revolution is no longer possible. Hence, the
Prussian path can no longer lead to the development of
capitalism, as it once did in Germany. As long as the
proletariat and its Party, with the people's war based on the
solid alliance with the peasantry, does not complete the
democratic revolution of a new type, our countries will
retain their character indefinitely and imperialism will
possess “to some degree a colonial monopoly” within them.
Take the case of Indonesia, whose bourgeois
“revolution” was merely one faction of the grand bourgeoisie
overtaking another. The document says: “The coup of 1965,
and as a result of the massacre throughout the entire
country, led to the establishment of a military regime and
the resurgence of foreign economic interests [...] In 1975, the
revenue of the Indonesian government came from a typical
colonial production of raw materials. Import-export taxes,
including oil revenues, constitute 76.7% of the national
budget, business and personal income taxes constituted only
3% of the budget.”12

12 Evers, op. Cit, pg. 22

27
3. What Is the Economic Heart of the Matter?

28
 Thus, the economic heart of the matter is not that
“imperialism is applying new forms of domination” because
it has lost its colonies, and is now Yankee “neo-colonialism”
etc., but that the economic base from the time before these
countries gained formal independence has remained intact
with very few changes. Thus, with the political and military
fact of independence, they become semi-colonial countries
while remaining semi-feudal. Therefore, the capitalism
which develops here is bureaucratic capitalism at the service
of imperialism, which holds in these countries “to some
degree a colonial monopoly.” A certain economic policy
corresponds to this economic base (under old or new forms),
which imperialism applies through the governments of these
countries, where representatives of the two factions
(bureaucrat and comprador) take turns to maintain
imperialist domination, to deepen and develop it. That is, a
country’s relationship to imperialism dictates its policy, not
the other way around.
In the final analysis, what those who speak of the
neo-colonial character of our countries are proposing is that
with a simple change of government the situation of our
countries could be changed; this is nothing more than
reformism and opportunism. This opportunistic concept of
“neo-colonialism” is related to Kautsky's opportunistic thesis
of imperialism being “the preferred policy of finance
capital,” which does not start from the economic essence of
imperialism — namely that it is parasitic and decaying
monopoly capitalism. This essence necessitates its
reactionary and violent nature in economics, and, therefore,
its reactionary and violent nature in politics; (imperialist)
economic domination is primary, and it necessarily leads to
(imperialist) political domination. The concept of a “neo-

29
colony” does not start from the economic essence of the
imperialist domination of our countries, which can be
colonial or semi-colonial, but posits it instead as “forms of
domination that imperialism applies”, as if imperialism is at
most a matter of economic policy. This would imply that
with a simple change of government, the national question
could be solved.

30
4. The Paradigmatic Cases of
South Korea and Taiwan

31
 Here we study the role of Japanese imperialism in
Southeast Asia through Japanese FDI in South Korea and
Taiwan.

4.1. The Development of Bureaucratic Capitalism in

South Korea and the Role of Imperialism

Korea was a Japanese colony from 1910 until 1945

(i.e. until the defeat of Japan), and in 1952, after the defeat
of Yankee imperialism in the Korean peninsula, the country
was divided into North and South Korea. The full
normalization of relations between South Korea and Japan
took place in 1965.
To establish the role of Japan in South Korea, we
quote the following from a German academic:

“On the one hand, Japan, along with the USA, is [South
Korea’s] most important trading partner. Since the
normalization of bilateral relations 30 years ago, the majority of
foreign investment has come from Japan, which has transferred
more technology in the form of licenses and capital goods. On
the other hand, Japan's developmental aid has played a non-
negligible role in the implementation of South Korea's economic
development plans in general, and for the construction of central
industrial branches such as the steel industry in particular.
Japanese businessmen have thus played a significant role in the
Korean development process over the past three decades. South
Korea was (together with Taiwan) a supplier for industrial
branches, for which production in Japan was mainly due to
costs, but also partly because they were no longer profitable due
to the ever-increasing environmental demands or as a
consequence of the restructuring process […]
[...] To be able to see Japan's role in the South Korean
economy, one must visit Korean factories and establish where
the machines with which production is undertaken come from,

32
 and where the components and basic materials come from,
which are then incorporated into Korean products. Only after
this can the central significance of Japan in sustaining the
Korean economy be made clear. A key cause of Japan's specific
role in the South Korean economy stems from the rapid
industrial development of South Korea, based on an industrial
structure of pure assembly before an industrial country full of
medium and small supplier industries could have developed.
The weaknesses of small and medium enterprises (SMEs) in
South Korea largely explains the country’s elevated dependence
on imported technology, seen in the most important industries
in the current phase of industrialization, like electronics and
automobile manufacturing.”13

Patrick Köllner’s talk of SMEs is unsurprising

considering the mental burden of German academics to
separate German SMEs from the German monopoly system,
when in fact these SMEs are dependent on the German
banks (organized according to the holding system). This
holding system extends down as far as the provincial banks
or savings banks (Sparkassen), the decentralization of which
yields a greater and broader centralization of the power of
the grand German banks.
On the other hand, SMEs, as suppliers of large
industry, develop production technology according to the
rules and patents of the large companies that commission
them to produce parts — to whom they have to
continuously report on their profit margin, according to a
complaint from a German entrepreneur in the automotive
parts branch. This is true in Germany as in any other
imperialist country or in any oppressed country where

13 Patrick Köllner, Japans Technologietransfer nach Südkorea:

Entwicklungstendenzen und Problempunkte, pg. 298.

33
bureaucratic capitalism has developed, where monopolies
generated by imperialist finance capital are dominant.

A. Development Based on Large Monopoly Enterprises and

State Intervention

The quoted study deals with the entire 30-year

process of development of bureaucratic capitalism in South
Korea, based on big business and state intervention, with
the predominance of the bureaucratic faction in the
economy and politics of that country. It focuses primarily
on the 1987-1993 period when the so-called “liberalization”
of the economy was given impetus, with the comprador
faction in the leading position.
Before this period, long-term foreign investment in
Korea was largely in the form of loans, aid, and “technology
transfers” rather than FDI. From 1995 until 2005, the
average inflow of FDI into Korea stood at 5-6 billion US
dollars; in 2006 and 2007 it remained at 5 billion; in 2008 it
stood at 8.4 billion; and in 2010, 6.9 billion US dollars —
which as of 2011, amounted to an estimated figure of
between 100-130 billion dollars. Nearly 43 billion of these
were from Yankee imperialism, around 24 billion from
Japanese imperialism, followed closely by the Dutch
imperialists with an amount close to 21 billion dollars; then,
further back in the list come the German and French
imperialists. It is necessary to note that part of the
imperialist investment in Korea is done through subsidiaries
of imperialist monopolies in Malaysia, Singapore, and Hong
Kong.
But this is not all. The (principally Yankee)
imperialist domination over South Korea is also exercised

34
through the financial system imposed by the IMF, which,
for example, imposed higher reserves after the Asian crisis
in order to guarantee not only the public debt but also
private debt — mainly those which the imperialist banks
give to the Korean commercial bank.
In the mid-1970s and in the 1980s, South Korea was
the backdrop of great workers’ struggles for wages, shorter
working days and better working conditions — struggles
which were characterized by great combativity
demonstrated by the working class, and which resulted in
the conquest of rights and wage increases. To some degree,
this has caused the transfer (starting in the mid-1990s) of
part of the “sweatshop” or assembly factories to countries
such as the Southeast Asian countries and China, which
have lower wages, worse working conditions, and longer
working hours. During these years, Japanese imperialism
also carried out “industrial restructuring” on its mainland by
way of increasing investment in fixed capital, and,
principally, lowering wages and lengthening the working
days. Combined with increasing the use of cheap and
exploitable immigrant labor, the worsening the working
conditions of the proletariat overall made it profitable to
bring many Japanese companies back to Japan.
It is only because of this partial return to Japan that
some Korean companies increased their rate of
“indigenization”. So it cannot be said that the influence of
the Japanese monopolies has lessened, because, as we will
see more clearly with the case of Taiwan, this actually
signifies a rise in the “decentralization” of these monopolies
in order to concentrate further, which is how the holding
system manifests itself.

35
B. Korea as an Imperialist Base for the Re-Exportation of
Capital in the Region

The myth of Korean economic independence must

also contend with the fact that part of the FDI from Japan
and the United States flowed out of South Korea towards
the Southeast Asian countries and China, along with
investments of the Korean grand bourgeoisie who have
begun to invest in these regions. This demonstrates that in
the current holding system, South Korea is used as a
“capital export platform” between imperialist countries and
semi-colonial countries where labor is cheaper.
We can more fully understand Korea’s place in the
world imperialist economy by noting that despite the fact
that its capital outflows now are greater than inflows, it has
not ceased to be a net importer of capital. This is explained
by the fact that most of the oppressed countries have a
financial account which is always in deficit, bearing in mind
that for every dollar that comes in, 3 or 4 dollars flow out
to foreign capital in the form of repatriation of profits,
payment of licenses, interest, etc.
Therefore, the Korean outflow of capital consists
mainly of two parts: repatriation of profits for license &
patent rights of the invested FDI; and net outflow of capital
from the grand Korean bourgeoisie, which will be then
invested abroad where there are lower salaries and greater
incentives than in Korea. But in many cases this overseas
investment is done by the decision of the parent company of
the particular imperialist monopoly, of which the grand
Korean bourgeoisie are intermediaries. In this way, it acts as
an outpost or spearhead in the Chinese market in favor of
its owners. Thus, Korea has become one of the big investors

36
in China. This, also, will be better understood when we
take a look at Taiwan.

B1. The Process of Korean “Opening” Headed Up by the

Comprador Faction of the Grand Bourgeoisie

This economic development has been facilitated by

the so-called “process of economic liberalization” imposed by
Yankee imperialism through the IMF, the World Bank, and
the WTO, which started around 1992-93 in Korea, with
greater “opening” after the 1998 “Asian crisis”. Other
findings concerning the current economic situation can be
read in a 2011 report prepared for presentation at the 10th
India-Korea Dialogue, November 7-8, 2011, Hotel Trident,
Chennai, India meeting, by the professors Choong-Yong
Ahn and Kyttack Hong, who define Korea's current
situation thusly:

“Growth potential index in decline, sharp income

polarization and rising popular demand [...] The official
unemployment rate is very low, at 3%, but a broader
unemployment statistic is reported to be 11.8% higher if those
preparing for job entry tests only and irregular employees
working part-time, 4-5 hours per week, are counted as
unemployed.
Youth unemployment is becoming serious [...] With the
change of the structure of the economy from one of conventional
industry to that of high value-added services, massive
unemployment has become inevitable. [...] The causes of
aggravated polarization (in terms of income, between those who
earn the most and those who have the worst incomes, our note)
can [...] be found in the weakened link between exports and
domestic demand [...] growth had little influence on domestic
demand due to labor-saving corporate restructuring and
increased risk due to the financial crisis and weakened economy.

37
 The previous statement can be supported by the reduced
correlation between exports and domestic demands since the
financial crisis.
Recently, exports have rarely contributed to creating
job opportunities and increasing value added because exports
have rather concentrated on info-tech items mainly made of
imported parts and components [...] Although Korea's large
conglomerates (with more than 300 workers) share only 1% of
total business establishments and 23% of total employment
respectively, their shares in total production and value added
are very high, 52.4% and 49% respectively.
In export performance, the relative performance of large
enterprises is highly visible, contributing 68% of total exports in
2009 [...] Korea's heavy dependence on exports, which account
for half of its economy, and the openness of its capital markets
make it particularly vulnerable to external factors.” (pg. 71
onwards)

C. Greater Domination of Imperialist Finance Capital Over

Korea

This is further explained, making the domination of

imperialist finance capital over this economy much clearer:

“As the European sovereign bonds problem intensifies,

foreign investors have reduced their participation in the Korean
stock market. Major banks have to pay higher costs in
borrowing money overseas. Korea's credit default swap (CDS)
premium on its five-year foreign currency bond reached 201.5
basis points on October 6, 2011, a nearly 100-point spike from
103.0 basis points in late July. And the Won (the Korean
currency, our note) has depreciated against the dollar at the
third-highest rate among 20 major currencies. Furthermore,
there are signs that the financial uncertainties at home and
abroad are spilling into the real economy, slowing down
economic growth [...] However, Korea is likely to see financial
market volatility due to its high external dependence. Korea's

38
 external trade in relation to nominal GDP ratio is the world's
highest level, at 87.9% in 2010. The proportion of foreign
investment in domestic stocks are based on KOSPI (index for
the shares of companies listed on the Korean stock exchange,
our note), market capitalization is also high, at 32.8% as of
October 11th, 2011. From August to September 2011, Korea
saw a net foreign capital outflow of 7.2 trillion won from its
stock markets and a net foreign capital inflow of 0.1 trillion won
from its bond market. Net outflow of Europe-based capital was
4.4 trillion won and 3.2 trillion won in the stock and bond
markets, respectively. [...] In the near term, Korea should try to
secure sufficient foreign currency liquidity to calm worries of
another liquidity crisis and a possible downgrade in the rating
of their sovereign debt (i.e. maintain high foreign exchange
reserves, our note).” (pg. 92)

Look at what the measures of the Korean

government after the 2008 world crisis revealed:

“Measures introduced by the Korean government

focused on reducing vulnerabilities created by overseas
borrowing by banks [...]. In June of 2010, the government
introduced ceilings on the forward market foreign exchange
derivatives positions of banks as a ratio to their capital. The
objective was to reduce the short-term external debt that
resulted from banks' provision of forward contracts to export
firms, preventing the possibility of a sudden and massive
withdrawal of capital, especially by foreign bank branches.” (pg.
98)

It is important to clarify two things regarding the

development of the automobile production or assembly
industry, because such production is quite a good example
of how FDI expands and conquers markets and how it
generates a monopoly organization in the oppressed
countries in the image and likeness of the imperialist

39
countries, following the method of the holding system. As
such, this “Korean” industry is production based on variants
of models produced by the great monopolies, and is
currently being developed with many variations of
procedures and technologies coming from Mitsubishi, GM,
Ford, Mazda, etc. — that is to say, with licenses and
patents from the imperialist automobile monopolies, as can
be seen in Myeong-Kee Chung’s investigative table 14 given
below:

14 Myeong-Kee Chung, Zur Entwicklung der koreanischen

Automobilindustrie (in English: Developing the Korean Automobile
Industry), Institut für Sozialwissenschaftliche Forschung e.V. ISF
Münchenn, pg. 75.

40
Table H-4: “Phases of the development of markets regarding production and technology
strategies in the Korean automotive industry (1964-1995)”
 Take note of the last row, “Origin of the (process)
technology” (Herkunft der (Prozeß-) Technologie), which we
already highlighted in the previous passage, exposes the
true nature of the “Korean” automobile industry.
Another diagram illustrates the pyramidal
organization of auto parts suppliers (“small” and “medium”
or “2nd-tier” companies), which are dominated by the auto
assemblers (so-called final “car producers”):

At the head of this system of suppliers to the

automobile industry in Korea, there are three bureaucratic
capital companies which receive the auto parts and
components (under license from the big imperialist
automobile monopolies) from the 1,548 direct suppliers.
These direct suppliers, in turn, have been supplied by 4,000
second-level suppliers. This means that 3 assembly
companies — which are dependent by their very nature
upon the big imperialist monopolies, because of the holding
system — dominate 5,548 “medium” and “small companies”.

42
 In summary: the so-called “industrialization of South
Korea” is nothing other than the development of
bureaucratic capitalism in that society, driven principally by
Yankee imperialism and Japanese imperialism and other
imperialist countries, in collusion and struggle. And, as we
have seen, even bourgeois economists confess that the result
is the dependence of Korea's economy on the world market.
In other words, it is dependent upon the interests and needs
of imperialism — a dependency that, according to Lenin, is
nothing other than a relationship of “oppression and
violence” of the imperialist economy over the Korean
economy. With this comes the bureaucratic character of
capitalism in this country.

4.2. The Case of Taiwan: FDI and So-Called

“Technology Transfer”

One of the many fairytales told by the publicists of

imperialism and the opportunists of all countries is that
today the “dependence” of the backward countries has
lessened, because now “the foreign capital we need” comes as
foreign direct investment (FDI), “indispensable for
technology transfer” and therefore for “independent
development”, because foreign capital now no longer comes
primarily as “ensnaring” loans, or public debt. But they
forget that “development aid” (especially Japanese “aid”) is
another way through which the imperialists intervene in the
economic policy of our countries for the benefit of their
export of capital and goods and to broaden the social base
in their favor in the recipient country. Furthermore, they
add that because much of this FDI now comes from Third
World countries like our own, it supposedly has a different

43
character. These erroneous conclusions make it necessary to
raise some fundamental questions based on specific
situations.
Therefore, it is appropriate to introduce, with our
comments, some excerpts from the Case Study of
Taiwanese-Japanese Joint Ventures in China by JM
Gerken15 which clearly demonstrates the class character of
this FDI that comes in a “package”. What is the importance
of this work, and what are its limitations? Its importance
stems from the fact that it is a case study; it links the
macro and microeconomic aspects of Japanese FDI in
Taiwan, which takes the form of “FDI package transfer” or
“transfer of the production of simple standardized products”
which will then “be made clear in the next investment in the
series of the cycle (Catching-up Product Cycle)”, i.e, in the
next Japanese-Taiwanese investment in China.
We intend to use this empirical information to show
how imperialist financial capital (Japanese, in this case)
contributes to generating the intermediary (subsidiary or
daughter) company of Taiwanese bureaucratic capitalism
and how Japanese imperialist capital, through these
investments, will then penetrate China. We intend to use
these concrete cases to demonstrate how these international
networks of dependence and of financial capital relations are
generated, and how it, after generating the monopolies and
their networks in the countries of origin (imperialist),
extends into the countries of the Third World and to China

15 JM Gerken, 3.4 - Fallstudien von taiwanisch-japanischen, Joint

Ventures in China, “Vorgehensweise und Zielsetzung der
Firmeninterviews.” (in English: 3.4 - Case Study of Taiwanese-
Japanese, Joint Ventures in China, “Behavior and setting goals in
company interviews”) Chapters 1, 3-4, 2000

44
(as the most economically backward imperialist country and
where investments are more profitable) to obtain
superprofits.
The problem or limitation is how the author
(Gerken) sees the “cycle” of imperialist finance capital: he
sees it limited solely to the first moment of the cycle and
does not see the complete cycle of the Japanese FDI; he sees
the second part of the cycle as a new investment of the
recipient country or at best as a hybrid — Japanese direct
investment in Korea (subsidiary or daughter company of the
main Japanese company or mother company), then
Japanese-“Korean” investment in China (granddaughter
company) or in other countries such as Vietnam or the
Philippines (granddaughter companies). We must apply the
concept of the holding system established by Lenin in order
to determine the true nature of these investments.
In the footsteps of his mentor Kojima — even though
it contradicts his own exposition of the facts — Gerken
takes the second moment of the imperialist FDI as direct
investments, in which the “New Industrial Economies” of the
ASEAN region invest China and Vietnam. He calls these
investments “new direct investments” and “extension of the
product cycle”, and also refers to these “New Industrial
Economies” of the ASEAN region as Catching-up
Economies. In other words, the study focuses on the
transfer (as part of the FDI package) of simple &
standardized Japanese products to be produced in Taiwan
(applied to the conditions of the country: “new standardized
product”), then extended or transferred to be produced in
China.
As can be expected, the study focuses on the
relations between things (commodity fetishism) and not

45
upon the relations which these things hide; that is to say, it
does not focus on the social relations of production. This is
the main thing that for the moment we must stress
regarding the quotes that follow. Why? Because in addition
to their bourgeois conception, as Lenin pointed out in his
aforementioned work, these academics see subsidiary
companies as independent simply because they are legally
so, and because they seek to beautify imperialism. But, as
Lenin himself told us, we are dealing with “a [work of]
literature... written from the bourgeois point of view, but
which, nevertheless, gives a fairly truthful picture and
criticism — petty-bourgeois, naturally — of this financial
oligarchy.” (op. Cit.)
Let’s take a look at the quotes:

“The macroeconomic theory of foreign direct investment

(FDI) developed by Kojima gives this issue an adequate
framework, since this later helps to link it up with the
microeconomic aspect. Kojima analyses the effect of the FDI on
the recipient country and notes that Japan's FDI differs from
American and European FDI. In an effort to clarify this detail,
Kojima identifies the existence of a type of FDI, which
Catching-up Economies prefer to implement and then continue
throughout East Asia.
In this relationship, one can speak of the direct
investment cycle, which, firstly begins from an industrial
country and passes to an emerging country and then on to a
developing country. From the 1970s, it was observed that the
Newly Industrialized Economies (NIEs) in South Korea, Taiwan,
Singapore and Hong Kong carried out direct investments in the
ASEAN states, whereas they were still mostly recipients of FDI
in the 1950s and 1960s. In the second half of the 1980s, the
NIEs began to invest in China and Vietnam. With the
beginning of the new direct investment cycle, the entrepreneurs
of the NIEs showed that they had acquired technical knowledge,

46
 capital and business management knowledge and that the
extension of the product cycle had also taken place at that level.
In the empirical part, we will examine the role Japanese
FDI has played in the development of Taiwanese direct
investments in China, and what particular knowledge of the
product, process and business management knowledge of
Japanese subsidiaries in Taiwan has been employed in the
subsequent investment in China. In this example, the advances
in the knowledge of the Taiwanese partner can be observed at
the micro level. Some of these Taiwanese investors apply in
China the products and technological processes that they have
developed or adapted to local conditions. In this case there is
talk of a “hybrid technology transfer”, which under certain
circumstances is more appropriate to Chinese conditions.” (op.
cit. Introduction).

So, reference has been made to the product “cycle”

through the “phenomenon of subsequent investment”
(macroeconomic level), centered on the microeconomic
(business) aspect, meaning — what precisely the
“contribution of the subsidiary company” is in “the
reproduction of a given good”. This is how they take up “the
direct investment instrument” (Introduction). “The business
equipment variable denotes the transfer of the FDI package,
which consists of product knowledge, process knowledge,
and business management knowledge. Capital can be
supplemented or substituted through specific industrial
patrimony, tangible or intangible, such as second-hand
production machines.”
Continuing with the quotes from the study:

“Similarly to Japan, in Taiwan, comparative advantages

in labour- intensive industries have declined (labour-intensive
use is typical of backward economies, our note). As such,
Taiwan itself began to transfer its labour-intensive industries to

47
low-wage countries (as can be seen, a whole hierarchy is
established by the degree of development, measured by the use of
labour among the companies of the different countries that
belong to the “holding system”, of a determined parent
monopoly, our note). As industrialization progressed,
international export experience spurred Taiwan's investments in
Southeast Asia. Taiwanese subsidiaries were strengthened by
local comparative advantages. Taiwanese investments in the
mainland (in the People's Republic of China, our note) grew by
about US$ 30 billion from 1983-1996.
The comparison of Japanese FDI in Taiwan with
Taiwanese direct investments in China in the electrical and
electronics industry expresses Japan's strong involvement.
Between 1952 and 1997, more than a quarter (27%) of Japanese
investment capital flowed into this branch. 375 small and
medium-sized entrepreneurs as well as 33 large Japanese
entrepreneurs founded one or more subsidiaries in Taiwan. The
product range of the Japanese companies encompasses
everything from cables to computers. These products include
many standardized parts, components, and simple additives.
Taiwanese investments in monitors, keyboards and other
peripheral devices are noteworthy. These are almost all past
models that were transferred to China, e.g. 15-inch displays.
Japanese presence is even more evident in the Taiwanese
automobile industry. Eight of the eleven self-assembly producers
have a joint venture and/or a contract of cooperation with the
Japanese. In Taiwan, the same model was reassembled just as in
Japan. This also expresses a closed merger with the Taiwanese
auto producer. Here you will also find examples for simple
parts, bodies, transmissions, which were transferred to China as
part of the subsequent investment.
In Southeast Asia, the foreign direct investments of the
NIEs are predominantly small and medium sized entrepreneurs,
who have so far extended their production of simple goods
overseas or moved there completely. One of the cornerstones of
this are the favourable trade conditions which are being
discussed between the European Union or NAFTA and the
ASEAN states. Another cornerstone for direct investments by

48
 NIEs: the local markets in Southeast Asia (economies of scale,
note from us), which have previously taken imports from NIEs.
Among the most recent waves of NIEs investors are mobile
exporters, who preferentially move their production because of
low wages. In Southeast Asia, simple electronic parts and
electronic devices, optical components (for example, lenses) and
furniture parts are assembled.
The reason for low labour costs and market orientation
is once again illustrated by the three predominant strategies of
Taiwanese investments in China, mature products with labour-
intensive production methods affect the “three C's”: Consumer
Electronics, Computer and Communication. It is a breakdown
of complex technical processes of high-tech products and
standardized primary and intermediate products which takes
place within the international division of labour. Within the
scope of these standardized products (primary and
intermediate) particularly small and flexible companies from
newly industrialized economies (NIEs) enter as joint venture
partners or OEM producers (Original Equipment Manufacturer,
our note). A typical pattern of this international division of
labor is to be found in the PC industry. At the forefront are
U.S. companies, which develop software systems for PCs and
make central processing units (CPUs). Japanese companies
provide some key components (e.g. liquid crystal displays:
LCD).”

This is very important because it shows the

intermediary character of the Korean monopoly company
SAMSUNG that employs these softwares. It makes it clear
that U.S. imperialist finance capital primarily dominates the
region, followed by Japanese imperialist capital and then by
the other imperialists.
The intermediary role or function of the companies of
the countries of bureaucratic capitalism or of Chinese
imperialism can be seen by how they are subject to the
needs of imperialist financial capital, as we read below:

49
 “For some computer parts there are specialized suppliers
in South Korea and Singapore. Taiwanese manufacturers aim to
provide higher quality peripherals and individual components.
The provision of simple devices, e.g. keyboards, intermediate
products, parts, is taken over by companies in China and the
ASEAN states [...] The outsourcing of the production of labour-
intensive products and simple precursor products progresses and
has to do with the production of said parts and components
which Taiwan has specialized in. For LCD production, for
example, the lowest production level of an LCD screen is
produced by a Taiwanese company in China. The rapid
implementation of product improvements (e.g. 17 inch displays)
leads the lower levels (such as 14 and 15 inch displays) to a
standardized method of production so that these “obsolete
products” can remain on the market.” (previously cited work).

As a result, the export of imperialist capital means

that its economic crisis is also exported to overseas
countries and an entire international network of
dependencies and connections of financial capital is
established, as Lenin warned us:

Paramount importance attaches to the “holding system

[...] The German economist, Heymann, probably the first to call
attention to this matter, describes the essence of it in this way:
“The head of the concern controls the principal company
[literally: the “mother company”]; the latter reigns over the
subsidiary companies [“daughter companies”] which in their turn
control still other subsidiaries [“grandchild companies”], etc. In
this way, it is possible with a comparatively small capital to
dominate immense spheres of production. Indeed, if holding 50
per cent of the capital is always sufficient to control a company,
the head of the concern needs only one million to control eight
million in the second subsidiaries. And if this ‘interlocking’ is
extended, it is possible with one million to control sixteen
million, thirty-two million, etc.” [...] To divide a single business

50
 into several parts by setting up ‘daughter companies’— or by
annexing them.
The advantages of this system for various purposes—
legal and illegal—are so evident that big companies which do
not employ it are quite the exception. [...] The “democratisation
of capital”, the strengthening of the role and significance of
small-scale production, etc., is, in fact, one of the ways of
increasing the power of the financial oligarchy. [...] But the
“holding system” not only serves enormously to increase the
power of the monopolists, it also enables them to resort with
impunity to all sorts of shady and dirty tricks to cheat the
public, because formally the directors of the “mother company”
are not legally responsible for the “daughter company”, which is
supposed to be “independent”, and through the medium of
which they can “pull off” anything. [...] A monopoly, once it is
formed and controls thousands of millions, inevitably penetrates
into every sphere of public life, regardless of the form of
government and all other “details”.
[...] The supremacy of finance capital over all other
forms of capital means the predominance of the rentier and of
the financial oligarchy; it means that a small number of
financially “powerful” states stand out among all the rest. [...] In
one way or another, nearly the whole of the rest of the world is
more or less the debtor to and tributary of these international
banker countries, these four “pillars” of world finance capital. It
is particularly important to examine the part which the export
of capital plays in creating the international network of
dependence on and connections of finance capital. 16

The exposition of the facts concerning the

development of imperialism (and consequently bureaucratic
capitalism) in Southeast Asia over the last three decades
and beyond demonstrates the full validity of what has been
established by Marxism-Leninism-Maoism regarding
imperialism and bureaucratic capitalism.

16 Lenin, op. Cit.

51
 What we have seen is an increased export of capitals
and consequently a heightened struggle in which big
monopolies and imperialist countries compete to penetrate
the economies of semi-colonial countries more thoroughly
and extensively. This causes production in the semi-colonial
countries to become more and more dependent on these
capitals and more deformed, as they produce for the needs
of the imperialist world market rather than for internal
development. Thus, we have seen the development of the
“international network of dependency and the connections of
finance capital”, in other words “global value production
networks” of the biggest imperialist monopolies or MNEs,
“international production networks”, or whatever the
bourgeois economists wish to call them.
These networks are nothing more than the tentacles
of the biggest monopolies for contesting the economic
territory of the world through peaceful or violent means,
which the author of the case study sees as the FDI and
“product” cycle, and which others refer to as the “global
value production chains.” For our countries, this has meant
a further deepening of their semi-colonial semi-feudal
condition upon which bureaucratic capitalism develops.
Regarding this subject, Lenin said:

Typical of the old capitalism, when free competition

held undivided sway, was the export of goods. Typical of the
latest stage of capitalism, when monopolies rule, is the export of
capital. [....] Capitalism is commodity production at its highest
stage of development, when labour-power itself becomes a
commodity. The growth of internal exchange, and, particularly
of international exchange, is a characteristic feature of
capitalism. The uneven and spasmodic development of
individual enterprises, individual branches of industry and

52
 individual countries is inevitable under the capitalist system.
[....] An enormous “surplus of capital” has arisen in the advanced
countries.
It goes without saying that if capitalism could develop
agriculture, [...] if it could raise the living standards of the
masses, [...] there could be no question of a surplus of capital.
[...] Both uneven development and a semi- starvation level of
existence of the masses are fundamental and inevitable
conditions and constitute premises of this mode of production.
As long as capitalism remains what it is, surplus capital will be
utilised not for the purpose of raising the standard of living of
the masses in a given country, for this would mean a decline in
profits for the capitalists, but for the purpose of increasing
profits by exporting capital abroad to the backward countries.
In these backward countries profits are usually high, for capital
is scarce, the price of land is relatively low, wages are low, raw
materials are cheap. The export of capital is made possible by a
number of backward countries having already been drawn into
world capitalist intercourse; [...] elementary conditions for
industrial development have been created, etc. The need to
export capital arises from the fact that in a few countries
capitalism has become “overripe” and (owing to the backward
state of agriculture and the poverty of the masses) capital
cannot find a field for “profitable” investment.

Thus finance capital, literally, one might say, spreads

its net over all countries of the world. An important role in
this is played by banks. The capital-exporting countries
have divided the world among themselves in the figurative
sense of the term. But finance capital has led to the actual
division of the world.
Since we are speaking of colonial policy in the epoch
of capitalist imperialism, it must be observed that finance
capital and its foreign policy, which is the struggle of the
great powers for the economic and political division of the
world, give rise to a number of transitional forms of state

53
dependence. In this epoch, it is not only are the two main
groups of countries (those owning colonies & the colonies
themselves) that are typical; also typical are the diverse
forms of dependent countries which, politically, are formally
independent, but in fact, are enmeshed in the net of
financial and diplomatic dependence.
We have already referred to one form of dependence:
the semi-colony. An example of another form is provided by
Argentina. “South America, and especially Argentina,”
writes Schulze-Gaevernitz in his work on British
imperialism, “is so dependent financially on London that it
ought to be described as almost a British commercial
colony.”17

4.3. Technology Transfer and the FDI Package

Let us continue with the case study:

“The transfer of the FDI package includes products and

processes and management of specific technologies, the
components of which are regulated according to a contract.
Thus, the transfer options are, from the very outset of each
foreign direct investment project, limited by these agreements.
The degree of success that is possible for the native party to
achieve is crucial, starting from the package of FDI at its
disposal, combined with their own abilities to establish
production. In many cases, the transfer of real knowledge
consists of the investor's own knowledge (know-how), which
cannot be transmitted completely in the technical specifications,
drawings, and operating instructions, etc., which can be agreed
upon. It is therefore important to ascertain what knowledge is
actually and truly transferred by the foreign investor.

17 Lenin, op. Cit.

54
 Often, the quality of the production is consciously
reduced to a minimum, so as not to jeopardize the technical
advantage of the foreign investor, or simply to prevent the
foreign branch from producing exactly the same component. In
some cases the recipient has found that although all the
technical information is accurate, the foreign branch can
produce exactly the same component. In some cases the
recipient has experienced that although all the technical
information is complete, there is still something missing. This
lack of knowledge lies in the experience of the investor, and
there is no rule of thumb for predicting when and to what
extent, the recipient of this knowledge can acquire said
experience. For example, the drawings contain precise technical
data and precise manufacturing instructions. However, some of
the information is missing, e.g. the optimum manufacturing
temperature, which is only discovered after several years. It is
therefore impossible to determine the exact value of the
investor's intangible assets, but it is up to the receiving party to
determine the specific value of this knowledge in greater depth.”

In addition, we would like to note that what is

transferred in each “investment project” is a product or
model already in production. So even if it is the “newest” or
the latest, it is already obsolete, because the parent
company is already researching and developing a new one.
This research and development (R&D) is not transmitted
within the package, but remains with the parent company.
Moreover, machines for manufacturing workshops are older
models and in many cases have been withdrawn — they
have zero or symbolic value in the books, and when they are
exported as part of the FDI “package” they acquire a new
value as a fixed asset in the foreign accounts of the
subsidiary. But even if these machines are of the “latest
generation”, they do not in any way contribute to the
technological development of the host country since they are

55
foreign products, and by the same token, do not signify the
development of the machine production sector to produce
machines for industry in the host country.
The main thing to emphasize is that foreign
investment is carried out according to the development
interests of the monopoly in the struggle for the world
market. The enterprises generated in the oppressed
countries, or in the most backward imperialist countries like
China, are bound by tentacles to the imperialist enterprises,
which ensure by all means and in all cases the subjugation
of the enterprises which imperialist finance capital played an
instrumental role in generating.

A. Taiwan: Another of the “Four Asian Tigers”

Another of the “four Asian tigers” is Taiwan. It is

dominated by imperialism, principally Yankee, in collusion
and struggle with Japanese imperialism and other
imperialist countries. The study of Taiwan demonstrates
how the process of the greater domination of imperialism in
recent decades has been carried out, just like it has in the
other oppressed countries — domination which they try to
hide with their terminology of “globalization”, “new
international division of labour”, and “integration into the
global production chain”. That is why it is good to take
some concrete data into account, such as those contained in
the above-mentioned research concerning the period of
1952-1997, which we include as a note.18

18 The Japanese have carried out most of the investment

projects in Taiwan (2,991 cases of investment, 1952-97). A quarter
of foreign investment capital comes from Japan (US $7.42 billion of
capital investment 1952-97). About a quarter (28%) of Japan's total

56
 After what we include as a note, the article says:

“On the other hand, Taiwan is also an active overseas

investor with the objective of expanding its network of
production & distribution and of penetrating into new markets.
In this sense, the financial and insurance sector dominated in
2012, and its outflow abroad tripled to more than US $4.5

direct investment goes to the electrical industry (investment capital

worth US $2.02 billion, 1952-1997). Eight out of the eleven
Taiwanese final assembly automobile manufacturers work with
Japanese partners in Joint Ventures. The Taiwanese currently have
a total investment capital amounting to US $30 billion (1983-96)
and are the second largest investor in China after Hong Kong. These
investments have increased considerably since the early 1990s. The
majority of Taiwanese investments in China are focused according to
capital, as can be seen by a number of instances in electronics and
household appliances. (capital invested: US $2.03 billion; number of
instances of investment: 2,778 cases 1991-97).
Regarding this, another bourgeois academic, Hübner, says:

“Japan invested not only in Korea and Taiwan but in

the entire region: in the East, South and Southeast Asia. In the
second half of the 1980s they increased their investment in
Indonesia, Malaysia and Thailand. Thanks to Japanese direct
investment, Malaysia has become the largest exporter of air
conditioning equipment and has already become one of the
leading producers of semiconductors. The construction of a
global-regional production network on the side of the Japanese
stakeholders took place - from a strategic point of view - in two
ways, where direct investments were accompanied by loans, and
public donations were obligatorily destined for the
infrastructure of the region. (This two-track strategy was not
only followed by Japan... The European Union also set up an
extensive programme to promote direct investment in the Asian
region...” (Kurt Hübner, Der Globalisierungskomplex, Edition
sigma, Berlin, 1998, pg. 180-181)

57
 billion. In second place came, as expected, the electronics sector
with US $1.35 billion; metallurgical equipment came in third
place with US $643.4 million. Of the US $8.1 billion of direct
investments with which Taiwan undertook foreign ventures, the
largest share went to Singapore in 2012: US$4.5 billion or 55.6%
flowed into the city State of Southeast Asia. The share of
capital invested in Japan was 13%, in Vietnam, 11.7%. Finally
0.2% of Taiwanese investments went to Germany (Information

Hübner also stated there that “direct investment was first and
foremost a significant driver of growth for Singapore and Malaysia. On
average, between 1986-91, these investments represented 24.4% and
9.7% of the share of the gross internal capital formation of these
countries.”
This trend in all these countries has continued to develop up to
the present date. The struggle between the monopolies and imperialist
countries for this market heightens, turning the country more and more
into a field of inter-imperialist contention as demonstrated by the
investments being made in Taiwan through the British Caribbean
Islands (a tax haven through which imperialist financial capital follows
an indirect path to overcome the different kinds of barriers it may
encounter in its path). It will also be necessary to take note of the
immense financial power held by Dutch imperialism as evidenced by the
statistical data.
The end of the period between crises, i.e. that of 1998 (Asian
economic crisis) and 2008 (“global financial crisis”) gives us the following
figures for Taiwan:

The total volume of direct investments (FDI) in Taiwan

in 2009, US$56bn in addition to the US$4.789bn which entered
that year, represented -41% with respect to the previous year, of
which 19.5% corresponded to the USA. 17.1% to the
Netherlands, 17.5% to the British Caribbean Islands, 15.2% to
Japan, etc. The main sectors in which investments were made in
2010 were: financial and insurance sector 20.2%; electronic parts
15%; wholesale and retail trade 5.8%; electrical engineering
5.2% and telecommunications 5.1% (“Foreign Direct Investment
(FDI) in Taiwan”, Taiwan, Basic Information, German
Economics Office of Taipei).

58
 from the Taiwanese Ministry of Economic Affairs Investment
Commission, 2013). In any case, investments originating in
Taiwan and operating respectively in mainland China are not
listed here. In reality, the investments by Taiwanese companies
in China represent the largest share of investments, despite the
fact that the Taiwan Investment Commission in 2012 recorded
only an investment of US$10.9 billion to the other side of the
Taiwan Strait, 17% less than in the previous year. Of this, US
$1.95 billion went to the electronics sector and US $1.52 billion
to the information and communications technology sector.
At the same time, mainland China's investments in
Taiwan from 2011 to 2012 grew more than sevenfold to reach

In 2012, the FDI grew by 12% compared to 2011 — that is, by

more than US $5.5 billion. The financial sector again recorded the
largest volume of FDI, followed by the trade and production of
electronic parts, etc. In this year the percentage of investment from the
British Caribbean Islands and the Netherlands rose with 25% and 21%
respectively, below the share corresponding to the U.S. and Japan,
according to information from the same source of January 31, 2013.
Germany occupied the 17th place in the list. (More foreign investments
in Taiwan, Finance and Insurance in the Center of Interest. Increasing
investments from and for Germany, GTAI).
As can be seen from the complementary data, the trend
observed from 1952 to 1997 has been essentially maintained with
corresponding quantitative variations. Logically, it is US imperialism
that leads the accumulated investments, both in this country and in the
whole region, followed by Japanese imperialism which treads on its
heels, then followed by the other imperialist countries. Add to this the
domination of the banks of imperialism (principally Yankee), of the
interbank transactions, of bonds, etc., of futures, of subprimes, of the
mortgage business, etc., etc. (the list goes on).
Moreover, it must be taken into account that the investments of
these two imperialist countries “are more mature and have had enough
time to position themselves strategically”. From what we are seeing,
there has been no shift here either of U.S. domination, nor of Japanese
domination — which in the midst of collusion and struggle, is on its
heels; this is what must be taken into account with respect to the
changes of forces that are taking place in this region of the world.

59
 US $328 million. This is a decisive expansion of the scope of
such investments that is authorized. It was only in August 2012
that Taiwan and China signed an agreement to protect and
promote investment.”19

The underlining in the preceding quotation is ours.

With it, we want to emphasize the intermediary role of the
monopolies of bureaucratic capitalist countries like Taiwan,
as we see more clearly in the motives of Japanese
investments in Taiwan (daughter companies) in comparison
with the motives of these investments in China
(granddaughter companies). Likewise, by comparing the
investments of the grand comprador bourgeoisie of Taiwan
in Southeast Asia with what we saw earlier regarding the
development of FDI and the parts industry for the
electronics and the high tech industry, we can understand
the importance Lenin gives to the holding system in order
to understand imperialism as the stage of the domination of
the monopolies generated by finance capital, in contrast to
the stage of free competition capitalism. The monopolies of
the countries of bureaucratic capitalism have been generated
and are subordinated by the most varied ties to the
monopolies of the imperialist countries. Ultimately, their
existence depends on their imperialist masters.
One point which we can already establish is that the
increase in foreign investment by the imperialist countries is
followed by the apparent decrease in their exports to the
semi-colonial countries or to other imperialist countries,
especially to those which are less developed, such as China
(law of unequal development). This is particularly evident
19 More foreign investments in Taiwan, Finance and Insurance in the
Center of Interest. Increasing investments from and for Germany,
GTAI

60
in the case of U.S. imperialism and Japanese imperialism in
this region of Asia (an expression of imperialist parasitism
and economic backwardness in the imperialist countries
caused by the export of capital).
Another point is that a great part of imperialist
investment in China is done through Hong Kong, Taiwan
and South Korea, which act as platforms for imperialist
finance capital. This becomes even more obvious when we
consider that imperialist investment is growing in these
countries in the form of development of the banks and their
financial sector. At the same time, the Chinese imperialists
are seeking to reorganize and further develop their banking
and financial sector and services sector in general.
Taiwan is now being surpassed by Korea as the
second largest investor in China. For this reason, in regional
scenarios we cannot overlook the subordinate and
subjugated role it represents with respect to the interests of
its owner, which the struggles between the grand
intermediary bourgeoisie of the semi-colonial countries
represent. That is why we include the following footnote
concerning Taiwanese investments in China.20
20 The situation of Taiwanese investment in China, according
to data from 2012 (Taiwanese entrepreneurs are rethinking their
investment strategies. The attractiveness of mainland China falls /
Investments in Taiwan are an alternative / by Jürgen Maurer
(German Chamber of Commerce Abroad):

“Taipei (gtai) 10.09.2012 [...] Between 1991 and 2011,

according to official statistics, a Taiwanese investment of
approximately US$112bn was permitted on the Chinese
mainland. According to the Investments Commission of the
Ministry of Economic Affairs, US $ 47.1 billion was invested in
the electrical and electronics industries. But, taking from
unofficial sources, as well as taking into account the monetary

61
 To concretely see the holding system, the result of
the study is of use, which we include as a note on: “3.
Business structure of Japanese subsidiaries in Taiwan” and
items 4, 6, and 5 of the case study”.21

circulation through third countries, much higher sums are

revealed.”

For this reason it is important to see the actual intermediary

role of these “Taiwanese investments”. In the case study of 14 companies
according to the cited investigation, starting from the part which refers
to Taiwan, on “the motives of Japanese-Taiwanese investment in China”,
we read:

“Comparison of the main motives of Japanese investors in

Taiwan with those of Japanese-Taiwanese investors in China. The
evaluation of the case study (1998) confirms that the main motives
of Japanese companies investing in Taiwan match those of
Taiwanese investors in China. Both are motivated by lower labour
costs in the destination country and with a view to gaining access to
the local market. Some Japanese businessmen reported that through
their Taiwanese subsidiaries they want to open new markets in
Southeast Asia and China [...] on the part of Japanese investors,
they have new plans that go beyond sub-projects of investment in
Taiwan. Summary: Comparison of the main motives of Japanese
investors in Taiwan [...] large projects with the automobile industry.”
21 “3. Company structure of Japanese subsidiaries in Taiwan.
Key points showing that Taiwanese partners are allowed to
participate in the Taiwanese branch:
The Japanese can own < 50% of the company.
The Taiwanese actively participate in management and
production.
In some cases, the Taiwanese achieve a harmonious
integration of the Japanese subsidiary into a Taiwanese business
association. (See the example of Atsugi Taiwan Motor Parts, Section

62
3.4.2.1.)
As simply as possible, the Taiwanese side acquired the
management skills of the Japanese. Their next priority is to gain the
specific process of knowledge. The Japanese were willing to make
the development of their organization available to the Taiwanese
side. Product-specific knowledge could be acquired by Taiwanese
only to a limited extent. Despite the lack of product-specific
knowledge, the Taiwanese could provide production support services
in the area. Usually the Taiwanese side has access to a clientele of
its own”. Furthermore, greater “independence” or “indigenization”
(“Taiwanization”) of the daughter company, means a decentralization
of capital and management in order to expand and further centralize
the power of the mother company (Japanese, in this case, this is
how the imperialist monopolies act in search of world domination).
The Japanese FDI, now metamorphosed, returns to the Japanese
market or goes to another imperialist market, using lower-cost
products to compete with its rivals in Japan itself or another
imperialist country, as is clear from the study cited:
4. The development of subsequent investments: It is evident
from the companies' interviews that the Taiwanese party, as a
partner of a Japanese firm (Joint Venture), gradually gained an
independent position in a Joint Venture in China. Taiwanese
partners and employees were able to identify with the company
founded by the Japanese. In all subsidiaries there was Taiwanization
with the absorption of product-specific knowledge, process and
management. The smaller the Japanese participation in the creation
of this subsidiary, the faster the Taiwanization of the company, and
the sooner the company also developed its own business strategy.
This means that the Taiwanese side actively deals with the Japanese
product and sees the opportunities it provides for its own

63
investment projects in China. Some of today's leading Taiwanese
companies, such as Acer and Sampo started as OEM partners of
Japanese companies and as general dealers of Japanese products.
Even today, a small equity stake of the Japanese partners in these
companies remains. Sumitomo Trading holds 0.5% of Acer's share
capital, and Sharp holds 8.51% of Sampo. Taiwanese companies in
this group have very rapidly absorbed product and process-specific
knowledge and began to develop their own products, in addition to
producing those of the Japanese. Technical cooperation and
relations with the Japanese allow these companies to build a second
base of their own. In the following period they were able to
gradually establish their own brand after the Japanese, because they
have their own production networks. The relationship with the
Japanese partner was not abandoned. On the contrary, the
distribution relations in the network remain very close. The market
power of the Japanese includes their willingness to accept Taiwanese
goods and their technological leadership in the production of high-
quality machines and electronic components. Therefore, the success
of its business is based in part on cooperation with Japanese parent
companies. However, the independence of the company is large
enough in this group to undertake on their own initiative their
investment activities in China, and this in turn strengthens their
position in relation to the Japanese” (already cited regarding “Case
studies”).
It is even clearer when we read item 6: “The cases shown
confirm the impression that Taiwanese companies in the electronics
& electrical branch and of auto parts have learned to react quickly
to small orders. To this end, production bases were also established
in China”.

64
 And how do these “Taiwanese” companies operate in China?
By following the example of their parent company:
“5. The transfer of process and product specific technology
to China.
Displacement of simple and standardized products.
The example cases demonstrate that a complete transfer of
standardized products is being pursued. In one case, this transfer
has been completed. The largest companies retain high-value
products in Taiwan. […]
6. Technological improvements of the product and of the
specific process for the transfer to China [...] in the present example
of the cases it has not been possible to identify improvements in the
technology of the product or of the specific processes. At the
microeconomic level of some subsidiaries, no adaptation process or
changes in the development of labour were found […]
7. Impact of the subsequent investment in the newly
founded Taiwanese-Japanese Joint Venture in China. Examples
show that the newly created Taiwanese-Japanese subsidiary in
China reproduces a mature commodity, sufficiently standardized
from the range offered by the Japanese subsidiary in Taiwan [...]
Large Taiwanese companies such as Acer and Sampo align
themselves with their investment projects in the typical pattern of
large companies, which transfer the production of simple and
standardized products to countries with lower costs. These products
include electronic components, peripheral devices and simple
consumer goods. At the same time, these companies retain higher
quality by-products in the country of origin.”

65
5. The Understanding of Marxism-Leninism-Maoism
of This Process in its Entirety

66
 Let us ask ourselves: how do we understand this
process? What is the nature of this development? It has
been established that this whole process in the oppressed
countries exists only under the domination of imperialist
foreign investment.
In 1975, Chairman Gonzalo asked himself a similar
question about the national situation, to which he
responded:

How does Marxism see the question? Mao Zedong

analyses this problem in On Coalition Government, as can be
read on page 302 in Volume III of his works:
“In order to defeat the Japanese aggressors and build a
new China it is necessary to develop industry. But under the
Kuomintang government there is dependence on foreign
countries for everything, and its financial and economic policy is
ruining the entire economic life of the people. A few small
industrial enterprises are all that is to be found in the
Kuomintang areas, and in most cases they have been unable to
avoid bankruptcy. In the absence of political reforms, all the
productive forces are being ruined, and this is true both of
agriculture and of industry.
By and large, it will be impossible to develop industry
unless China is independent, free, democratic and united. To
wipe out the Japanese aggressors is to seek independence. To
abolish the Kuomintang’s one-party dictatorship, establish a
democratic and united coalition government, transform all
China’s troops into a people’s armed force, carry out land
reform and emancipate the peasants is to seek freedom,
democracy and unity. Without independence, freedom,
democracy and unity it is impossible to build industry on a
really large scale. Without industry there can be no solid
national defense, no well-being for the people, no prosperity or
strength for the nation.”
In Mariátegui's opinion regarding this matter [...] we
highlight: “Imperialism does not allow any of these semicolonial

67
 peoples, whom it exploits as a market for capital and
commodities and as a source for raw materials, to have an
economic program of nationalization and industrialization; it
compels them to undertake monopolization and monoculture
(petroleum, copper, sugar, cotton in Peru)…”
So, for Mariátegui, imperialism does not allow us to
develop true national industry (i.e. industry at the service of the
nation), nor an independent industrialization program. If the
possibilities of industry are indeed limited by the “structure and
character of the national economy”, “it is further limited by the
dependence of economic life upon the interests of foreign
capitalism” as he teaches us in “Capitalism or Socialism”.
This is the situation in our country: Industry is
developing as dependent industry, and, in consequence,
submitted to the interests of imperialism, principally North
American [...] Since before the Second World War, there have
been multiple opportunities to stimulate the industrial process
whilst at the same time developing the direct participation of
the State in said process. But, as it could not be any other way,
given the classes that command the State, the vision that
motivates them is to develop a process of industrialization
under the canopy of imperialism.

Precisely! It’s as if this was written as a commentary

on the studies quoted further above regarding economic
development in Asia.
Chairman Gonzalo continues further down in the
article of People's Voice:

[...] How should one understand bureaucratic capitalism

in our country? [...] Mao Zedong extraordinarily — although in
a condensed form — in his Selected Works, presents us with the
question of bureaucratic capitalism (Volume III, in On Coalition
Government); while considering the serious situation which the
great popular masses found themselves in under the domination
of the Kuomintang, he says:

68
 “Why has such a grave situation arisen under the
leadership of the Kuomintang's chief ruling clique? It has arisen
because that clique represents the interests of China's big
landlords, big bankers and the magnates of the comprador
bourgeoisie. The handful of people forming this reactionary
stratum monopolize all the important military, political,
economic and cultural organizations under the Kuomintang
government. They too say “the nation above all”, but their
actions do not accord with the demands of the great majority of
the nation. They too say “the state above all”, but what they
mean is the feudal-fascist dictatorship of the big landlords, big
bankers and big compradors, and not a democratic state of the
people.
Therefore they are afraid of the rise of the people,
afraid of the democratic movement... They talk about
developing China's economy, but in fact they build up their own
bureaucrat-capital, i.e., the capital of the big landlords, bankers
and compradors, and monopolize the lifelines of China's
economy, ruthlessly oppressing the peasants, the workers, the
petty bourgeoisie and the non-monopoly bourgeoisie. They talk
about putting “democracy” into practice and “handing state
power back to the people”, yet they ruthlessly suppress the
people's movement for democracy and refuse to introduce the
mildest democratic reform. (pg. 224. Emphasis placed by, like in
all other quotes, People's Voice)”

Let us take note of the key issue: firstly, Mao defines

bureaucratic capital as being that of the big landlords, big
bankers and magnates of the comprador bourgeoisie;
secondly, he points out that bureaucratic capital
monopolizes the economy; and thirdly, he says that it
“ruthlessly [oppresses] the peasants, the workers, the petty
bourgeoisie and the non-monopoly bourgeoisie.” From this
basis and economic position, the reactionary political
character of bureaucratic capital necessarily derives. In

69
Volume IV Mao analyzes the process of development of
bureaucratic capitalism:

“Confiscate the land of the feudal class and turn it over

to the peasants. Confiscate monopoly capital, headed by Chiang
Kai-shek, T. V. Soong, H. H. Kung and Chen Li-fu, and turn it
over to the new-democratic state. Protect the industry and
commerce of the national bourgeoisie. These are the three major
economic policies of the new-democratic revolution. During
their twenty-year rule, the four big families, Chiang, Soong,
Kung and Chen, have piled up enormous fortunes valued at ten
to twenty thousand million U.S. dollars and monopolized the
economic lifelines of the whole country. This monopoly capital,
combined with state power, has become state-monopoly
capitalism. This monopoly capitalism, closely tied up with
foreign imperialism, the domestic landlord class and the old-
type rich peasants, has become comprador, feudal, state-
monopoly capitalism. Such is the economic base of Chiang Kai-
shek’s reactionary regime. This state-monopoly capitalism
oppresses not only the workers and peasants but also the urban
petty bourgeoisie, and it injures the middle bourgeoisie. This
state-monopoly capitalism reached the peak of its development
during the War of Resistance and after the Japanese surrender;
it has prepared ample material conditions for the new-
democratic revolution. This capital is popularly known in China
as bureaucrat-capital. This capitalist class, known as the
bureaucrat-capitalist class, is the big bourgeoisie of China.”
(Chairman Mao, Selected Works, Vol. IV, “The Present
Situation and Our Tasks,” pg. 167)

Let us pass immediately to the comment Chairman

Gonzalo made on the quote in the previously cited People's
Voice article:

In this text Mao establishes the development of

bureaucratic capitalism, he shows us how this capital of the four
families piled up enormous fortunes, completely monopolizing

70
 the economy. He then points out how monopoly bureaucratic
capital “combined with state power, has become state-monopoly
capitalism”. This is significant: monopoly capital by interlinking
with the state becomes state monopoly capital — not simply, as
some believe, state capitalism. The most important thing is that
it is monopoly capital, and this is the essence of its unbreakable
bond with imperialism (remember that Lenin demonstrated
that the economic essence of imperialism is its condition as
monopoly capitalism).
On the other hand, Mao teaches us that this monopoly
capitalism which is “closely tied” to imperialism, to the
landlords and to the rich peasants of old type in its development
“has become”, as he puts it, “state monopoly capitalism,
comprador and feudal”. Mao Zedong feels, not only that this is
the economic base of the Kuomintang regime, but also that this
state-monopoly capitalism oppresses the workers and peasants
and “also the urban petty bourgeoisie, and injures the middle
bourgeoisie”. And, finally, in reaching “the peak of its
development... it has prepared ample material conditions for the
new-democratic revolution”. This is a point of extraordinary
importance; even though among us there is talk of bureaucratic
capitalism, no attention is paid to the fact that this, in its
development, matures the conditions for the national
democratic revolution.
We must study this grand thesis of Mao Zedong
concerning bureaucratic capitalism very seriously and use it as a
guideline to judge our process of capitalist development.

Here, Chairman Gonzalo posits the necessity for us

to understand bureaucratic capitalism; it not only allows us
to understand our own society, but also to understand social
formations which are similar to ours, which is essential to
carrying out democratic revolution.
The General Political Line of the Communist Party
of Peru states:

71
 Taking up Chairman Mao’s thesis, Chairman Gonzalo
teaches us that it has five characteristics: 1) that bureaucratic
capitalism is the capitalism that imperialism develops in the
backward countries, which is comprised of the capital of large
landowners, the big bankers, and the magnates of the big
bourgeoisie; 2) it exploits the proletariat, the peasantry, and the
petty bourgeoisie and constrains the middle bourgeoisie; 3) it is
passing through a process in which bureaucratic capitalism is
combined with the power of the State and becomes State
monopoly capitalism, comprador and feudal, from which can be
derived that in a first moment it unfolds as a non-State big
monopoly capitalism and in a second moment, when it is
combined with the power of the State, it unfolds as state
monopoly capitalism; 4) it ripens the conditions for the
democratic revolution as it reaches the apex of its development;
and, 5) confiscating bureaucratic capital is key to reaching the
pinnacle of the democratic revolution and is decisive in passing
over to the socialist revolution.
In applying the above, he conceives that bureaucratic
capitalism is the capitalism that imperialism generates in the
backward countries, tied to a decrepit feudalism, and
subjugated to imperialism — which is the last phase of
capitalism. This system does not serve the majority of the
people but only the imperialists, the big bourgeoisie, and the
landlords. [...] it is, thus, a bureaucratic capitalism that
oppresses and exploits the proletariat, the peasantry, and the
petty bourgeoisie, and that constricts the middle bourgeoisie.
Why? Because the capitalism that develops is a delayed process
that only allows an economy to serve imperialist interests. It is
a capitalism that represents the big bourgeoisie, the landlords
and the rich peasants of the old type, the classes that constitute
a minority but which exploit and oppress the large majority, the
masses.
He analyzes the process that bureaucratic capitalism
has followed in Peru, the first historical moment which develops
from 1895 to the Second World War, in which, during the 1920s,
the comprador bourgeoisie assumes control of the State,
displacing the landlords but respecting their interests. The

72
second moment is from the Second World War to 1980, a period
of its deepening, during which a branch of the big bourgeoisie
evolves into the bureaucratic bourgeoisie [...] Thus a clash
between both factions of the big bourgeoisie is generated,
between the bureaucratic and the comprador bourgeoisie. [...]
The third moment is from 1980 onward, in which bureaucratic
capitalism enters into a general crisis and its final destruction
[...] and no measure can save it. At best it shall lengthen its
agony. On the other hand, like a beast in mortal agony, it will
defend itself by seeking to crush the revolution.
If we see this process from the people’s road, in the first
moment, the PCP was constituted with Mariátegui in 1928, and
the history of the country was divided into two; in the second,
the PCP was reconstituted as a Party of a new type by
Chairman Gonzalo and revisionism was purged; and in the
third, the PCP entered to lead the People’s War, a
transcendental milestone which radically changed history by
taking the qualitatively superior leap of making the conquest of
power a reality by way of armed force and the People’s War. All
of this only proves the political aspect of bureaucratic
capitalism that is rarely emphasized, but which Chairman
Gonzalo considers as the key question. Bureaucratic capitalism
ripens the conditions for revolution, and today as it enters into
its final phase, it ripens the conditions for the development and
victory of the revolution.
It is also very important to see how bureaucratic
capitalism is shaped by non-State monopoly capitalism and by
State monopoly capitalism; that is the reason why he
differentiates between the two factions of the big bourgeoisie
(the bureaucratic and the comprador), in order to avoid tailing
behind one or the other — a problem that led our Party to 30
years of wrong tactics. It is important to understand it this way,
since the confiscation of bureaucratic capitalism by the New
Power leads to the completion of the democratic revolution and
the advance into the socialist revolution. If only the State
monopoly capitalism is targeted, the non-State monopoly
capital would remain free, and the big comprador bourgeoisie
would remain economically able to lift its head to snatch away

73
 the leadership of the revolution and to prevent its passage to
the socialist revolution.
Furthermore, Chairman Gonzalo generalizes that
bureaucratic capitalism is not a process peculiar to China or to
Peru, but that it follows the belated conditions in which the
various imperialists subjugate the oppressed nations of Asia,
Africa, and Latin America, at a time when these oppressed
nations have not yet destroyed the vestiges of feudalism —
much less developed capitalism.
In synthesis, the key question to understand the process
of contemporary Peruvian society and the character of the
revolution is this Marxist-Leninist-Maoist, Gonzalo Thought
thesis on bureaucratic capitalism, which is a contribution to the
world revolution that we, upholders of Marxism-Leninism-
Maoism and Gonzalo Thought, have firmly taken up.

We have quoted this part of the PCP document “Line

of the Democratic Revolution” from the First Congress in
full because of the key importance this topic holds for the
communists of the world. With regards to this, there is
another question of paramount importance to carrying out
the democratic revolution and digging up the three
mountains that oppress us, so we must continue with the
quote from Chairman Mao discussed in the same People's
Voice article, which says:

Besides doing away with the special privileges of

imperialism in China, the task of the new-democratic revolution
at home is to abolish exploitation and oppression by the
landlord class and by the bureaucrat-capitalist class (the big
bourgeoisie), change the comprador, feudal relations of
production and unfetter the productive forces. The upper petty
bourgeoisie and middle bourgeoisie, oppressed and injured by
the landlords and big bourgeoisie and their state power, may
take part in the new-democratic revolution or stay neutral,
though they are themselves bourgeois. They have no, or

74
 comparatively few, ties with imperialism and are the genuine
national bourgeoisie. Wherever the state power of New
Democracy extends, it must firmly and unhesitatingly protect
them. In Chiang Kai-shek’s areas, there are a small number of
people among the upper petty bourgeoisie and the middle
bourgeoisie, the right wing of these classes, who have
reactionary political tendencies, spread illusions about U.S.
imperialism and the reactionary Chiang Kai-shek clique and
oppose the people’s democratic revolution. As long as their
reactionary tendencies can affect the masses, we should unmask
them before the people under their political influence, attack
this influence and liberate the masses from it. But political
attack and economic annihilation are two different matters, and
we shall make mistakes if we confuse the two. The new-
democratic revolution aims at wiping out only feudalism and
monopoly capitalism, only the landlord class and the
bureaucrat-capitalist class (the big bourgeoisie), and not at
wiping out capitalism in general, the upper petty bourgeoisie or
the middle bourgeoisie. (Chairman Mao, Selected Works, Vol.
IV, “The Present Situation and Our Tasks,” pg. 167-168)

Appropriately, Chairman Gonzalo reminds us that

the task of applying Marxism to the study of the
development of capitalism in agriculture fell to Lenin, and
that the peasant path has been extraordinarily studied and
developed by Chairman Mao. And he tells us:

In turning to [Lenin], we find a solid basis, from the

conception of the working class, upon which to judge such a
substantive question. In The Agrarian Programme of Social-
Democracy in the Russian Revolution, in Volume 15 of his
Collected Works, Lenin teaches us that:
“[...] This development in a capitalist country may take
place in two different ways. Either the latifundia remain, and
gradually become the basis of capitalist economy on the land.
This is the Prussian type of agrarian capitalism, in which the
Junker is master of the situation. For whole decades there

75
 continue both his political domination and the oppression,
degradation, poverty and illiteracy of the peasant. The
productive forces develop very slowly…
Or else the revolution sweeps away the landed estates.
The basis of capitalist agriculture now becomes the free farmer
on free land, i.e., land clear of all medieval junk. This is the
American type of agrarian capitalism, and the most rapid
development of productive forces under conditions which are
more favourable for the mass of the people than any others
under capitalism.
[...] In reality the struggle going on in the Russian
revolution is not about “socialisation” and other absurdities of
the Narodniks — this is merely petit-bourgeois ideology, petit-
bourgeois phrase-mongering and nothing more — but about
what road capitalist development of Russia will take: the
“Prussian” or the “American”. Without ascertaining this
economic basis of the revolution, it is absolutely impossible to
understand anything about an agrarian programme.
... All the Cadets (party of the grand bourgeoisie) do
their utmost to obscure the essence of the agrarian revolution ...
The Cadets mix up (“reconcile”) the two main types of agrarian
programme in the revolution— the landlord and the peasant
types. Then (also in a few words): in Russia both types of
capitalist agrarian evolution already made their appearance in
the years between 1861 and 1905—both the Prussian (the
gradual development of landlord economy in the direction of
capitalism) and the American (differentiation of the peasantry
and a rapid development of productive forces…)”
(Italics is from the original. Underlined emphasis is
ours, same as in the previous quotes, that is to say, in the
original People's Voice).

Here, the two paths in the countryside are

masterfully laid out — the countryside which is the
“economic base of the revolution” from which we must start
and which we absolutely cannot circumvent. But this is not
all. Lenin establishes a relationship between these two

76
economic paths and political paths. In the same work, he
says:

“The genuine historical question which objective

historical and social development is putting to us is: a Prussian
or an American type of agrarian evolution? A landlords’
monarchy with the fig-leaf of a sham constitution, or a peasant
(farmers’) republic? To close our eyes to such an objective
statement of the case by history means to deceive oneself and
others, hiding in philistine fashion from the acute class struggle,
from the acute, simple and decisive presentation of the question
of a democratic revolution.
We cannot get rid of the “bourgeois state”. Only petty-
bourgeois philistines can dream of doing so. Our revolution is a
bourgeois revolution precisely because the struggle going on in
it is not between socialism and capitalism, but between two
forms of capitalism, two paths of its development, two forms of
bourgeois-democratic institutions. The monarchy of the
Octobrists or the Cadets is a “relative” bourgeois “democracy”,
from the point of view of the Menshevik Novosedsky. The
proletarian-peasant republic, too, is a bourgeois democracy. In
our revolution we cannot make a single step — and we have not
made a single step — which did not support in one way or
another one section of the bourgeoisie or another against the old
order.”
This great thesis of Lenin is essential to understanding
the agrarian problem within the national democratic revolution;
nonetheless, in our country, there are those who consider that
these two paths are no longer valid in this day and age, which is
a great mistake that only serves to obscure the issue and cover
up support for landlord-type agrarian measures. What could be
posited is that such a path develops today under new
conditions: the development of bureaucratic capitalism and the
use of cooperative and associative forms in general. The peasant
path has been extraordinarily developed and studied by Mao
Zedong as can be seen in Volume III of his Selected Works, “6.
The Land Problem”, pg. 247.

77
 We wish to clarify that the three mountains which
oppress us are inseparably linked; for this reason they
constitute the target of the democratic revolution, the
targets which we struggle against inseparably. What
democratic revolution aims to liquidate is not capitalism in
general, but bureaucratic capitalism; it is not directed
against the bourgeoisie in general but against the grand
bourgeoisie, both the comprador and bureaucratic factions.
As has been said before many times, a bourgeois
revolution of a new type is led by the proletariat, because
the bourgeoisie has become a rotten, obsolete class, and in
our countries a middle/national bourgeoisie strong enough
to take up the leading role does not exist presently nor has
it existed in the past. For this reason, as the development of
the oppressed countries over these past decades has shown
us, its “modernization” follows the landlord or Prussian path
of slow evolution towards capitalism (semi-feudalism) based
on the latifundium and on new forms of serfdom. This
results in the development of a bureaucratic capitalism
which is completely subordinate to the requirements of
imperialism, deforming the economic development of these
countries and impeding the development of a national
economy in service of the classes that constitute the masses
in these countries.
Until we complete the democratic revolution by
means of People's War for the conquest of power
throughout the whole country, this path of slow evolution
will be maintained indefinitely; it will not reach completion
like in Germany, because we find ourselves in the epoch of
imperialism (principally Yankee imperialism in our case,
and in other cases the correspondent principal imperialism
which oppresses them). The most important part for us is

78
that bureaucratic capitalism matures the conditions for
revolution, and what is needed is a Marxist-Leninist-Maoist
Communist Party to initiate and develop People's War in
order to carry out democratic revolution to its completion.

79
80