Volume 6, No. 2, February 2024
Editor: Rashed Rahman
Global capitalist imperialism has transformed its production structures/systems in such radical ways today that much of the earlier analyses relying on an examination of the aggregation of separate national economies and the trade and capital flows between them no longer serves to adequately explain 21st century reality. Of course this does not mean all the laws of motion and tendencies described in 19th and 20th century analyses are completely redundant. Only that those laws and tendencies have taken on new forms, transforming the world into an interconnected global economy (globalisation) that needs fresh perspectives in order to be adequately understood. First, the forerunner view of capitalism in the late 19th and 20th centuries. Karl Marx had already pointed to the tendency towards increasing concentration of wealth (oligopoly if not monopoly) and the growing role of finance capital (banks, etc). These tendencies by the close of the 19th and beginning of the 20th century had emerged as the dominant trend in the development of capitalism. However, the increasing concentration of production and capital into monopolies and the domination of finance capital were still seen from the lens of national boundaries. These boundaries were destined to burst under the pressure (or higher priority) to export capital rather than commodities per se, fuelled by, on the one hand, the tendency of the rate of profit to fall for investment within the confines of national boundaries, and on the other, the superprofits to be gleaned by the export of production and capital to foreign shores. Colonialism helped lubricate this two-way flow, with India, for example, being compelled to transfer huge wealth to Britain in the shape of profits and commodities during the 18th-20th centuries.
Cartels soon emerged to divide the global market amongst themselves. A territorial division of the world amongst the capitalist powers was evident. The challenge to the older developed and dominant powers by new emerging capitalism-developing countries led to two world wars in the 20th century, wars essentially for a redivision of the world. This terrible mutual bloodletting that took the lives of millions sobered the capitalist world to the necessity of ‘managing’ their conflicts and differences without resort to war (especially after the emergence and demonstration of the terrible effects of nuclear weapons in the mid-20th century and the division of the world being redrawn along the lines of the First – capitalist – and Second – socialist – Worlds). The mutual devastation of the capitalist contenders in WWII induced them to seek cooperation – economic, political and military – amongst themselves and as a united front against the socialist bloc (the Cold War). This mutual exhaustion also hastened decolonisation and the emergence on the world stage of former colonies as independent states that came to be labelled the Third World.
With the success of the Chinese (1949) and Cuban (1959) revolutions and the heroic and awe-inspiring resistance of the Vietnamese people to the aggression of the most powerful superpower on Earth, the US (1954-75), hopes for liberation from capitalism’s clutches began to be invested in anti-colonial, anti-imperialist, anti-capitalist armed guerrilla struggles in the Asian, African and Latin American continents, lumped together in the appellation ‘Third World’. This approach was even elevated to the status of a global strategy by Marxists such as Lin Piao (later disgraced after being killed in an air crash while trying to flee China after a failed coup attempt), in which the Third World would ‘encircle’ the developed capitalist First World and with the help of revolutionary socialist countries (a category that excluded the now ‘revisionist’ and ‘social imperialist’ Soviet Union and its Eastern European allies), would overthrow the rule of capitalism globally. This linear and oversimplified view came to grief and collapsed during the 1970s and 1980s when, despite the successful decolonisation and revolutionary national liberation of many colonies and semi-colonies, the capitalist First World not only survived, but was soon able to subsume even the most radical revolutionary regimes within the structures of global capitalism. Post-liberation Third World countries soon ran up against the limitations of independent economic development at the hands of global capitalist structures and the inadequate capacity of the socialist countries as a whole to provide sufficient assistance for this project. Dependence on the developed capitalist world and the international financial institutions created by them after WWII (the Bretton Woods ‘twins’ of the IMF and World Bank) emerged as the mechanism for denying these post-colonial societies the space for forging an independent path. ‘Aid’ from the west and these institutions soon began to reveal itself as the modern means for extracting surplus value from these dependent countries in the form of debt traps and their concomitant wealth and capital flows to the developed metropolitan world.
A parallel movement could be discerned from the 1970s in the shape of superprofits gleaned from low-wage workers in the Third World South, primarily through Multi-National Corporations’ (MNCs’) supremacy over international production networks. This did not necessarily follow the pattern of capital investment in such countries, although that remained (and still remains) one of the pathways to profit and wealth flows from the South to the North. The new means for extraction of wealth involved the development of global supply chains, in which without any (or at least minimal) investment, MNCs in the developed world were able to develop manufacturers and suppliers in the low wage South for their global domination of market access. This ‘internationalisation’ of production (globalisation), spurred on immeasurably by the collapse of socialism in the Soviet bloc in the 1990s (leading to a huge ‘horizontal’ expansion of capitalism), created a new (from the old to a large extent) global capitalist class that relies on low wage but higher surplus value supply chains for products it does not manufacture, only markets globally.
This development has led to the trumping of the nation-state by 15-20 MNCs that control the fate of the global economy through global supply chains fastened at the centre of the global economy through control of production located primarily in the South to final consumption (market access and domination). Currently, more than 80 percent of world trade is controlled by the MNCs, whose annual sales represent half of global GDP. This ‘offshoring’ of production by the MNCs represents a vast shift in the predominant location of industrial employment from the North to the South between the 1970s and the 21st century. In the developed capitalist countries this has had the effect of industries closing (producing the ‘rust belts’ in the west, particularly the US, where the factory town has virtually disappeared in a contemporary version of decline and fall), manufacturing jobs shrinking, and the working class being ‘left behind’. It is this disgruntled stratum that has become the political and electoral base for right wing, far right and populist nationalist forces in developed countries, Trump and Brexit being easily recognisable as the ‘beneficiaries’ of such trends.
Meanwhile in the low wage South, workers have few rights (or practised in the breach), suffer repression, and their solidarity is weakened through devices and structures such as outsourcing, labour contractors, and home-based workers. It is observable that the lower the per capita income of a country, the higher the share of western MNCs, leading to the undeniable conclusion that this is all about low wages. This phenomenon is by no means new. There are undeniable historical precedents but the scale and sophistication of commodity supply chains today represent a qualitative change that has, and is, transforming the global political economy.
What low cost (wages in particular) country sourcing yields is the capture by global monopolies of higher surplus value generated by labour in the periphery within a process of unequal exchange. The ‘success’ of China, India (and other ‘Tigers’) lies in their largest share of total employment in global commodity chains, with the US as the primary export destination. This is an area where Pakistan is still marginal. Hence the recent invitation by Prime Minister Imran Khan to Chinese investors to take advantage of low wages on offer in Pakistan as part of the China Pakistan Economic Corridor (CPEC) project.
Production and consumption in the world economy are increasingly severed from each other. It has yielded resource transfers from the developing economies to rich countries of an estimated $ 2 trillion in 2012 alone. To hide their extraordinary wealth, the rich are offered ‘treasure islands’ in the Caribbean and elsewhere for parking their money beyond the reach of snoopy tax collectors (cf. the Panama Papers). As for the commodity supply chains that underpin this reaping of riches, the number of jobs worldwide in these rose from 296 million in 1995 to 453 million in 2013. The global division of labour shows the trend of the world’s industrial workers in the South as follows: 1950, 34 percent; 1980, 53 percent; 2010, 79 percent. The present-day global capitalist construct offers unrestricted mobility of capital, not of labour. This has elevated the concept of a ‘reserve army of labour’ to a ‘global reserve army of labour’. The gap between wages in the developing and developed world is in the range of 40-60 percent over the last three decades. Value capture and extraction, as opposed to direct value generation, is what determines the profits of the MNCs today. Holding wages down in the periphery makes possible the enormous siphoning off of economic surplus from the South without any quid pro quo. Those parts of the developing world that are lauded for their economic dynamism (unfortunately Pakistan is not amongst them) in production and exports have manufacturing at the heart of this process. Concomitantly, we see the emergence of MNCs that do not manufacture. These phenomena are central to the new trends of offshoring.
The internationalisation of monopoly capitalism and global commodity production through the replacement of high-wage workers in the developed world with like-quality, low-wage workers abroad has increased competition amongst the expanded (by addition of the South) reserve army of labour. Insecurity of employment and the ever-present threat of unemployment keep wages down (and profits up). The MNCs indulge at best in oligopolist rivalry. The freely competitive model is obsolete. The exploitation of workers in the South is not simply confined to low wages, but the fact that the difference in wages between the North and the South is greater than the difference in their productivity. Here too the monopoly capitalists are rubbing their hands in glee as productivity (and therefore profits) in the South is improving (e.g. China, India).
The overaccumulation and concentration of wealth has reached an extreme. The 26 wealthiest individuals in the world (most of them Americans) own as much wealth as the bottom half of the world’s population, i.e. 3.8 billion people. The world capitalist economy is more centralised (monopolistic), hierarchical and unequal in and between the richest and poorest classes and countries.
This is the world globalised capitalism has bequeathed us. It is obvious that limiting oneself to the confines of the nation-state in conducting the struggles of millions of workers, peasants, the poor and other marginalised sections of the community offers limited returns. In the absence of a current-day International of the Left (not necessarily a bad thing given the sorry history in this regard), should not the internationalisation of capitalism and its effects call forth an internationalisation, or at least solidarity, of the forces opposed to this unjust construct in the shape of Left movements coming together across the globe?