[Marxism] Forwarded from Anthony (imperialist privilege)

[Louis Proyect <lnp3@xxxxxxxxx>]

Here are my last words, this time around, on imperialist privilege, in 
response to Julio. (Lately I haven’t had much time to devote to this 
list, and I probably won’t again for the next few months). In my last 
post I tried to answer Julio’s question,

"Can you suggest a mechanism by which "US imperialists" would go "out of 
their way to maintain the privileges" of U.S. workers? By "mechanism" I 
mean, how specifically could capitalist competition (in the way it 
imposes itself on the individual capitalists and then aggregates) lead 
to this outcome?

I replied … the state. And explained how the state in the United States 
worked historically (and continues to do so but in a diminishing way) to 
maintain a privileged working class. I did not try to explain all the 
reasons why, except that the class struggle in the USA played an 
important role. I also did not try to explain the source of the wealth 
used by the capitalist class in the USA to maintain the privileges of US 
workers. I also did not explain how I think this is changing even as we 
are having this conversation.

In his response, Julio switched the discussion to these latter points. 
He wrote,

“The idea of "imperialist privilege" is based on the notion that 
"monopolies" get systematic super-profits, over and above those that 
would result from the normal profit rate. Monopoly capitalism or 
"imperialism" is supposed to change essentially the laws of competition 
and price formation under capitalism.”

Thanks Julio, but that is not the only explanation of how imperialist 
privileges came into existence, were expanded, and are maintained – even 
if it is possibly the most commonly discussed explanation. In my humble 
opinion the role of imperialist monopolies to maintain imperialism is 
today secondary, never was primary, and never was the starting point of 
imperialist super profits – or simply imperialist profits. There is in 
fact no need to posit superprofits to explain the existence of 
capitalist imperialism, nor to explain the existence of imperialist 
privileges for the working classes of those countries.

I am going to describe two fundamental historic periods in which two 
different sets of conditions created the high wage levels and therefore 
the high material standards of living of the US working class. The two 
different sets of conditions rested on, and were essential elements of, 
two different kinds of imperialisms. Bridging and connecting the two 
periods was a long overlapping transition. Elements of both stages of 
imperialism continue to exist in the USA, though it is now in a new 
transition to …

In my view, the key issue to explain if you want to understand the 
source of imperialist wealth – and hence the source of income that can 
be redistributed against market forces - is the abundance of capital in 
some countries, and the relative dearth of capital in other countries. 
Monopolies are secondary in my view, and almost besides the point.*

 So, let’s – for now - forget the idea that monopoly capitalism and 
imperialism are the same thing – monopolies are just a natural part of 
every well oiled market, including world markets.

My starting point is different, pre-capitalist imperialism.

Based on territorial expansion, expropriation of land, plunder, and 
tribute, all precapitalist imperialisms had this in common (and most 
were also based on kidnapping whole populations into slavery.) All 
capitalist imperialisms continued to contain these elements (in the last 
century or so minus most slavery), all of which play some role in 
providing the wealth which the state can redistribute to maintain 
privileges among the working class, and for that matter the petty 
bourgeoisie of an imperialist country.

However, early capitalist imperialism is the crucial turning point in 
producing modern capitalist imperialism and its privileges for the 
working classes in the imperialist countries.

The key issue for the formation of large concentrations of capital is 
land, not slaves, not the plunder of gold, and not even merchant and 
financial capital (although all of these played their role). This is why 
the British empire in North America, Australia, and New Zealand is the 
key to the concentration of capital in Great Britain – and its 
imperialist offspring – land.

Whether or not precapitalist social relations to land were transformed 
into capitalist property relations, or remained in some pre-capitalist 
or semi-capitalist form is the first historic dividing line between 
imperialist and subordinate countries. That transformation created 
capital almost overnight. Land that could be bought and sold without 
restriction, became a form of capital. Land that could not be bought and 
sold without restriction, could not fully be transformed into capital.

The British revolution and the French Revolution accomplished this 
transformation most fully in Europe – but not completely in the mother 
countries. The most complete transformation occurred in some of the 
British colonies in what became the United States of America. (By 
contrast, Quebec’s property relations remained mired in 
pre-Revolutionary French traditions until well into the 19th century.) 
This was possible because the land in North America was not being 
expropriated from the local aristocracy – tied historically to the local 
capitalist classes in mother France and Mother England – but from the 
native American peoples outside of the class structure of the colonies 
and of the mother country (and viewed as subhuman by most of the 
invading British.) This pattern was extended to all other British 
settler states – English speaking Canada, Australia, New Zealand, South 
Africa, Zimbabwe (the results differed according to the military and 
economic strength of the preexisting culture, and the intensity of 
colonial settlement.)

By 1810 this transformation of land into capital had created three 
immense concentrations of capital: in Great Britain, in France, and in 
the United States. At that moment in history, the three great 
concentrations of imperialist capital already were in existence. ( The 
later transformations in Germany and Japan are separate cases because 
those transformations occurred neither through expropriation of a landed 
precapitalist class (as it did in large part in Great Britain and 
France) nor through conquest of noncapitalist land, as it did in the 
USA, rather the precapitalist landowning ruling classes transformed 
themselves into capitalist classes, and in the process, their land into 
capital.)

By comparison, Russia, China, the Austro-Hungarian empire, the Ottoman 
Empire and the Spanish and Portuguese empires were all immense – land 
rich - but capital poor: All had precapitalist social relations to land 
which restricted or prevented its sale, and hence its transformation 
into capital.

One far-reaching implication of this global imbalance of capital at the 
beginning of the 19th century was that capital poor countries had to 
rely on capital rich countries for loans and direct investment for most 
large development projects, like modern armies, canals, railroads, what 
have you.. This meant that imperialism – British imperialism in the 
first place, French imperialism in the second place, and finally and 
most importantly US imperialism - dominated investment decisions in the 
subordinate countries, and determined how their economic and social 
structures would develop. The ‘third world’ was transformed in this way 
into consumers of industrial products and credit, and producers and 
exporters of raw materials – either agricultural or mined. Of course 
imperialist capital derived both ‘normal’ completive market profits, and 
monopoly superprofits from both sides of this trade.

These profits added to the already overabundant supply of capital added 
to the base the state already had at hand for compromising with the 
working class.

Another far-reaching implication of this global imbalance – in 1810 - 
was that only three countries in the world could really afford modern 
military machines, and one didn’t even need it (the USA).

This meant that state coercion could always be a part of the insurance 
package for imperialist profits – if a debtor country didn’t pay, send 
Her Majesty’s navy to shell their ports, and take over their tax 
revenues for a few years.

The reproduction of those relations for nearly two centuries created 
everything the dependency theorists talked about – but those were 
secondary effects of something already long in motion.

But British and French imperialism are really a lot different than US 
imperialism, and since the privileges of the working class in the USA 
were the issue under discussion originally …

Let’s move on to the United States and its working class.

The privileges of the working class in the USA historically have been 
greater than those of any other working class in the world. The fact 
that they are now under the axe is a world important turning point in 
history that deserves a lot of attention by revolutionaries, (but that 
also is not the point of this note.)

The transformation of land into capital in what is now the United States 
was very significantly different than those revolutionary processes in 
Great Britain and France. It produced the first mass petty bourgeoisie 
in the world, it produced a century long disequilibrium in labor markets 
with extraordinarily high demand for labor combined with permanent 
relative shortages of labor – thus a high wage economy. These two 
factors together: a mass market of petty bourgeois property owners and a 
high wage labor market - created the possibility of mass production with 
major economies of scale and scope, and a constant pressure to 
substitute capital for labor. The superabundance of capital allowed that 
to happen.

The United States was the cutting edge of the European bourgeois 
democratic revolution. There, not in Europe, the most completely 
capitalist property relations were created. There, not in Europe, 
capitalism was ‘democratic’ because capitalist property owners made up 
the largest proportion of the population in the north until the 1870’s 
(when I say capitalist property owners, I include all owners – and their 
immediate families – of land and slaves.)

Wages were from the beginning higher than in Europe, because supply – 
especially of English speaking labor, especially of skilled English 
speaking labor, was – except during major commercial crises – always 
less than demand.

Wages rose higher still, because free or cheap western land (acquired 
through the conquest and destruction of native American peoples and wars 
with Great Britain, France and Mexico) - created a constant drain of 
skilled workers away from the eastern towns – accentuating the 
disequilibrium in the labor market and raising wages further. From 1868 
until 1914 massive immigration from Southern and Eastern Europe 
increasingly but never completely balanced the supply of labor with the 
still growing demand.

High wages, and shortages of skilled labor in a capitalist market 
produced a constant pressure to find more labor efficient technologies. 
Economies of scale and scope were possible in the USA because of the 
mass market, whereas the same economies were not possible in Europe. 
Expanding that market through building an extensive and intensive low 
cost internal transportation system allowed for further economies of 
scale and scope.

US capitalism became the Mothers of Invention even before Frank Zappa 
was born and went to the Czech Republic. Fordism was born too.

In short, the privileges of the working class in the USA were based in 
the first place on an earlier stage of imperialism: the expropriation of 
the land of the Native American people. In the second place on how that 
expropriation took place and the consequences thereof. Far less 
important, but still important, were other kinds of imperialist plunder 
and profits.

This takes us up to the First World War, more or less. By that time the 
most important basis of working class privileges was almost gone – free 
and cheap land. All that remained was the disequilibrium in labor 
markets – which was coming to an end as well through immigration and the 
introduction of labor efficient technologies. Of course the working 
class in the United States had shown that it was capable of class war – 
the great strikes of the 1870’s and 1890’s had proven that. A major new 
round of class struggle and social upheaval was clearly on the agenda in 
1914.

Sorry for being so telegraphic and brusque in presentation, but …

This is the historic basis of imperialist privilege in the United States.

It predates modern capitalist imperialism.

The transition from this older imperialism to the new imperialism 
occurred between 1890 and 1945 and includes the Spanish American War, 
WWI, and WWII. It also includes the roaring 20’s, prohibition, harsh 
immigration restrictions, the great depression and the great labor 
rebellions of the 1930’s.

It also includes the Russian revolution, and the rise and fall of 
fascism in Europe.

The new US imperialism – that of the cold war – was a very different 
animal than the 19th century US imperialism out of which it grew.

In its formative years there was no clear pattern, much less plan, of 
where it was going. But through trial, error, accidental successes, 
costly adventures a pattern emerged. WWI turned the United States into a 
creditor of its European allies.

By 1946 the United States had emerged as the most powerful industrial, 
financial, and military power in the world. The dollar – pegged to gold 
– became the world currency. The cold war began. US direct investment 
and financial penetration of the world became dominant worldwide, with 
special concentrations in Europe, Latin America, the Middle East and a 
few strategically important countries.

The cold war with the Soviet Union and its allies, and with China added 
a new dimension to the privileges of the working class in the USA. Those 
privileges were not simply the price the capitalist paid to avoid class 
confrontations, they now became an essential element in maintaining a 
massive military establishment which could project US power permanently 
around the globe, a military establishment which had to draw its 
manpower from the US working class.

Growing US capital investments around the world, and their growing 
importance to the balance sheets of US corporations added to the 
importance of this military projection – especially as social 
revolutions threatened the expropriation of those investments.

This was an expensive proposition. One way to pay for it would have been 
to squeeze the working class through taxation, government wage freezes, 
and inflation. This was Truman’s original notion at the end of WWII – 
but it provoked an immediate and massive wave of strikes – a taste of 
the potential confrontation ahead if the new rulers of the world decided 
to go down that road.

But if the working class of the US to be able to have houses in the 
suburbs, public schools and parks for the kids, new cars, TV’s etc. – 
and the United States was going to pay for a gigantic military 
establishment – something had to give.

US direct foreign investment was already concentrated in mining, oil and 
agriculture, especially in the Caribbean and Latin America.

The costs of the cold war almost immediately resulted in strong pressure 
to maintain prices of imported raw materials at the lowest possible 
levels – below normal market prices if possible.

Cheap oil, cheap copper, cheap bananas, cheap coffee, cheap industrial 
diamonds …

In other words to keep raw material prices low, the United States 
encouraged, promoted, and did every thing in its power to prevent the 
rise of organized and powerful workers movements in other countries – 
especially in the Caribbean and Latin America.

High wages in the USA and a massive military machine required cheap raw 
materials. The pattern of military and paramilitary repression of the 
workers movements in Latin America was the direct counterpart to the 
high wages of US workers, though it was not directly caused by the 
workers in the US themselves. The overthrow of the Mossadagh government 
in Iran, and the support of the Royal House of Saud’s sadistically 
brutal anti-working class regime were two others.

In other words, the state – and the use of its coercive power to 
‘artificially’ alter market prices of raw materials in the world market, 
was central to US imperialism, and to the privileges of workers in the 
USA. Monopoly market power was only a secondary aspect.

{This is the essential answer to Julio’s question, “Why would workers 
with similar skill accept lower wages in Mexico or Colombia than those 
paid to workers in the US?” The answer is, they don’t accept them – they 
struggle to raise them. A better question would be, why haven’t they 
been as successful in their struggles as workers in the USA? The answers 
include: A. Land wasn’t completely commodified in land America before or 
after independence producing weak capitalist classes, capital shortages, 
weak demand for labor, low wages. B. Military, police and paramilitary 
repression of working class movements – almost always with the backing 
of the United States, depressed wages below even ‘normal’ market wage 
rates. C. When the capitalist classes of other countries have had 
exceptional circumstances, they have at times compromised with working 
class movements: the PRIist regime in Mexico during WWII and Argentina 
under Peron are two cases, but in general they have been under the 
thumb, and often under the guns, of imperialism.

A turning point in cold war imperialism occurred in the early 1970’s.

One important note needs to be made here about US economic history from 
the 1860’s to the 1946. The internal market in the United States for 
producer goods and consumer durables was for most purposes closed to 
foreign competition, not by tariff barriers but by the higher costs of 
ocean transportation compared to rail and river transportation and by 
low cost mass production in the US.. Even if European producers could 
produce manufactured goods more cheaply than US manufacturers, and 
already by about 1860 they generally could not, the US market was 
essentially closed to them by high transportation costs. This was 
essential for the existence of a high wage national market economy – it 
could not be integrated into a low wage world economy.

This condition remained true until the second world war when the 
transportation revolution began, essentially the replacement of break 
bulk cargo with containerized cargo. Over the 30 years following WWII 
traditional port facilities were transformed into container ports – 
allowing by the mid 1970’s a dramatic reduction in transportation costs 
that effectively opened the US market to manufactured goods – if they 
could be produced at competitive prices outside the USA. And by the 
1970’s they were being produced at much lower prices than in the USA. A 
key element maintaining the imperialist privileges of US workers was 
about to be removed from the structure.

Manufactured imports however did not instantly flood the market after 
WWII. The manufacturing capacity of Europe and Japan had been crippled 
during WWII. Once it was rebuilt by around 1960, exports to the US 
market slowly rose still faced by the transportation cost barrier, and 
by another barrier – the different market culture of the USA. Small four 
cylinder cars in the USA not only didn’t fly, they didn’t go fast 
enough, or they didn’t even have enough room to make out in.

In 1973 the OPEC oil embargo of the USA finally opened the US market to 
large scale penetration by foreign manufactures. Increasingly, and 
without any noticeable let-up, US manufactures were faced with lower 
priced imports in more and more categories. US corporations began to 
move – relentlessly – their production facilities to low wage parts of 
the United States, and then out of the United States.

And, paradoxically the United States was on the road to winning the cold 
war, although very few people saw it at the time, as the US had just 
suffered a stunning military and political defeat at the hands of the 
Vietnamese revolution.

In 1989 and 1990 the cold war ended.

The cold war social compact in the USA began to unravel in the 1970’s 
and is now on the way to the morgue – though key components still 
survive. Most of its economic underpinnings are already gone, or going: 
cheap land, high demand for labor tight supply of labor, cold war, low 
raw material prices (go to your local gas station for confirmation).

The remnants of the cold war social compact still constitute the 
imperialist privileges of the working class in the USA today. But 
exactly what - and how much -still survives, and exactly what will 
replace the cold war social compact are still not yet clear to me.

All the best, Anthony

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