The Socialist Forum: Can Russian Peasants be Industrialised? (1932)

Letter to the Editors from the April 1932 issue of the Socialist Standard

A correspondent writing from St. John (New Brunswick) asks some interesting: questions about the possibility of making efficient factory workers out of the Russian peasants:—

Isaac Don Levine, author of the “Life of Stalin,” … in a recent article in the New York Scribners’ Magazine, would have us believe that a Dictatorship such as the one in Russia can by no manner of means create a proletariat, capable of working in machine industry in anything less than several generations or centuries. He implies that the Slav is racially an inferior type, not amenable to factory discipline, and a clumsy animal in other respects.

If it is true that an agricultural population is not of a type that can readily be adapted to machine production, and it takes generations of workers coming originally from rural districts to make mechanics, how can we account for the remarkable rise of German industry in the space of forty or fifty years up till about 1914? The majority of Germans, prior to 1860 or 1870, were villagers and farmers, and in a very few years after coming to the cities, turned out lo be capable mechanics, and this same thing happened in other places. Any number of Polish, Hungarian and Balkan peasants who arrived in the United States prior to 1915, took their place in machine industry without any experience, and fitted right into the scheme of things, their children even more so, after them.

If the Soviet Government succeeds in obtaining the required number of capable technicians and foremen to manage the factories and shops built and building, in this five-year plan, what is there to prevent the transformation of millions of mujiks into machine tenders as has happened in other countries?

Yours, etc.,

M. Wasson.

Reply

Not having seen the article by Mr. Levine we do not know what evidence he adduces to show either that Russian peasants or Slavs generally are incapable of being trained as industrial workers.

It is true that some employers (e.g., Ford Motors) in their selection of workers give preference to American or Canadian born, or to immigrants from Great Britain, Germany, etc., and often reject applicants from the more backward European States. There is, however, no evidence to show that the latter are unsuitable because of racial characteristics. An explanation is that some countries, having reached a fairly high level of capitalist development, have framed their general and technical education in a way which produces workers suitable for up-to-date factory work. Workers from backward countries and rural areas are unlikely to possess the qualifications of training and education needed.

It is interesting to recall that in Great Britain, in the early days of the factory system, employers found the same difficulty in compelling handicraftsmen and peasants to fit themselves into the discipline of machine production.

The whole question of racial differences is discussed very thoroughly by Friedrich Hertz in his “Race and Civilization” (Published by Kegan Paul, London, 1928, and by the MacMillan Co., New York). He shows how old are the theories of racial superiority, and how completely they cancel each other out; for there is no race that at some period has not cherished the illusion of its own innate superiority. Hertz deals with the capacity for social progress and reached this conclusion :—

“The differences between distant groups of one and the same linguistic family or race are greater than those between any two ‘unrelated’ races as a whole. This assertion can be proved up to the hilt. Therefore it follows from this that it is not racial character which has prevented the backward from progressing, but environmental influences.” (P. 259.)

He gives a neat answer to the belief in the superior fitness for industrialism supposed to be possessed by non-Slav races by pointing out that early in the 19th century it was said that the Germans also were inherently a backward race. He quotes Genovesi as having written in 1820 that the Germans would never be able to develop a trade and commerce or produce a population like the French and English. A German writer when he first heard of railways being built was of the opinion that such things were of no good to Germany, because the German character was too easy-going (p. 59).

In Hertz’s book there are a large number of illustrations of stupid theories of racial superiority being encouraged by ruling classes for their own interests. He shows, for example, how these theories were used by the Governments during the war.

As regards the Russian Five-Year Plan, the Soviet Government have banked very heavily on early success of their industrialisation schemes. The slowness with which peasants can be trained to equal the efficiency of workers in advanced capitalist countries is likely to present a very difficult problem to the Government there, hardly less difficult than the problem would be if—as Mr. Levine suggests—the Slavs could for racial reasons never be industrialised. The Russians themselves claim, with what justification we do not know, that they have every reason to be optimistic about their ability to produce skilled workers. According to Mr. J. C. Crowther (an English scientist who visited Russia) :—

“The Russians have evolved their own system. They say a raw worker can become as skilled in six months by this training as he would in four years casual work as an artisan’s mate in the shops. They propose to put 700,000 workers through such courses in 1931” (“Industry and Education in Soviet Russia.” Pub. Heinemann, 1932).

Ed. Comm.

Material World: Taking the gold (2024)

The Material World Column from the September 2024 issue of the Socialist Standard

Every four years the Olympics give us a demonstration of human skills, determination and intelligence. Athletes from around the world compete for honours: yet in each Olympics, it seems, only a handful of countries take home the bulk of the medals. We could reasonably expect raw human ability to be evenly distributed around the globe, and yet, the Olympics shows us that of the 200 countries and territories that compete, US, China, Australia and some European nations will win most of the events.

Racists would attribute this to some sort of inherent national ability and superiority on the part of those nations. Of course, there are more sensible explanations. The Olympics represent the sporting culture of the countries that established them: people in many countries just do not have the same interest in these sports. In many countries, there is not the participation, much less the infrastructure, to find and train the most able sports people.

Engagement in sport requires the time to train, and billions of people around the world are tied to long working weeks (and many of those simply do not have the diet available to realise their sporting potential). On top of which, some states, like the UK, spend millions on training, supporting and honing their athletes.

Further, some states are able to attract talent through migration, offering opportunities and citizenship that others cannot match.

The participation of the other countries is essential to the spectacle, though: after all, for someone to come first someone has to come second, or even last. In many ways, the Olympics can be seen as a mechanism to transfer sporting glory from a global majority to a minority.

North and south

As such, it serves as a good metaphor for the way that wealth is concentrated internationally. In July this year, Hickle, Lemos and Barbour published a paper in the journal Nature Communications entitled Unequal exchange of labour in the world economy. In it they argue ‘wealthy nations rely on a large net appropriation of labour and resources from the rest of the world through unequal exchange in international trade and global commodity chains’.

They analysed data, from 2021, showing the global breakdowns of types of labour performed, and the relative prices/wage costs of that labour. Around the world, they suggest that 9.6 trillion hours of labour were performed in the world economy. 2.1 trillion hours went into traded goods (including services). They divided the world into the global North (based on the IMF list of advanced economies: USA, United Kingdom, etc) and the global South (all other countries).

The overall net balance of trade was in favour of the global North, amounting to 826 billion hours of labour transferred from South to North. They note there is no sectoral imbalance (ie, the global South is not just producing primary products, but also intermediate and finished goods for consumption). The South is not just performing unskilled labour, but highly skilled labour across the full range of economic activities, and ‘This appropriation roughly doubles the labour that is available for Northern consumption but drains the South of productive capacity that could be used instead for local human needs and development’.

They explain that the:

‘Dynamics of unequal exchange are understood to have intensified in the 1980s and 1990s with the imposition of structural adjustment programmes (SAPs) across the global South. SAPs devalued Southern currencies, cut public employment and removed labour and environmental protections, imposing downward pressure on wages and prices. They also curtailed industrial policy and state-led investment in technological development and compelled Southern governments to prioritise “export-oriented” production in highly competitive sectors and in subordinate positions within global commodity chains. At the same time, lead firms in the core states have shifted industrial production to the global South to take direct advantage of cheaper wages and production costs, while leveraging their dominance within global commodity chains to squeeze the wages and profits of Southern producers. These interventions have further increased the North’s relative purchasing power over Southern labour and goods’.

That is, through control of international institutions and control of finance. We could add in the raw power of ownership, as many industries when decolonisation occurred still belonged to Northern capitalists. We could add naked corruption as another mechanism. And some capitalists in the periphery choose to invest their profits in the North rather than locally. Although not included in their list, we can add military dominance as well, as some Northern states will use force to ensure their position in the global chains, as well as providing the military resources that prop up rulers in the global South.

Hickle et al find that ‘Southern wages are 87–95% less than Northern wages at the same skill level, ie, for equal work as defined by the ILO. Southern wages are 87% less for high-skill labour, 93% less for medium-skill labour, and 95% less for low-skill labour’. This is also part of the driver for imbalanced trade. They conclude:

‘Given this dynamic, it is clear that the North’s development model cannot be universalised, as it relies on appropriation from elsewhere. Furthermore, it is unlikely that the North’s current levels of aggregate consumption could be maintained under fair trade conditions’.

And as they note:

‘It should be understood that unequal exchange is ultimately driven by the corporations and investors that control supply chains, and the states that determine the rules of international trade and finance, not by workers or consumers’.

Globalised workforce

There is a clear class issue here. The 9.6 trillion hours of labour that the authors calculate are performed in the world economy are performed by a globalised workforce that is being exploited through producing more value through their work than it costs in wages to maintain and reproduce their ability to work. Capitalists, North and South, compete to grab a share of this surplus value. What the authors have in effect uncovered is how successful, and how, the capitalists of the North have been in this struggle at the expense of the capitalists of the South.

They also calculate that ‘globally, labour received, on average, 51.6% of world GDP during the 5-year period 2017–2021’ and that this represents a global decline in the share going to labour. But it does not follow that a more equal sharing between the capitalists of the North and South of the 48.4% up for them to grab would alter this.

Pik Smeet

Despatch from Singapore (1973)

From issue number 4 (1973) of The Western Socialist

Edit. Comm. note:

The new little nation of Singapore has been (and will continue to be) more and more in the international news. A former member of our Companion Party in Great Britain has been living in Singapore for the last four years.  The Western Socialist takes pleasure in presenting to its readers the following despatch which has much of interest for those who would [like to] know what goes on in that sparkling city-state (as it is often designated) of 2.5 millions.

"In Singapore, we are trying to modernise and industrialise ourselves by stimulating men's natural desire for material gratification . . ."

This statement by a government minister expresses with typical bluntness. the no-nonsense pragmatism of which the ruling People’s Action Party are so proud. Singapore, small by any standards, is experiencing capitalist development at a hectic pace and the socialist, with his historical perspective, can find a very close duplication of British capitalist development.

For the greater part of its 150-year history, Singapore has been a colonial outpost. With few natural resources its revenue has been derived from trading, carried out with a largely immigrant work force, mostly Chinese and Indian. Since 1965 the stress has been on manufacturing Industries.

Poorly paid work force 

As in all capitalist states the chief concern of the government Is to expand industrially. With a large, poorly paid work force the pickings are profitable and capital from a host of countries is avidly solicited by Prime Minister Lee Kuan Yew and is just as avidly forthcoming. mostly through multinational companies. At home, the PAP theoretician, Rajaratnam, justifies the exploitation — “Let them come to exploit us now with superprofit on their part" — with an aplomb that indicates the degree of political apathy of a working class as yet little aware of its powers either as a value-producing or a revolutionary force.

The appallingly low wages are a result both of the lack of trade union action and the surplus labour force. The government’s self righteous declaration of intention to absorb this surplus with labour-intensive industries has suffered a reversal, owing partly to the importation of ready made machine processes and the need for fewer skilled as against many unskilled workers. As in mid-19th Century Britain, capital-intensive industry is developing, with the stress on greater worker productivity. Henceforth it is to be expected that trade union struggle will centre increasingly around the problem of machine made redundancies.

One-third of the population is housed on gigantic estates. At Jurong, one of the largest industrial complexes in Southeast Asia outside Japan has been constructed, and also a number of council estates of high-rise flats, including one incredible jungle housing 130,000 persons. These flats, one unit of which is completed every 14 minutes, are inferior to those in Britain, but the social amenities are vastly better.

New image needed

One of the most pressing problems faced by the PAP government is the creation of a national ideology. This must grow, not as in Britain, from centuries of history strengthened by tradition and education, but from the dire, immediate need for a viable work-force owing allegiance to none but the new republic of 1965. Chinese, Indians. Malays — all are being enjoined to dissociate themselves from their cultural background and develop loyalty to the state only. The once derided figure of the colonialist Raffles now has an honoured place in the mythology as the founder of Singapore, a combination of St. George and King Arthur! The government has stated that he has been rehabilitated, as, being a European, no racial jealousies are likely to arise among the work-force. It has justified its multi-racial policy in hard-headed economic terms. Preference and prejudice on a racial basis is seen as being likely to misuse the full range of workers’ talents. The role of the mass media in this process is blatant and naive in the extreme and is the cause for some embarassment to the more sophisticated Singaporeans concerned for their national image.

Weak dissent

The political situation is ambiguous. Opposition parties can legally start up, although members of the Barisan Socialist and others with Communist Party sympathies are arrested and held without trial. It is declared PAP policy to imprison them until they recant, relent and make abject confession, whereupon they are rehabilitated in the ex-political detainees Association’s shoe factory set up by the government in order to more effectively supervise them.

Most people take the ’practical’ approach. “As an efficient business unit it works so leave the government alone” — an attitude that is encouraged by the PAP. Nevertheless, political discontent exists, but most of this simply consists of claims to be able to run Singapore capitalism more smoothly than the government.

These attempts to forge, in hothouse fashion, a nation with a loyal working class out of disparate cultural elements have resulted in problems in many aspects of social life.

On the industrial field strikes have been few — but the penalties are great. A go-slow by a group of port workers in protest against provisions of the Employment Act limiting overtime working brought vicious reaction. Dismissal, deprivation of citizenship and deportation were threatened by Lew Kuan Yew. This was in sharp contrast to his recent plea to employers to give a little of the extra profits made by the increased exploitation of the workers back to them. The legislation on overtime was itself a recognition of the unemployment problem, which in some fields is very high and likely to increase with the British rundown.

Virtues & suicides 

Calls for the practice of the puritan virtues of self-denial, thrift and hard work for the workers contrast with the tawdry opulence of the many new skyscraper tourist hotels and penetrate every walk of life. Schoolchildren, their paramilitary training and flag ceremonies over for the day. face a heavy homework schedule. The increase in student neuroses and drug addiction is attributed by a senior psychiatrist to the stress of modern living. Lee warns continually against "permissiveness” and drugs and warns "Bring in alien fads at your peril.” Over half of Singapore’s population is under 20, and the student population is high. Education represents a large investment in the human raw material needed for the new industrial society and the government is concerned about the economic wastage due to drug addiction. Caught between the pressures of a highly competitive educational system and the fear of losing one's acceptability (which permits of higher education) through political or cultural nonconformity, student suicides have increased. Among the young, the expression “taking a flyer” has found a sombre significance in the city’s high rise jungles; in recent months cases have occurred of mothers jumping with children in their arms. With suicide running as seventh highest cause of death throughout the age groups, Rajaratnam can say of the Singaporean with pride:

"His diseases today are those of a civilized and progressive society . . . from heart disease and a variety of neuroses. He can leave this planet in style and his choice of exits is wide.”

Perhaps. But not as wide as the gulf separating the workers' conditions from those of the Singapore capitalists and their office-boys in government.

Poverty & prostitution

The uprooting of communities for rehousing has led to much social unrest and in many cases a worsening of poverty. Inability to meet newly increased rents has resulted in many tenants quitting their flats. Particularly for the ex-village Malays this poverty has been compounded by their inability to supplement their income and diet from poultry and backyard produce. With the GNP growth of around 15%, malnutrition in Singapore is still very high. About 20% of child hospital attendees are suffering from this aspect of poverty. Increased organized prostitution in the industrial estates has drawn from one police official a condemnation of the factory girls for lowering the image of Singapore’s womanhood. Some of these same girls earn a total daily wage that would just about buy a small beer in one of the new hotels.

Government employees, even more than those of private capitalists, suffer insulting restrictions on their freedom. The maximum length of hair permitted for civil servants is gazetted (with diagrams!) and their instructions manual forbids them to speak disparagingly of the government. They were even forbidden to read on government premises the English-language newspaper, “The Herald,” before it was banned.

For all this, Singapore is an interesting and exciting city. Many traditions, languages, racial types and religions form a colourful cross-cultural complex in what must be one of the cleanest of cities, with the friendliest of people, who show, when they are not worked upon by external and internal divisive interests, how tolerantly human beings with different cultures can live together.

To watch the Singapore working class being created and then subjected to a continuous barrage of propaganda by a government intent on developing a world of capitalist values is a frightful experience for those who know something about such values. But the rapid industrialization within a newly created national ideology has obliged the government to justify its actions in a blend of plausible political theory, practical expediency and pure apologetics. In some areas such as the University, where a certain political sophistication is claimed, government policy, particularly its undemocratic actions, is severely criticised.

Prospects for Socialists

Whether diverse political opinions lie below the surface of this society, we have no way of knowing yet, but in his four years in Singapore, this writer has been struck forcibly by one thing. Unlike Britain, the workers of Singapore are not plagued by a 150-year history of reformist agitation. Apart from those who view things natlonalistlcally. and want to do the government’s job of running capitalism for them, and those who, often more for cultural reasons than political. lean towards China, discussions on socialism are fairly straightforward and generally sympathetically received. Rarely does one hear a counter-argument about “transitional demands” or reforms leading to socialism. The effects of capitalism as it impacts upon a newly formed society, and the de-humanising effects upon the working class, are perfectly plain to the workers in Singapore, unsure though they may be at present about its precise cause or solution. Short shrift would be given to those self-elected leaders of the revolution so often found in Britain, who have such a low opinion of the workers that they urge them to embrace capitalist institutions in order to demonstrate that they won’t work.

Lack of what passes for political sophistication may well be a factor In keeping the issue clear, and might well lead to readier acceptance of socialism as the only alternative to what they are forced to suffer, in spite of the retarding effects of still strong religions. Already a group of workers has expressed interest and enthusiasm for the Party’s case. Literature is being circulated under the most trying circumstances, and they have requested permission to print extracts from our publications. It may be too soon to call them socialists; perhaps they never will be. But the Party may, even so, find a lesson to be learned here.

Bill Robertson

The dark religion of bourgeois economics (2023)

From the June 2023 issue of the Socialist Standard

After acquiring political dominance in England during the revolutions of the 17th century in the name of the Jesus Myth, the capitalist class would come to nurture an even more malevolent ideology centred on an equally fictitious myth called ‘the free market’. With the help of that luminary of the Enlightenment, Adam Smith, the economics of exploitation were elevated to a force of nature which rivalled Christianity in its malignancy and the suffering it would sanction. His infamous remark concerning ‘the invisible hand’ implied a kind of transcendental force that was superior to mere human judgement and that directly contradicted the Enlightenment project of subjecting all knowledge to human reason thus casting aside all such superstition. The Enlightenment would, in terms of science, help guide humanity out of the darkness of religion only to, in the hands of bourgeois economic propagandists, replace it with the cult of worshipping at the altar of the free market. Like Napoleon the English bourgeoisie were not interested in reason, science or logic but only in an ideology that would serve their never-ending hunger for wealth and power.

This mystical force is a manifestation of the bourgeois need for an ultimate source of authority. In the absence of a deity they substituted another non-human entity to reinforce the ‘truth’ of their ideology. In their defence of the capitalist system against any perceived threat from ‘socialism’ its defenders give the impression that their preferred economic mechanism was conceived and created with a meticulous precision that was motivated purely by the health of society. In fact, historically speaking, this ruling class had no idea of the shape and evolution of capitalism once they freed it from feudal shackles. Like a monstrous juggernaut its momentum was unstoppable as it covered the planet with pollution, war, economic depressions and shattered the lives of all those who were enslaved by its overwhelming need for profit. Those who worshipped at its altar explained the failures and disasters in terms of government betrayal of free market principles or the immoral activities of renegade monopolists and financial pirates etc. Indeed, how could anyone criticise such a powerhouse of technical innovation and wealth creation?

But those who created the wealth were beginning to become sullen and bitter about their lack of a share of it all. The politically more astute among the bourgeois intelligentsia recognised that the system was unable to provide even the most basic necessities of life for workers and so decided to create an infrastructure and welfare system that would forestall any revolutionary inclinations among the masses. It was not only the fear of insurrection but also the need to maintain a healthy workforce together with a dread of the creation of monopolies, which might hold them all to ransom, in transport, raw materials and power etc that brought into being the nationalised or ‘public’ sector. This arrangement, in its turn, created further problems because, as it was financed by taxation, it was always strapped for cash due to that other commandment of capitalist religion: ‘Thou shall not financially burden the wealthy’. Although this ‘mixed economy’ has been the model for most advanced capitalist states ever since whenever things go wrong, as the inevitable instability of production for profit always does, the political and economic debate is invariably split between those who blame too much state interference (the Right) and those who claim that free market deregulation is at the heart of the problem (the Left). We still live with a stalemate produced by the failure of both.

Marx had proved that profit was nothing more than theft. The value of labour power as incarnated in its price (wages) is considerably less than the value it produces. Since the capitalist can sell the products of labour at their full value he could pocket the difference as ‘profit’. This is the inevitable logic of the labour theory of value that was embraced by the ‘classical economics’ of Smith and others. This unpalatable moral and political truth did not fit the needs of the ideology, and bourgeois economists have desperately tried to disprove it ever since the publication of Marx’s Capital. Almost the whole body of contemporary economics is an attempt to justify exploitation in various and ingenious ways and so discredit Marx’s definitive theory. It is the height of irony to try and dismiss the Marxian model as an anachronistic Victorian economic theory when those who oppose it have nothing more to offer as an alternative than a version of ‘laissez-faire’ which predates Marx by a hundred years and more!

With the denial of Marx’s discoveries it would seem that economics as a science has not progressed like the other disciplines dignified by that title. For all the power generated by the latest computer programs available to the City and other financial institutions the system continues to crash and burn periodically, and even when it does ‘work’ the exploitation of the many by the few produces endless industrial struggle and alienation. The programmers are still directed to search for ever better ways to increase profit margins and the shiny modern computer interfaces and endless economic double-talk cannot disguise the ancient inhuman God of greed that motivates it all and so disfigures our species.

Wez.

The Onward March of Capitalism. (1927)

From the June 1927 issue of the Socialist Standard

To show the degrading effect of capitalist production on the modern wage-worker, Paul Lafargue uses this comparison.

“Look at the noble savage whom the missionaries of trade and the traders of religion have not yet corrupted with Christianity, syphilis and the dogma of work, and then look at our miserable slaves of machines.” —The Right to be Lazy (p. 10).

To justify this statement, we need only compare the general conditions of the workers to-day with the following description that Lewis Morgan gives of the American Indian :—

“All the members of an Iroquois gens were personally free, and they were bound to defend each other’s freedom; they were equal in privileges and in personal rights, the sachem and chiefs claiming no superiority; and they were a brotherhood bound together by the ties of kin. Liberty, equality, and fraternity, though never formulated, were cardinal principles of the gens. These facts are material, because the gens was the unit of a social and governmental system, the foundation upon which Indian society was organised. A structure composed of such units would of necessity bear the impress of their character, for as the unit so the compound. It serves to explain that sense of independence and personal dignity universally an attribute of Indian character.” (Ancient Society, pp. 85-6.)

Such was the state of man in this form of society, before modern civilisation played its part. And the curse it has been to these people is evident from the following item of news that appeared in the “Daily News,” 7/3/1927 :—

“The Red Indians, confined to reservations in various parts of the United States, even as near the east coast as New York State itself, are dying by thousands, abused and neglected.

Mr. Robert E. Callahan, a writer on western life, has just spent a year surveying the 22 principal Indian reservations. He declared that on some reservations he found the Indians killing their pet dogs and their horses to keep themselves alive”

And further, we are told that :—

“Judges appointed by the agents have been known to throw Indians into gaol for resenting an agent’s treatment of them. An Indian named Kill Thunder was chained by one of these men, who was judge, gaoler, and prosecutor all in one, for visiting a friend without the agent’s permission.

There are estimated to be 340,000 Indians left in America. Mr. Callahan says 225,000 of them have been reduced to the most miserable conditions of existence, and that unless some drastic changes are made the Red Indians within a few years will be extinct.”

So we see that the capitalist method of wiping out, what is to them, an odious comparison, between the Barbarian and the wage-slave, is to reduce the former to a state of poverty and subjection, parallel to that suffered by the latter.

Exploitation by the capitalist class, together with the evils that flow from it, spreads like a plague, and to escape from its vile influence is out of the question.

In drawing up the manifesto of the Communist Party (1847) Marx and Engels dealt with this point :

On page 10, they say :—

“The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere. ”

And further, on the same page, we read :

“It compels all nations on pain of extinction to adopt the bourgeoisie mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.”

Events since this was written have demonstrated the truth of the assertions made. The most recent example, on the one hand, is China, whose development has been accelerated through its exploitation by the Western Powers. And an effort is now being made by the property-owning class in China, to rid itself of that influence, and secure the full benefits from the exploitation of the workers of that country.

On the other hand, there is the American Indians, who, not having reached the preceding stage in historical development to capitalist society, is unable to adopt that form of production, and consequently must suffer the penalty of extinction.

A nation or class can only establish that form of society which has been made possible by conditions which have developed within the prevailing system. And the chief factor which determines the character of a society; and the direction or form which the new system will take, is the way in which the wealth of that society is produced, and the form of ownership or distribution.

The introduction of capitalism, necessitated, not only that the production of goods for sale should be developed, together with the merchant and his capital, but also the presence of a body of producers that could be profitably utilised as wage-workers.

The backward nature of the vast populations of Russia and China, accounts to a great extent for the slow development of these countries. And the fact that they are, in spite of this handicap, following in the direction of the more advanced countries, speaks volumes for the penetrating powers of the capitalist method of production. But had the social system of these countries been in a more primitive state, their fate would have been that of America and the Colonies, which were developed by the modern emigrant wage-worker. And the original inhabitants, who were not slaughtered by the invading force, pushed in the background, and used later as chattel slaves or exterminated in compounds, provided by the “benevolent” Christian capitalists, because they could not profitably use them in the modern method of production.

As the establishment of capitalism was made possible by conditions that developer in feudalism, so in turn have the conditions been developed in the present system that makes the next social change both possible and necessary.

The growth of social production within the present system, supplies the foundation of the society that is to take its place, and makes the change to Socialism possible. The private ownership by a non-producing section of the socially produced wealth implies on the other hand a propertyless producing class, whose interest dictates the need for that change; a change that awaits the understanding by this class; that to secure the benefits their social productive powers justify, they must end the private ownership in the means of life, and establish a system of society in which the wealth that is socially produced, shall be socially owned.

And by taking advantage of the political conditions that have grown up with the system, they will secure control of the machinery of state, and with command of this force, accomplish the social change which their class interest dictates.

Ted Lake

Free Trade, Fair Trade or No Trade? (2006)

From the February 2006 issue of the Socialist Standard

The World Trade Organisation negotiations in Hong Kong in December didn’t get very far. There had been talk of a deal to further “liberalise” world trade, under which the developed capitalist countries would drop restrictions on agricultural products from the “developing” countries in return for these reducing their tariffs on industrial imports. The most that emerged was a promise by the EU to stop subsidising agricultural exports by 2013 – provided that in the meantime there was an agreement on the other points. Not enough, said EU Trade Commissioner Peter Mandelson, to make the meeting a true success, but enough to save it from failure.

Maybe in time – April is the next deadline – some agreement, even along the lines envisaged, will be reached. But, given the nature of capitalism, it is not surprising that agreement is proving difficult. The WTO has 149 member states – 149 capitalist states, each with its own economic interests to defend and promote.

Under capitalism goods are produced for sale with a view to profit. Profits originate from the surplus value created by the workers who actually produce the goods that are put on sale, but are realised – i.e., converted into money – only when the goods are sold. Built in to capitalism, therefore, is an intense and relentless competition between capitalist firms to sell their goods, not only between firms in the same country but on the world market between firms from different countries. The role of states in this competition is to defend and promote the economic interests of the capitalist firms within their frontiers, by, for instance, protecting them from foreign competition on the home market or helping them to conquer foreign markets, which are of course the home markets of other countries.

A range of measures are open to states to do this. They can impose tariffs and quotas on imports (protectionism) and they can offer insurance and other financial aid for exports. They can pay subsidies on exports (dumping), but this is politically controversial since these subsidies have to come from taxes on non-exporting capitalist firms within the state.

If these policies – protectionism and dumping – get out of hand, they turn into “beggar-my-neighbour” and no state gains. This can lead to wars, and was in fact one of the causes of the Second World War when Germany and Japan felt they had no alternative to go to war to break through the restrictions on their trade resulting from the policies pursued by Britain, France and America. So there is room for promoting capitalist interests all round  by negotiations such as those at Hong Kong aimed at what is in effect tariff disarmament.

The jockeying for competitive position that went on in Hong Kong wasn’t just between the industrially developed “West” (including Japan and Australia) on the one hand and the poor states of Africa, Asia, Latin America and the Caribbean on the other. There were also arguments among the developed capitalist states themselves. The US wanted access to EU markets for its agricultural products, while the EU accused the US of hidden dumping since its “food aid” involved giving food (for which US farmers are paid) rather than money. Then there were the “emerging” capitalist states – China, India, Brazil, Russia – which also want access to EU (and US) markets, but are precisely the countries to which the West wants easier access for its industrial goods. The really poor states – the so-called “Least Developed Countries” – have no clout at all, and are only defended by Non-Governmental Organisations such as Oxfam and the World Development Movement (which also have no clout). In fact, they are not likely to gain anything out of any deal, which will be a carve-up between the developed and the emerging capitalist states.

Free Trade v Fair Trade

Alongside the clash of economic interests there was an ideological battle between the partisans of “free trade” and those of “fair trade”.

The ideology of “free trade” (no restrictions on imports or exports) has been part of conventional economics since David Ricardo propounded his theory of “comparative advantage” in 1817. Ricardo took as an example Portugal as a producer of wine and England as a producer of “cloth and hardware”. While Portugal could produce cloth and hardware and England wine, neither could do so as cheaply as the other; if they did this there would be a waste of resources compared with what would happen if Portugal specialised in wine and England in cloth and hardware. This was because, said Ricardo, the cheaper wine produced in Portugal and the cheaper cloth and hardware produced in England could then be exchanged for more of each other. Both sides would be better off.

This is the theory, but it doesn’t allow for change. It was obviously attractive to English capitalists as it meant that they would have a world monopoly in manufactured goods. But it was not so attractive to the up-and-coming capitalists of other countries who wanted to produce industrial goods too, nor to the rulers of these countries who wanted to built up their industrial and military strength to better compete for a place in the sun. So they, the US and Germany in particular, embraced protective tariffs for “infant industries”, as propounded by the German economist Friedrich List.

By the end of the 19th century the manufacturing industries of these two countries were strong enough to compete with British industry and even to outcompete British products. A section of the British capitalist class began to have second thoughts about free trade; they demanded protection for British industry through tariffs imposed on foreign imports. They called this “fair trade”. An hundred years ago “free trade” versus “protection” was in fact the main bone of contention between the free-trade Liberals and the protectionist Tories.

Today, the main ideological defenders of “fair trade” (protectionism) are the “development NGOs”. Thus, Benedict Southworth, Director of the World Development Movement issued a press release on 13 December declaring:

“More free trade is not the answer to Africa’s problems. Trade Justice means poor countries getting access to our markets to sell their goods without being forced to open their own economies to our multinationals and losing their ability to protect poor farmers, infant industries and basic services.”

While Barbara Stocking, Director of Oxfam, wrote to the Times (19 December):

“South Korea and Tokyo industrialised using state intervention such as high tariffs to protect infant industries and credit for strategic sectors. The EU and US are pressing to force developing countries to lower their industrial tariffs even though these policies helped South Korea, Taiwan and others to trade their way out of poverty. If Korea had stuck to its supposed ‘comparative advantage’, it would still be exporting rice and wigs instead of cars and computers”.

In an article in the Times (14 December) journalist Carl Mortished admitted that free trade wouldn’t benefit the poorest states, but rather the emerging capitalist states:

“Free trade is fair and just, contrary to what Oxfam will tell you. However, because it is just, it cannot be kind. Trade works in favour of those with comparative commercial advantages and the poorest nations have few. If an agriculture deal is done in Hong Kong, the winners will be powerful developing nations with agribusiness potential, such as Brazil and India. The farmers of Mozambique will gain little. The reason emerges in a report by the UN’s Food and Agriculture Organisation. The State of Food and Agriculture 2005 concludes that liberalising farm trade would benefit consumers in protected markets, such as the EU, with lower-priced food. It will also benefit efficient producers, such as Brazil, but the poorest countries will suffer.”

So was he, then, in favour of “fair trade” for the poorest states? Not at all, as the title of his article “Why ‘fair trade’ is bad for poor nations it seeks to help” proclaimed. Preaching being cruel to be kind, he argued that farmers in these countries “don’t need favours, but fertiliser and equipment. In short, they need investment, and that means more open markets … Poor countries must reform if they are to compete. If we stopped throwing favours at them, the reforms might begin”.

He’s right about one thing: “they are to compete”. They have to. All states have to. And that’s the problem. Built in to capitalism is competition, and where there is competition there are losers as well as winners. Oxfam, the WDM and the others are on completely the wrong track in imaging that there can be no losers or that the winners will help the losers out to their own disadvantage.

One World

We are living in a world that has the productive potential to turn out enough to adequately feed, clothe, house, educate and care for the health of every single person on the planet, irrespective of where they live. That this isn’t done today is due to the fact that the production and distribution of wealth is organised on the basis of buying and selling, of trade.

The Earth’s natural resources and separate parts of the world-wide industrial network are owned separately, by corporations, states or rich individuals. These owners compete amongst each other to sell what those they employ produce and so realise as profit the surplus value contained in them. This has a number of effects. Production stops, not when enough to satisfy people’s needs has been produced, but well before this, when what people can afford (the market) has been catered for. At the same time there is a huge waste of resources on the process of selling itself, on things that have nothing to do with production as such, but only with the buying and selling of the products that constitutes trade (on fixing prices, making and receiving payments, transferring money, changing currencies, etc.) And there is also a huge waste in the armed forces and arms that all states are forced to equip themselves with in order to be in a position to protect and promote the interests of the capitalist groups within them.

So inherent to capitalism – the world trading system – is both artificial scarcity and organised waste. And as long as the system is allowed to continue there’s nothing that can be done to prevent this. But “another world is possible”, and it has to be another world, since there are no national solutions to world problems like world poverty, hunger and disease.

The alternative is a world in which all the Earth’s natural and industrial resources become the common heritage of all humanity. This means that the production and distribution of the things that people need can be organised on the basis of the world being a single unit. The oil resources won’t belong to filthy rich sheiks in the Middle East – or even just to the people living in the Middle East – but to all humanity, to be used for their benefit. The same goes for all the world’s other natural resources. They won’t be traded. They will simply be transferred from one part of the world to another as required to meet needs. This wouldn’t be trade since there would be no question of payment or of any transfer of something of equal value from the part of the world where they went to the part they came from.

Under these circumstances, if people in one part of the word needed food – as is undoubtedly the case at the moment – it would be transferred there, as for instance from the wheatlands of North America. This wouldn’t affect local agriculture since there would be no competition between the two; there’d be no local markets to undermine since local production wouldn’t be for a market either. In fact, local agriculture could be given the fertilizer and equipment that they need – without demanding any counterpart – so that it can contribute increasingly to satisfying local food needs.

This – no trade, but production for use – is the alternative to both the free trade favoured by capitalist corporations and their agency, the WTO, and the fair trade favoured by the equally capitalism-accepting development NGOs.

Adam Buick

Development to what? (2021)

From the January 2021 issue of the Socialist Standard

We resume our refutation of the view that workers in the advanced capitalist countries share in the exploitation of the people in the so-called ‘Third World’ by examining contemporary theories of this.

In the early post-war years large swathes of the world’s poor countries were decolonised. Seeking to complement their new-found political independence with a semblance of autonomous economic development, they soon found this was not so easily achieved.

The concept of ‘development’ has roots in nineteenth century thinking on the supposed civilising mission of the imperialist powers succinctly captured by Kipling’s patronising phrase: ‘white man’s burden’. Cynically, imperialism was justified as a means of uplifting native peoples everywhere — economically, spiritually and culturally — though, in reality, its impact was often the opposite.

The modern understanding of ‘development’ as a coordinated macro-economic strategy was first clearly associated with a ‘structuralist’ school of thought that emerged in Latin America in the 1930s centred on the Economic Commission for Latin America (ECLA). The structuralists argued against the Ricardian concept of ‘comparative advantage’ promoted by liberals who extolled the virtues of free trade and urged countries like Argentina to specialise in the export of agricultural products, capitalising on that country’s natural advantages.

The structuralists countered that there was a long term tendency for the price of agricultural products, to fall against imported manufactures because of the latter’s greater ‘elasticity of demand’. Meaning Argentina would be shortchanged in the long run due to a declining terms of trade if it focused only on producing beef and wheat for the European market. Therefore it made sense to adopt protective policies of ‘import substitution’ to stimulate the growth of local manufacturing.

Development economics

After the Second World War, however, such economic nationalist thinking found itself increasingly swimming against the tide. While import substitution continued to be implemented in many developing countries, by the late 1970s it was largely abandoned. Ironically, it was instrumental in encouraging transnational corporations (TNCs) to set up — in Trojan-horse fashion – production facilities within the countries concerned precisely as a way of getting round import controls — leaving such countries still essentially at the mercy of external economic players in the guise of these corporations.

Moreover, commencing with the General Agreement on Tariffs and Trade (1948) there was an increasingly concerted, international push to bring about a ‘substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis’. The belief was that free trade would not only mitigate the prospect of war but also promote economic growth. This tendency culminated in the emergence of neo-liberalism (rubber-stamped by the so called ‘Washington Consensus’ which replaced the post-war Bretton Woods framework) in the wake of the collapse of Keynesianism in the recession-hit 1970s.

Dependency Theory

In the early post-war years, ‘development economics’ had fallen under the spell of the ‘modernisation paradigm’. A leading protagonist, Walt Rostow, argued that development was a process driven by capital investment and that the developing countries, being short of capital, needed to open themselves up to investment from abroad. The Modernists were Keynesian interventionists and, unlike the liberals, accepted the need for developing countries to industrialise and diversify their economies. For them, ‘development’ basically meant passing through a linear sequence of economic stages, mirroring the economic history of the already developed countries (The Stages of Economic Growth: A Non-Communist Manifesto, 1960)

In the 1960s and 70s, however, the modernisation paradigm was increasingly challenged. What had appeared so seductively simple at the outset no longer seemed to fit the facts. In those early post-war years, growth among the developing countries had been comparatively vigorous — though, for the vast majority of citizens, the benefits failed to ‘trickle down’. Then, in the seventies, the oil crisis came along — and the mushrooming problem of Third World debt as many countries desperately resorted to IMF (and other) loans to plug the gap between export earnings and the rising costs of imports. With the onset of global recession, growth began to falter. In Africa alone at least 15 countries saw their economies shrink in real terms. The situation deteriorated further in the 1980s, dubbed the ‘Lost Decade’.

In this period a new development paradigm emerged — Dependency Theory. This built upon earlier structuralist thinking but also marked a new departure. As Dudley Seers notes: ‘The realization that import substitution created new, and possibly more dangerous forms of dependence converted the ECLA structuralists into dependency theorists’ Dependency Theory: A Critical Reassessment,  1981).

According to the ‘Dependistas’, drawing on Lenin’s ‘law of uneven development’, the problems faced by poor countries was not the result of their incomplete integration into the global capitalist economy as modernisation theory suggested. They were already fully integrated into this economy and those problems sprang, instead, from the form of integration to which they were subjected. They were not ‘undeveloped’ but systematically ‘underdeveloped’. This manifested itself in a net outflow of capital from them via such mechanisms as ‘unequal exchange’ — proof that it was not for any lack of capital that their development was impeded.

The ‘world trading system’ was conceptualised as a hierarchical order in which the dominant core countries were able to impose their own needs on the dominated countries. Such needs dictated that the latter should remain suppliers of low-value raw materials for processing into high value finished goods within the industrialised core countries themselves, rather than rival producers of such goods, given the latter’s complete dominance over global value chains. In short, industrial development and economic diversification was effectively blocked in the capitalist periphery.

Thus, the linear ‘stages of growth’ model of modernisation was misconceived. It overlooked that the predicament developing countries found themselves was quite unlike the pristine state of affairs already developed countries encountered when they first began to develop since, back then, there were no already-developed economies around to obstruct and distort the development process.

For developing countries, trade liberalisation (which tended to be heavily biased in favour of developed countries) was not the only problem. There was also the growing dominance of the TNCs that not only controlled the great bulk of global trade but, as stated, were becoming increasingly active as producers inside these countries. Their immense economic clout and footloose nature in a world where capital could freely relocate to wherever costs where lowest, gave them considerable leverage in their dealings with poor countries. Finally, there was the ability of lending agencies like the IMF to impose ‘structural adjustment’ programmes on these countries — like privatisation and phasing out food subsidies — as a condition for receiving the loans they increasingly depended upon.

For some ‘Dependistas’ the solution lay in ‘delinking’ from the global economy and pursing a policy of national self-reliance. But in a world in which the global division of labour was becoming ever more diversified and complex, this was not really feasible.

Moreover, though it became fashionable for a while, Dependency theory seemed increasingly out of touch with changing realities. In particular, its core claim that industrial development of the poor countries would be ‘blocked’ was decisively refuted by the emergence of the ‘newly industrialising countries’ — particularly, the Asian Tiger economies (like South Korea and Taiwan) and, above all, China which has since become a major imperialist power to rival the US, with business interests right across the globe.

Additionally, there has been a massive shift in manufacturing away from the advanced countries to the Global South which now accounts for 83 percent of the world’s manufacturing workforce. Indeed, amongst many large western-based corporations there has been a significant movement towards ‘offshoring’ production and outsourcing it to local contractors based in the Global South — meaning such corporations are no longer involved in producing commodities as such, solely in marketing and ‘branding’ them.

Guilt-ridden liberals

Around the time the Dependency paradigm was gaining adherents — the 1970s — an alternative worldview centred on the concept of a ‘New International Economic Order’ (NIEO) began to be promoted. The impetus came from the non-aligned movement of developing countries. The basic idea was to bring about a more equitable global economy.

Hardly any of the proposals embodied in this concept were taken up as neo-liberalism strengthened its hold on practical policy-making everywhere. However, in ideological terms, the concept gained traction by implanting far greater awareness of the substantial inequalities in economic circumstances and living standards between rich and poor countries.

Along with this has arisen the idea that ordinary people in the ‘rich countries’ enjoy a standard of living so much higher than ordinary people in ‘poor’ countries precisely because they live in one part of the world that profits handsomely from the exploitation of the other. They are said, in effect, to share in the fruits of such exploitation and it is this that affords them a lifestyle incomparably more affluent and comfortable than their counterparts in the exploited poor countries.

Sadly, this frankly pernicious and tendentious idea is one that seems to seep into popular discourse with all the ease of a toxin into a watercourse. It is the meat and drink of hand-wringing liberals everywhere who fret guiltily about how appalling it is that ‘we in the West’ should enjoy the comforts of life produced by the sweatshop labour of the Global South.

Consider this comment by Jonathan Glennie and Nora Hassanaien in the Guardian newspaper, that most formidable bastion of liberal thinking, on the subject of ‘Dependency Theory’:

‘As with most Marxist-inspired tirades, it is not a complete analysis of Latin America’s history — it probably exaggerates the villainy of capital and heroism of peasants. But it presents a perspective on the truth that any serious development worker or academic should have intellectual access to. This is as relevant today as ever. It is critical that voters in the rich world learn that their wealth is related to a historic exploitation of other parts of the world, especially when they are eventually asked to readjust their living habits and conditions in order to better accommodate the just requirements of poorer countries’

(1 March, 2012).

At a time when many ‘voters in the rich world’ are finding it harder and harder to make ends meet, when governments are slashing social welfare programmes with the grim determination of a state-sponsored executioner with a quota of severed heads to fulfil, when more and more people seem to have been reduced to ignominious penury of food banks, charitable handouts and even a life on the streets, it must be comforting to learn that they can always depend upon that ‘historic exploitation of other parts of the world’ to sustain and materially uplift them.

Unfortunately, being ‘asked to readjust their living habits and conditions’, by which one assumes is meant having to accept a downward adjustment in their real income is no guarantee whatsoever that the ‘just requirements of poorer countries’ will be suitably accommodated.

On the contrary, the only beneficiaries of this sacrifice will likely be those who substantially own the means of production and profit from the employment of others who constitute the overwhelming majority of those ‘voters in the rich world’ to whom Glennie and Hassanaien appeal. There is no getting round this most fundamental antagonism in our existing capitalist society which mediates and conditions everything else that we find so obnoxious and objectionable about it.

In fact, grotesque inequalities are to be found in both the rich world and the poor world alike. Spatial-cum-national inequalities in this respect pale by comparison with class inequalities, something our liberal handwringers seem constantly prone to overlooking. In this, they are joined by Maoist-style ‘Third Worldists’ who cynically exploit the idiom of Marxist rhetoric to justify their abandonment of a class-based analysis of capitalism in favour of a nationalistic-based ‘anti-imperialism’.

In the final two parts of this series we will consider the claims of these Third Worldists and subject them to empirical and theoretical scrutiny.

Robin Cox

Post War Trade. Another Scheme to Save Capitalism (1942)

From the April 1942 issue of the Socialist Standard

In an article, “World Trade after the War,” a special correspondent of the Times (March 24th and 25th) discusses ways and means of finding work and markets for the highly industrialised countries and thus avoiding a post-war slump when the armament industries come to a standstill. He sees the problem as one of undeveloped countries which will need the help of industrialised countries but are unable to pay for that help. In accordance with the theory of pre-war capitalism such countries could raise loans and use the money to buy machinery, railway plant, etc., and thus build up their own industries, but this failed to work. The countries which had borrowed the money could only repay the interest and capital by exporting goods to the lender countries, but the lender countries used tariffs to keep out imports which competed with home industries. How, asks the writer of the article, is this to be avoided in future? He propounds a scheme under which, through international agreement between the great Powers, surplus products of the industrialised countries would “not be dumped on the market or destroyed to keep up prices” but “would be taken over by a world development committee which would use them to satisfy the needs and promote the development of countries unable to buy them at commercial prices. This committee would be financed by a small percentage levy on the commercial sales, a kind of premium paid by the producers in return for the stability of markets and prices they would enjoy. By developing backward countries, equipping them with roads, railways, and agricultural and other machinery it would open up both new sources of supplies and new markets, and would raise the standard of living all over the world.”

The writer evidently believes that he has discovered some new and revolutionary principle which will solve the problem, when all he has suggested is in fact a slight change in the method by which the capitalist world has worked in the past. Apart from the international committee and the “small levy,” how does his scheme differ from the past practice under which loans have been made to undeveloped countries? The only real difference is the notion of evening things out and achieving some stability. And what will happen to this international scheme and its stability when the undeveloped countries get going and pour out the products of their new agriculture, new mines and new factories on to the world market? The result will be precisely what it was before, and in the ensuing scramble the Powers which dominate the scheme will find themselves in a life and death struggle with challenging Powers, among them the newly developed countries.

The underlying fallacy of the writer’s approach to the problem can be seen from his way of presenting the problem. He writes, for example, about the possibility of undertaking great electrical and irrigation works in undeveloped areas: —

  There is certainly room in China, in the Balkans, and indeed all over the world for innumerable Tennessee Valleys, which would give ample employment to the engineering capacity now employed in war work, and thus solve one of the great problems of the transition from war to peace.

Now why does a writer sitting in Printing House Square, E.C.4, have to cast his eyes on China and the Balkans and all over the world? Why doesn’t he look around him at the abject poverty, slums, and under-nourishment hardly a stone’s throw away from him, just across the river at the Borough and Bermondsey, or northwards to Clerkenwell? Why doesn’t the organ of Banks and City Financiers think of lending a few hundred million pounds to British workers on its doorstep, who, like the Chinese and the peoples of the Balkans, “are unable to buy … at commercial prices”? Why, indeed? for the capitalist is not and will not be concerned with the problem of producing goods solely for the use of those who need them but only with the problem of making a profit. It is possible to think of loans to a Government in China coming back with a nice addition of profit (even if the history of foreign lending is often a story of default and loss), but the Times writer, even without considering the question, feels instinctively that there is a catch in the idea of lending millions to the workers of Bermondsey. He knows at once that money thus transferred from the British capitalist to the British worker is dead loss to the former and the end of the wages system, the end of profit, in short, the end of everything that makes capitalism worth while to the capitalist.

The Times writer, like every other defender of capitalist privilege, will do everything that can be done to solve the poverty problem except abolish its cause, the capitalist system.

Edgar Hardcastle

Africa—A Field For Investment (1952)

From the December 1952 issue of the Socialist Standard

Africa is a vast continent, with a population of 200 million where 700 different languages are spoken. It is coming more and more into the news, for it offers enormous opportunities for the investment of capital.

The Daily Mail had two articles (4 and 5 Sept) on the proposal to form a Central African Federation, to include Southern Rhodesia, Northern Rhodesia and Nyasaland, and which will be discussed at Westminster shortly.

And The Daly Telegraph (10-9-52) reports:

   “A Sahara expedition which will study methods of halting the desert’s advance. Mr. Baker and his three companions will spend a week in Paris meeting French Sahara experts at the Ministry of War and elsewhere. They will visit the plantations in Algeria, and will go to Tunisia, through Laghouat, In Salah 700 miles south of Algiers, and cross the desert through Zinder to Nigeria. They will then drive to Uganda and Kenya."

The Daily Telegraph (6-9-52) reports a “decision to build a £70 million oil refinery on the Kenya mainland opposite Mombasa Island. The Government will freeze 2,000 acres in the interests of the security and well-being of Kenya. Work is expected to be provided for hundreds of Europeans and thousands of Africans. It is widely thought that Mombasa will become an important naval base."

There are all kinds of plans for developing Africa. Experts have been investigating dam sites on the River Zambesi, to harness the power of the Victoria Falls; the Zambesi, one of Africa's greatest rivers, forms the northern border of Southern Rhodesia, and it is believed that, some 200 miles north-east of the Falls, between the high banks of the Kariba Gorge, a dam site would create an inland sea as big as the three largest American dams put together. Cheap electric power could be generated at low cost

Another large plan is the Sabi Lundi development scheme, which has large possibilities for industry, for there are coal and phosphate deposits here.

All these plans need capital.

   “The President of the World Bank, disclosed that the bank has lent £500 million to 27 countries in the last five years. It is helping to finance a £100 million four year plan by Southern Rhodesia " (Daily Graphic 6-9-52).

A booklet has been prepared by the Public Relations Dept, of Southern Rhodesia, and is called “Southern Rhodesia, A field for investment." We are told that, "Southern Rhodesia is admirably placed to be the manufacturer in chief to many millions of Africans inside and beyond its borders. Apart from its own people, Southern Rhodesia can therefore look northwards and eastwards to Northern Rhodesia, Nyasaland, the Eastern Congo and Portuguese East Africa, to a population of not less than 12 to 15,000,000 Africans, for potential markets for her growing industries."

We thus can see that economic development is going on.

What will be the result of all this development on the native Africans? "The five million whites in Africa fear that they will be swamped and overpowered by the Africans, whose standard of civilisation is incomparably lower than theirs. The Europeans there seek to avert this real danger by retaining all forms of political power in their own hands for as long as possible " (page 42 “Attitude to Africa," by W. A. Lewis, Michael Scott, M. Wight and C. Legum).

The Africans are thus being drawn into the vortex of our present capitalist economy.

I. Flower.

Russian bourgeoisie (2010)

Book Review from the February 2010 issue of the Socialist Standard

Cronies or Capitalists? The Russian Bourgeoisie and the Bourgeois Revolution from 1850 to 1917. By David Lockwood. Cambridge Scholars Publishing, 2009. £39.99 / $59.99

This study by David Lockwood, who teaches at Flinders University in Australia, is important in two ways. It contributes both to the history of Russia in the decades leading up to the establishment of the Bolshevik regime and to the theory of historical materialism.

As history, the book traces the evolution of the political attitudes and activities of the big capitalists of late Tsarist Russia, with special emphasis on the Russo-Japanese war and insurrection of 1905, World War One and the upheavals of 1917. The author debunks the Bolshevik view of the capitalists as dependent on Tsarism and therefore unable to fight for a bourgeois revolution (thereby justifying Bolshevik leadership). On the contrary, they consistently opposed the archaic Tsarist state as a fetter on the development of the productive forces.

However, according to Lockwood, it was not the capitalists who eventually played the decisive role in overthrowing Tsarism and modernising Russia. This role was assumed, especially after the outbreak of war in 1914, by a new social force known as “the Third Element” – technical specialists of various kinds in voluntary coordinating bodies like the War Industry Committees, in city and provincial government and in the army. These aspiring technocrats were the backbone of a new “developmental state” that displaced the old state in February 1917 and took final form under the Bolsheviks.

This brings us round to the author’s general contribution to Marxian theory. He emphasises that the tasks of the bourgeois revolution need not be – and, in fact, usually are not – carried out by the bourgeoisie itself. In Russia, in Japan after the Meiji Restoration of 1868, and in other late industrialising countries, these tasks have generally been carried out by a modernising state. The role of the state is immensely strengthened under conditions of intense military competition and, above all, during wars.

Lockwood argues in this connection that the state belongs not to the superstructure of society (alongside law, ideology, etc.) but to its basis. That is, the state is a specific type of production relation that interacts with other production relations (in modern times, with capital). I agree that it is less misleading to assign the state to the basis than to the superstructure, but perhaps it is best to treat it as a third category, distinct from both basis and superstructure.

While in most respects the author’s exposition is admirably clear, he might have made a greater effort to avoid confusion over terms. The problem is that central concepts — capital, capitalism, capitalist, bourgeois, bourgeoisie – can be understood either in a narrow sense, to refer only to private ownership of the means of production, or in a broad sense that also encompasses state ownership. In the World Socialist Movement we use these words in the broad sense. Lockwood uses them in the narrow sense until the final chapter, when without warning he switches to the broad sense, even calling the system established by the Bolsheviks “state capitalism” (inside quotation marks that suggest reservations).

Nevertheless, on the whole we can recommend this book. Unfortunately, like most academic works, it is quite expensive and there is no paperback edition. Get your public library to order it.

Stefan

The China trade (1983)

From the November 1983 issue of the Socialist Standard

Capitalism, according to the Communist Manifesto, batters down all Chinese walls. This is illustrated nowhere more clearly than by developments in the Chinese economy over the last few years, especially since 1979 — events more far-reaching in their implications than the holding of China’s first-ever fashion show in Peking, or the establishing there of a branch of Maxim's, the fiendishly-expensive Paris restaurant. The imperative need for modernisation of industry and “export-led growth" has caused China to be integrated far more fully into the global capitalist economy than ever before. Those aspects of Chinese society which once appealed so much to Western Maoists have disappeared, and the official propaganda now employs blatantly capitalist criteria and phraseology. Any pretence of an economy based on considerations other than profit has been dropped.

Since 1979, over five billion US dollars have been invested in China by overseas firms, and an even larger sum has been received in loans from governments and international banking organisations. A Joint Venture Law promulgated in July 1979 permitted the setting-up of joint Chinese/overseas-owned companies, with China not even insisting on a controlling interest. Over a hundred such joint ventures have now been established. In May this year, the tax payable by them was cut, and they were exempted from import duties on certain items. The overseas firms that invest are of course allowed to keep the profits they make — profits which can only come from the exploitation of Chinese workers. Regulations concerning overseas companies in joint ventures refer blithely to their “profit and other legitimate income".

The growing volume of overseas investment has necessitated involvement in various areas of international law, such as deciding on the tax and insurance position of the investing companies. Seminars on these matters have been held in Peking, with international experts instructing the Chinese rulers in the ways of the capitalist world. Glossy books and pamphlets have been published, detailing China’s attractions to overseas companies (such as low taxes and the absence of labour disputes). In June 1982. a United Nations sponsored China Investment Promotion Meeting was held in Guangzhou, attended by five hundred overseas businessmen and bankers. Documents of interest to invest in sixty-nine projects were signed there. Any developing country wishing to win investments has to do this kind of thing, and China is no exception.

Moreover, four Special Economic Zones have been set up, intended to offer even more goodies to overseas capitalist firms. The extra attractions include lower rents and even lower taxes. The largest Special Economic Zone is at Shenzhen on the border with Hong Kong. One company here has announced — for the first time in China since 1949 — the sale of shares, aimed mainly at individual investors in Hong Kong (Guardian, 6 July 1983). The dividends these shareholders will receive will, once again, come from the unpaid labour of the Chinese working class. Even outside the Special Economic Zones, local governments fall over themselves to offer incentives to investors. On Hainan Island in the extreme south of China, the Chinese partner in joint ventures takes lower profits than in a Special Economic Zone (the overseas firm gets more) and — astonishingly — workers are paid lower wages (Beijing Review, January 1982).

The chief exports relied on to finance the modernisation are coal and oil. China has vast coal reserves, but they are mainly far from the most industrialised areas and from seaports. So priority is being given to new railway lines linking coal-producing areas to the ports. As for oil-producing. China has to rely on joint ventures for the expertise and investment needed to carry out exploration in a number of potentially rich offshore areas.

Another method China is adopting to attract foreign exchange is to expand its tourist trade. New skyscraper luxury hotels — many of them joint ventures — are being built, dwarfing in both size and conception the homes of ordinary Chinese workers. The largest hotel of all, in Nanjing, is complete with swimming pool and rooftop helicopter pad. Even in less opulent surroundings, one night in a hotel can cost almost as much as an average worker’s monthly wage.

As far as China's internal economy is concerned, one change has been an end to the “big pot" system, whereby state-owned industrial enterprises turned over all their profits to the state, which then provided finance for individual enterprises from this communal fund. Nowadays, factories simply pay a proportion of their profits to the state in taxes and keep the rest of their profit to dispose of as the factory managers decide. This is claimed to have increased both factory profits and the state’s income, on the grounds that more efficient and profitable factories now benefit from higher profits, whereas before they did not. The point is not whether this is a “better" system than previously, just that it makes it quite clear that the Chinese economy, like capitalism everywhere, is based on production for profit.

Corresponding to this reduced role of the state in allocating financial resources has been an increased role of the banking system. Production is now financed more and more by bank loans, and bank managers are encouraged to use strictly capitalist standards in deciding whether or not to grant a loan; a loan which is likely to be unprofitable will be refused. Interest rates to private depositors have been raised, partly to ensure that the compensation paid to former private capitalists is placed with the banks and so is available for lending. In 1982, about a million pounds worth of treasury bonds were issued, paying a juicy eight per cent interest to individual bondholders. The capitalist nature of the Chinese economy should be plain for all to see.

The agricultural sector has also seen comparable developments, with far more emphasis being given to commune-members cultivating private plots of land and selling the produce on the open market rather than through the state distribution mechanisms. This was just the kind of activity which had been condemned for years as evidence of "capitalist tendencies”. Market forces are now more important than before in setting price levels in both agriculture and industry. Of course this can lead to price rises: for instance, one iron and steel company was found to be selling steel billets at 30 per cent above the state price, because demand outstripped supply in a familiar capitalist way.

The developments sketched above do not mean that the nature of Chinese society has changed fundamentally since the death of Chairman Mao. China was no less capitalist during the Cultural Revolution than it is today. It is the existence of commodity production, wage labour and class monopoly of the means of production that determine the existence of capitalism. And capitalism is abolished not by rhetoric about a worker’s state, but by a socialist revolution.

Paul Bennett

Changing Russia (1963)

From the August 1963 issue of the Socialist Standard

Last January the Union of Soviet Journalists decided to invite a team of Economist reporters to tour Russia. The fruit of this visit, which took place in May, appeared as an article at the beginning of June entitled "Changing Russia?" and gives us an interesting insight into the forces at work there.

Until now Russian capitalist industry has never had it so good. It has enjoyed a sellers' market. There have been shortages all round which has meant that anything produced could be sold whatever its quality. But the situation is rapidly changing. Sections of industry are finding they cannot sell their products so easily. To overcome this, bargain prices and hire purchase have been introduced. No doubt the high-powered advertising we know in the West is not far away.

Against this background must be seen the proposals of Professor Liberman for reform of the industrial incentive system. Production in Russia is capitalist though this has been obscured by superficial differences between industrial organisation in Russia and the self-confessedly capitalist countries of the West. "In the Soviet Union today," says the article, “the director of each factory is given target figures of the gross output he should seek to obtain and the costs per unit at which he should aim (plus bonuses for himself and his workers if he overfulfils them), as well as control figures on the amount of labour he may hire, the wages he must pay, and the amount of investment he can undertake. In a capitalist economy he is provided with the same sort of economic indicators by a free market." If Liberman's proposals were adopted, on the other hand, Russian industry would come nearer to that of the West. He has suggested that the industrial enterprises be required not only to fulfil their plans but also, as the Economist puts it, “to strive harder to produce the things that would be most profitable in the present state of market demand."

The development of the productive forces and the spread of capitalist relations into the countryside has created a larger working class dependent entirely on money-wages in order to live. This has led to an increased demand for consumer goods. Now that its power stations, steel works, machine tool factories and the like have been built, Russian industry has reached a position where it can meet this.

These economic changes are the basis of the growing liberalisation in Russia. The conservative elements who see their positions threatened are trying to resist these changes, but their efforts would appear vain. The 1917 Revolution overthrew Tsarist Absolutism and allowed nascent Russian capitalist industry to develop more freely and rapidly, but only at the expense of submitting the country to a more barbarous absolutism, the Stalinist regime. Now this absolutism has in its turn become a fetter on capitalist expansion and is being cast aside.

Experience has shown that a modern capitalist country cannot for long be run on police-state lines but only with the consent, even if passive, of the mass of the workers. For this reason we may see even bigger changes yet—the emergence of political democracy for instance. This is what history teaches us to expect. Changes in economic circumstances cause corresponding changes in the political, legal, ideological and literary superstructure. This is precisely what has been happening in Russia recently.

Russia now has the productive forces of a developed capitalist country yet still the political regime of a developing country. This contradiction shows itself in the disagreements between the liberal and conservative elements in Russia, in the campaign against police excesses, in the demand for more freedom of expression in poetry and art, in the Liberman controversy and in anti-Stalinism. Russian industry has developed to such a stage that political and other changes are required before it can develop further. Once liberalisation has triumphed in Russia, as it will, the capitalist character of Russian industry will have become more obvious. Russia will lose its attraction in "left-wing" circles. History, by destroying the illusion that Russia is Socialist, will once again have done our work for us.

One final point. It appears that industrial techniques are not all that the Russian rulers have learned from the West. The reporters mention as one of the official evasions the claim that "the large number of savings bank accounts proves that wealth is evenly distributed"! More interesting is the comment which follows. "In fact," explain the reporters, “it is common practice for the wealthy to avoid conspicuousness by operating several separate accounts." Yes, Russia has a wealthy privileged class too. Which is what we’ve been saying for years.

Adam Buick