Countries which are today stricken by poverty - Egypt, for example - were once the world's greatest centres of civilisation. When Britain first took control of India, in the 18th century, the country was thought of not as a sea of poverty, but as a fabulous treasure house. The ordinary people were somewhat poorer than in Britain, but by a factor of perhaps 2:3 rather than the 1:20 of today. The luxury of the ruling classes was probably greater than that of Europe's wealthy.
By Jay Lewis
Of China, the Frenchman Francois Quesnay wrote in 1767: "No-one can deny that this state is the most beautiful in the world, the most densely populated, and the most flourishing kingdom known." Scientific discoveries in China reached a remarkable level.
When Portugal first established itself as a colonial power in what is now famine-stricken Mozambique, the local Arab-African city states there, with their "fine stone houses and the air of elegance in the local courts and markets" were "a world comparable, if not superior, in material culture to Portugal" (James Duffy). In Zimbabwe, when the 19th century white colonists found the ruined buildings after which the country is now named, they assumed that they must have been built by previous white invaders. They could not believe that black Africans were capable of such achievements.
In Ethiopia, in the Middle Ages - so Walter Rodney, a black Marxist historian murdered in 1980 as he tried to build a working class party in his native Guyana, wrote - "The kings distinguished themselves by building several churches cut out of solid rock. The architectural achievements attest to the level of skill reached by Ethiopians as well as the capacity of the state to mobilise labour on a huge scale. Fine illuminated books and manuscripts became a prominent element of Amharic culture. Equally fine garments and jewellery were produced for the ruling class and for the church..."
The European powers had certain advantages over the peoples of Africa and Asia - a more dynamic economic system, more centralised state power, and better military technology. But overall there was no great superiority. The economics of colonialism are responsible for today's economic gap between the average living standards in Britain and in India. At independence in 1947, the conditions of the Indian peasantry were roughly the same as they had been 200 years earlier. The colonial era which had enriched thousands of British investors and administrators had left the Indian peasants stuck in absolute poverty.
Underdevelopment is not due to lack of talent or energy by the people of the country. Like modern industrial development, it is the product of an economic system, capitalism. Before the 18th century or thereabouts, economic differences between parts of the world were much smaller than they are today. Or, to be more accurate, they were differences of a different sort. Some societies - ancient Egypt, ancient Greece, ancient China - reached a much higher level of culture than others. But that was a difference that mostly concerned the ruling class. The ruling class might have literature, baths, roads, great temples and palaces, a varied and delicate diet, beautiful clothes and jewels - or not. Whatever happened in the wealthier spheres of society, the mass of the people did nothing more than scratch a bare living from the land.
Today we have the inverse situation. The wealthy have much the same technology, culture and luxury at their disposal in every country. But the standard of living of the working people ranges from the Western worker's material comfort and relatively easy access to culture to the African peasant's poverty and illiteracy. A luxury hotel in Africa provides similar service to a luxury hotel in New York. Even in the world's most underdeveloped countries, such industry as there is can use recognisably similar technologies to those used in the advanced countries.
Capitalism has created - for the first time in history - the productive potential to free humanity from want. It has created freely-moving international technology and wealth. In the richer capitalist countries, strong trade unions have won greatly improved living standards for many workers. Yet even in the USA millions are destitute. And the average worker's wage in Indonesia, for example, has, on a generous estimate, one tenth the buying power of a US wage. For millions of people in Africa, in India, and even in Latin America, life is as harsh and as precarious as it was 500 or 1000 years ago, if not more so.
The story of development and underdevelopment is the story of how capitalism's drive to expand production has worked its way through unevenly, creating huge material advances in some areas while simultaneously creating ruin elsewhere.
The decisive turning point in producing the present pattern of the world came in the 16th century. A new economic system - capitalism, the system of wage labour and of continuous accumulation and reinvestment of profits - emerged decisively from the neo-feudal societies of Western Europe. As yet, it was not industrial capitalism. The Industrial Revolution and large-scale factory production were still in the future. But this earlier capitalism - commercial capitalism - had its own technological revolution, with printing, more developed firearms and ocean navigation.
For centuries until then the central networks of trade had been the coastal shipping routes of the Mediterranean and the Indian Ocean. But now the cities of the Arab world - until then the greatest on earth after China's - and those of Italy were eclipsed. As ships began sailing the open seas regularly and relatively easily, the new centres of trade were the seafaring powers of the Atlantic - Portugal, Spain, the Netherlands, England - who also established themselves in the Indian Ocean. Karl Marx summed this up as follows:
"The discovery of gold and silver in the Americas, the extirpation, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of blackskins, are all things which characterise the dawn of the era of capitalist production [in the 16th century]... The colonies provided a market for the budding manufactures, and a vast increase in accumulation which was guaranteed by the mother country's monopoly of the market. The treasures captured outside Europe by undisguised looting, enslavement and murder flowed back into the mother-country and were turned into capital there."
The rise of capitalist civilisation in Western Europe thus went together with the destruction of previous civilisations in other parts of the world. Black Africa's particular blight was the slave trade. "To discuss trade between Africans and Europeans in the four centuries before colonial rule [i.e., from the late 15th to the late 19th century] is virtually to discuss slave trade," as Walter Rodney puts it. Millions of Africans were forced into the status of human cattle and shipped overseas. Probably more than 10 million arrived alive in the Americas or Europe; maybe as many again died en route. The population of Africa stagnated from 1650 to 1850, while Europe's nearly tripled and Asia's more than doubled. Africa had handicraft industries, and trade based on them. But the handicrafts could not compete. They were displaced by the new trade in human beings against European manufactured goods. The African peoples were split up into small warring groups and statelets, as rival chiefs would make war on each other in order to capture prisoners for the slave trade. With the European traders, from their coastal forts and bases, also encouraging these divisions, the African peoples had no chance of establishing relatively strong, large states such as had arisen in Europe.
The slave trade was also the underpinning of modern anti-black racism. Suspicion and fear of strangers dates back long before the 16th century, and anti-Jewish discrimination was already well established in Europe. Systematic, widespread prejudice and discrimination based on skin colour started with the slave trade (though it did not reach full pitch until the late 19th century). The white slave traders and slave owners, adjusting the ideology of the "rights of man" to fit in with their economic activity, declared that black people were naturally primitive and inferior. Even worse, some black people were bludgeoned into accepting this, or half-accepting it. Racism itself in turn became something of an economic factor in the underdevelopment of black Africa.
The slave trade declined in the first half of the nineteenth century, as industrial capitalism developed, creating a wider and more universal need for the more flexible and elastic wage labour. A new chapter opened in Africa. In a sudden "scramble" at the end of the 19th century, practically the whole continent was divided up as colonies for the European powers.
The economic system established under colonial rule had three main features: limited capitalist enterprise, cash crop farming linked to European trading concerns, and forced labour. Mines - gold and diamond in South Africa, copper in Zambia, etc. - and capitalist farms or estates (especially in the areas where many whites settled, like South Africa, Zimbabwe and Kenya) employed wage labour. Railways and ports were also built. Rail networks were started in the 1880s and 1890s, and mostly completed by the early 1930s. Capital investment in black Africa was, however, much lower than elsewhere in the Third World. Up to 1930, for example, only 2% of British capitalism's overseas investment was in Africa, while 14% was in India, 43% in the rest of the Empire and 22% in South America.
The wage labour was often casual labour, and the methods primitive. The great majority of the African population were still formally independent peasants. But they were driven increasingly from traditional subsistence agriculture (i.e., producing mainly for their own consumption) towards cash crops. "The African peasant," as Walter Rodney records, "went in for cash crop farming for many reasons. A minority eagerly took up the opportunity to continue to acquire European goods... Many others... took to earning cash because they had to pay various taxes in money or because they were forced to work... Examples of Africans literally being forced to grow cash crops by gun and whip were to be found in Tanganyika under German rule, in Portuguese colonies, and in French Equatorial Africa and the French Sudan in the 1930s.... The laws and by-laws by which peasants in British East Africa were required to maintain minimum acreages of cash crops like cotton and groundnuts were in effect forms of coercion by the colonial state..." Forced labour was also used to build railways, roads and ports.
These elements were combined in different ways and in different proportions in different parts of the continent. But they meshed together in a single system - and one which had very little impetus towards raising productivity.
Force was required to tear Africans away from their traditional livelihoods and create a labour force for capitalist exploitation. But the forcible methods of the colonial regime did not completely destroy the traditional structures of the African economy, nor were they intended to. Collaboration with tribal chiefs provided the Europeans with a cheap method of administration. And the continuation of some subsistence farming allowed them to pay extremely low wages and prices for cash crops. Subsistence farming would keep the African workers alive, while wages or cash crops enabled them to pay their taxes and debts, and to buy a few European goods. The companies which controlled trade in the cash crops, like Unilever, brought huge profits back to Europe. Capitalist profiteers geared themselves into pre-capitalist forms of exploitation; they grabbed the proceeds of the peasants' surplus labour, done under pre-capitalist conditions, and, by selling the goods in Europe, transformed them into capital. The Africans suffered the evils both of capitalism and of pre-capitalist economic forms. They suffered the ruthless pressures and insecurity of the capitalist market economy, transmitted through the trading companies; and they suffered the isolation, primitive conditions, static technology and traditional hierarchies of pre-capitalist societies.
The Europeans brought little capitalist civilisation to Africa. Hardly any schools or hospitals were built for the black population until after the Second World War. In Nigeria in the 1930s, for example, there were 12 hospitals for 4,000 Europeans, and 52 hospitals for at least 40 million Africans. Although literacy was higher in Nigeria than in other colonies, still it stood at only 12% in 1952. There was a flurry of "development" spending after World War Two. Partly the colonial powers were responding to the fact that the old colonial economy was breaking down (under the impact of the drastic decline in primary-product prices in the 1930s) and something of a permanent wage-worker class had emerged. Also, they became convinced that independence was inevitable, and made efforts to create a reliable African middle class to which power could be transferred. But it was too little, too late, and not very useful anyway. After winning independence the new African states had a terrible heritage to overcome.
When black Africa was put under colonial rule in the late 19th century, it had already been shattered and devastated by four centuries of the slave trade. But the India conquered by the British from the mid-18th century was a great and splendid empire. European trading bases had existed in India since the early 16th century, but they had exported manufactured goods from India - for India "had an industrial sector producing luxury goods which Europe could not match" (Angus Maddison). Now Britain imposed restrictions on textile imports from India, and promoted cheap exports from the new cotton mills of Lancashire. "The handicraft industries were destroyed - the same which had supplied the eastern trade of more than thousand years and had provided Greek and Roman, Arab and Venetian, English and Portuguese traders with their wealth. 'The bones of the weavers' - and an English Governor-General said it [in 1834-5] - were 'bleaching the plains of India'" (Michael Barratt Brown).
The Mughal Empire - the regime before the British conquest - had not been a progressive system. A tiny elite, mostly alien in origin (Persian or Afghan) and in religion (Muslim), lived in luxury through extremely heavy taxation of the peasants. But the British continued many of the evils of the old regime, and added some new ones. Under Mughal rule, all land had been owned by the Emperor. The peasants were guaranteed the hereditary use of their plots, but could not sell, buy or sub-let land. Members of the ruling class would be allocated districts where they held sway as tax collectors for the Emperor: those positions were not hereditary. The British half-transformed this set-up. In Bengal and some other areas, the Mughal tax collectors were given a status which was half landlord, half tax collector. This landlord/tax collector class rapidly expanded under British rule, generating a sub-class of middlemen. In southern India, where Mughal rule had decayed well before the British conquest, the British worked differently. There, the higher-caste peasants were given quasi-smallholder status, but with the colonial government as overlord.
Karl Marx commented: "In Bengal, we have a combination of English landlordism, of the Irish middlemen system, of the Austrian system, transforming the landlord into the tax gatherer, and of the Asiatic system, making the State the real landlord. In Madras and Bombay we have a French peasant proprietor who is at the same time a serf and a metayer [share-cropper] of the State. The drawbacks of all these various systems accumulate upon him [the peasant] without him enjoying any of their redeeming features." The peasants had no access to resources to improve their agriculture. And if by chance they should get access, the benefit of any improvement would immediately be confiscated by the landlord or middleman, who was a parasite, interested only in luxury consumption rather than capitalist-type investment for expansion.
According to modern research, Marx was mistaken in his belief that the British had also allowed the decay of irrigation works established under the Mughals. The Mughals' irrigation works were slight, and were in fact expanded in certain districts by the British. Overall, however, agricultural productivity increased barely at all, or maybe even decreased, during two centuries of British rule. Above the relentless peasant poverty, the British replaced the Mughals as a ruling class. The British administrators retained the same vast luxury, display and armies of servants. By the 1930s, about one-tenth of India's whole national income was flowing to Britain, and another slice was being consumed by the British administration in India itself. The maintenance, in modified form, of the old social structures in the countryside enabled cheaper and easier rule. Britain's land reform, wrote the Governor General in 1829, "though a failure in many other respects, and in most important essentials, has this great advantage at least, of having created a vast body of rich landed proprietors deeply interested in the continuance of the British dominion and having complete command over the mass of the people." But there was after all a difference between the British and the Mughals. The Mughals' wealth was used for luxury and display alone. The wealth of the British, or some of it, was capital. Sizeable amounts of capital were invested in India. A big railway-building programme was undertaken in the 1850s. In 1870, 21% of all Britain's overseas capital stock was in India.
Karl Marx wrote: "I know that the English millocracy intend to endow India with railways with the exclusive view of extracting at diminished expense the cotton and other raw materials for their manufactures. But... you cannot maintain a net of railways over an immense country without introducing all those industrial processes necessary to meet the immediate and current wants of railway locomotion... The railway system will therefore become, in India, truly the forerunner of modern industry." Marx qualified this prediction: "All the English bourgeoisie may be forced to do will neither emancipate nor materially mend the social condition of the mass of the people, depending not only on the development of the productive powers, but on their appropriation by the people. But what they will not fail to do is lay down the material premises for both. Has the bourgeoisie ever done more? Has it ever effected a progress without dragging individuals and peoples through blood and dirt, through misery and degradation? The Indians will not reap the fruits of the new elements of society scattered among them by the British bourgeoisie, till in Great Britain itself the now ruling classes shall have been supplanted by the industrial proletariat, or till the Hindus themselves shall have grown strong enough to throw off the English yoke altogether."
In any case, the growth of factory production in India was very slow. There was a spurt of industrialisation around the First World War, and steel production was started then, much earlier than in most Third World countries. The Indian capitalist class, by the time of independence, was far stronger than any capitalist class in black Africa. But from the 1920s to independence in 1947 the industrial percentage of India's workforce actually declined. The stark poverty of the peasantry limited the home market. The British in India, and the Indian elite, preferred imported goods. And, perhaps crucially, Indian industry lacked the state protection and sponsorship which has been crucial to every infant industrial capitalism. Every industrial capitalist power since Britain has developed with tariffs guarding its infant industries and a large measure of state intervention. Even in Britain, state contracts during the Napoleonic Wars were a big factor in the Industrial Revolution. But the Indian capitalists did not have a state of their own. They were ruled by a British state, which would always help British capitalists first. For a short period after World War One, the British did adopt a policy of helping Indian industry. But it was quickly ditched, especially when the great world slump after 1929 left British industry clamouring for the Empire to be made its protected market.
The French writer Claude Levi-Strauss aptly describes India as the British left it: it was, "as if history and economics had managed to establish, indeed superimpose, their most tragic phases of development on these wretched victims: the shortages and epidemics of medieval times, frenzied exploitation as in the early years of the industrial revolution, and the unemployment and speculation of modern capitalism."
How Britain ruined India
Looting El Dorado
In 1519-21 Spain conquered Mexico, and over the following decades it rapidly built up in America the first great colonial empire of the capitalist era. In India and Africa and the Middle East, as we have seen, the colonial regimes acted as a sort of funnel, strapped onto a modified local pre-capitalist economy, pumping out wealth into the channels of European capitalism. Spanish America was not quite the same. Nor, generally, did it follow the other example of European colonialism, in North America and Australia, where the local population was almost completely wiped out and replaced by European settlers pursuing capitalist development.
The Americas had perhaps 100 million people before the Europeans arrived. Fewer than three million of these lived in North America or in present-day Argentina, Brazil or Chile. The vast majority were in present-day Mexico, Central America and Peru, where they had elaborate civilisations (Inca, Aztec) but were technologically not very advanced. These densely-populated areas became the main centres of Spanish America. The native ("Indian") population was decimated by war, forced labour and imported diseases - in Mexico it was reduced from 25 million to one and a half million in one century - but remained the basic labour force for the Spanish regime. Elsewhere in the Americas, where the native population was sparse or was wiped out completely (as on many Caribbean islands), African slaves were imported. But in the Spanish possessions, African slavery was a relatively minor element, except in Cuba. Today "mestizos" - people of mixed race - are the dominant ethnic type in Latin America; but countries vary widely, with Bolivia and Guatemala having an Indian majority in the population and Argentina and Uruguay being almost entirely white.
"At first the Spaniards simply picked up the gold already mined by the Incas and used for ritual," records Immanuel Wallerstein. "It was a bonanza. Just as this was running out, the Spaniards succeeded in discovering the method of silver amalgam which enabled them profitably to mine the silver which existed in such abundance." A yearly succession of treasure fleets made their way across the Atlantic, laden with silver. Potosi - now a small, poverty-stricken town in the Bolivian highlands - became, in its heyday around 1600, as large and perhaps as rich as any city in Western Europe. It was producing half the world's total supply of silver. The human cost? Eight million Indians killed by forced labour in the silver mines of Potosi alone.
The huge gains made from the silver trade have convinced many Marxists that Spanish America was fully capitalist. Capital is not just wealth from trade, but wealth which constantly expands itself through reinvestment. Although fortunes based on the silver trade played a big role in the emergence of the capitalist world economy, they were generally not capital there. To quote Marx again: "The treasures captured outside Europe... flowed back to the mother-country and were turned into capital there." In fact it was more in Italy and in north-west Europe than in Spain that the silver quickened capitalism. Much of it went to Antwerp, which in the 16th century was "as much (if not more) the true capital of the Atlantic as Seville or Lisbon... a system of exchange, circulation and banking came into being, centred on the Scheldt port, and extending as far as Germany, England and even Lyons" (Fernand Braudel). Even metropolitan Spain's economy was still based on feudal privilege rather than capitalist enterprise. The treasure of the "Indies" (as the Spanish called America) was consumed in luxury and military display. Spaniards of the time complained that their country was "the Indies of other foreign kingdoms".
Feudal Spain established a new feudalism in Spanish America. Spanish settlers grabbed huge areas of land - the "latifundia". A fantastically unequal distribution of landownership was set up which continues in most of Spanish America to this day. In 1970, over 60% of Latin America's land was in big holdings (more than 500 hectares), whereas in Africa and Asia 75-80% of land was in holdings smaller than 20 hectares. The Indian and mestizo peasants were tied to the latifundia by a system called debt-peonage. The Spanish land-grabber would grant the peasant a little land, some implements and some seed or livestock, in return for labour and loan repayments. Formally, the peasants are wage labourers. In fact they can never get out of debt, and the landowner is local magistrate and governor as well as employer. This system is by no means abolished in Latin America even now.
At the beginning of the 19th century almost all the Spanish-American colonies won independence. But the land-owning oligarchies remained the dominant force. Spanish-American feudalism, resting as it did on the super-exploitation of the Indians, lacked the dynamic conflict between cities and countryside typical of West European feudalism. Landowners generally lived in the cities. There was not much of an autonomous urban merchant/industrial class fretting against feudal limitations. Independence produced no great stride forward into capitalist development. In fact, manufacturing industry - quite active under Spanish rule, though in feudal guild forms - initially declined. The British politician George Canning greeted Spanish American independence with some excitement: "England will be a workshop, and Latin America her farm." Britain did not need to establish its own colonial rule in America in place of Spain's. The competitive supremacy of its industry would give it economic dominance, and with that political influence. Trade increased. Spanish-American manufacturing industry, relatively robust against the feeble competition of Spain, was crushed by the competition of Britain's new factories. Most Latin-American countries became economies dependent on a single export - coffee, bananas, tin for Bolivia, nitrates and later copper for Chile. But the cities were still rich; and capital did circulate increasingly in Latin America under this "imperialism of free trade". Towards the end of the century, new industries arose in Mexico, Brazil, Chile and in Argentina.
Capitalist development had been limited because of the devastating competition of Britain - which nevertheless suited the landowning oligarchies quite well, giving them easy access to modern manufactured goods and markets in return for their agricultural exports - and also for another reason. Some leaders of the independence struggle had hoped to unite former Spanish America into a single state. They failed. The division of the region into several states led to those states being integrated into the world as separate (relatively weak and small) provinces, relating more to outside big powers than to each other. A South American "common market" of some vigour, Mercosur, has now been created under Brazilian hegemony, but as late as 1966 only 10% of the trade of the Latin American Free Trade Area was within LAFTA, whereas over 60% of Western Europe's trade was internal.
And then worse: from the late 19th century, as rapidly-expanding North America became a great industrial power, large parts of Latin America became semi-colonies of the US. In 1895 an official US diplomatic note declared: "Today the US is practically sovereign on this continent, and its fiat is law." The US never quite acquired that full control, and especially not over the larger states to the south, but it was a powerful force backing up the oligarchies, and in Central America it regularly intervened with military force at the least sign of reform.
The depression of the 1930s threw the old oligarchic export economies into crisis. Between 1928-9 and 1932-3 exports declined by more than 60% for every major economy in Latin America. Nationalist revolutions and reform efforts, from below and from above, followed. The local industrial capitalist class began to play a bigger role.
Latin America today, alongside tracts of poverty as bad as any in the world, has much modern industry and a sizeable middle class not very different in living standards from Western Europe. But the old oligarchies only faded, in most countries, after the Cuban Revolution in 1959.
The spoils of the Sultanates
For centuries, indeed for thousands of years, before the capitalist era, the east Mediterranean was more developed, more civilised and richer than western Europe. Egypt, Babylon (Iraq) and Greece were the greatest centres of ancient civilisation. Although the Roman Empire had its political centre in the West, its eastern regions were richer, with far bigger cities.
In the 7th century, nomad warriors from desert Arabia conquered most of the east and south Mediterranean under the banner of a new religion, Islam. Big Islamic empires dominated the area until the 20th century. From the 14th to the 20th century, the imperial power was Turkey (the Ottoman empire).
In 1453 the Turks conquered Constantinople (Istanbul), the capital of what remained of the Roman Empire. In 1529 their armies were at the gates of Vienna. But soon their power began to decline relative to that of a Western Europe where capitalism was already sprouting. Ironically, the more ordered centralisation of the Islamic empire, compared to the ramshackle feudal polities of the West, stunted its development. All land was owned, and all economic activity was controlled, by the Sultan. The peasants paid taxes to support the Sultan and a central state bureaucracy made up of conscripted slaves. Areas of land were allotted to the Sultan's military commanders, but while the empire was still vigorous (at least until the later stages of the decay of the empire) they acquired none of the autonomous economic, political and legal power, or the hereditary rights, which Western feudal lords had. The cities, too, had no independence, but were closely regulated by the Sultan's despotism. "Craft guilds were carefully supervised by the State... and from the 17th century onwards commercial functions devolved increasingly onto infidel minority communities, Greek, Jewish or Armenian" (Perry Anderson).
The system became stagnant. Western powers started chopping bits off the Ottoman realm. France took Algiers in 1830, then extended its rule to the whole of Algeria by a war lasting until 1847. Britain seized Aden, an important port at the south-west tip of the Arabian peninsula, in 1839, and over the course of the 19th century extended its control right round the coast of Arabia to Kuwait. France took Tunisia in 1881; Italy took Libya in 1911. The Turks' European territories, in the Balkans, broke away and came under Austrian or Russian domination.
Turkey itself became a sort of semi-colony. "Semi-colony", here and in the writings of Marxists like Leon Trotsky, was not a loose term for "economically subordinate state". It meant what it said: a state politically dominated in much the same way as a colony, but not as neatly or completely. Since the Middle Ages, foreigners and people under their protection had been exempt from Ottoman taxes and law. Commercial treaties starting with the Anglo-Turkish Commercial Convention of 1838 had restricted the Ottoman authorities' ability to levy tariffs on Western imports. The Sultan, and his Egyptian viceroy, the Khedive, fell heavily into debt to British and French financiers. When they became unable to meet their repayments, Britain seized Egypt (in 1882). Turkey was probably saved from a similar fate only because no Western power was willing to see another gain sole possession of so rich a prize. Instead, in 1881, a consortium of Western governments took effective control of the Sultan's finances, collecting the taxes, taking their money, and paying over to the Sultan only what was left.
At this stage Germany was the most powerful European power in Turkey, sufficiently so to ensure that Turkey was pulled into World War One on Germany's side. After the war, Britain and France carved up the remnants of the Ottoman Empire. Britain took Iraq, Jordan and Palestine; France took Syria and Lebanon. British forces occupied the capital of the rump Turkish state, Constantinople, for five years after World War One, and France and Italy laid claim to chunks of its territory. Only by defeating Greek armies promoted and sponsored by the Allies, and ousting the Sultan's government in Constantinople, was a Turkish-nationalist government based in Ankara able to win some national independence (in October 1923) and begin a pioneer state-capitalist drive for industrialisation.
A European population of about a million settled in Algeria after 1830, took much of the best land, and developed capitalist farming for export (wine, fruit, etc.). In Egypt, cotton growing had been developed by 19th-century Egyptian rulers attempting a pioneer version of late 20th century "development economics"; it was converted to the profit of the British. Besides oil, however, Western intervention planted no other major new industries in the Middle East. Instead, the Ottomans' formidable pre-capitalist machine for squeezing the peasants was diverted to the profit of Western capitalists.
Egypt, and other parts of the Middle East, were also important to the imperialist powers for strategic reasons. After the building of the Suez Canal in 1865-9, the Middle East was the fulcrum of trade between the West and the East.
The other great prize was oil. Oil exploitation began before World War One in Iran (under the control of the Anglo-Persian Oil Company, later BP) and Iraq (under the control of a consortium of British, French and later American companies). It spread to Saudi Arabia and Kuwait in the 1930s, and to Algeria, Libya, Oman and other Gulf statelets in the 1960s and '70s.
Iraq had come under British control after World War One. Iran was also heavily dominated by Britain. Until the 1960s and '70s, oil in Iraq and Iran, and in other Middle East countries, was run as a money machine for Shell, BP and the American companies which increasingly elbowed their way in. The oil industry was a little corner of capitalism in countries which otherwise remained poor peasant economies. Virtually none of the oil profits went back into the local economy.
Throughout the Middle East and North Africa, "Europeans held all the commanding heights of the economy except for land ownership..." - not only oil, but commerce, and what little industry there was. The importance of oil, and the strategic position of the region, made the imperialist powers especially reluctant to end their colonial or semi-colonial grip. Not until after Algeria's bloody war for independence (1954-62), and the nationalist revolutions in Egypt (1952-6) and Iraq (1958), did control shift decisively.
"By 1960, the bulk of economic activity in the region, with the important exception of oil, had passed into the hands of the governments or the native bourgeoisies. The next two decades saw a powerful wave of socialisation. Outside agriculture and housing the national private sector was reduced to insignificance in Egypt, Syria, Iraq, Sudan, Algeria, Libya, South Yemen, and, most recently, Iran, and severely curtailed in other countries. The takeover of the oil industry since 1973 has completed this process," wrote the economic historian Charles Issawi in the early 1980s.
Levelling and uneven development
There were great world empires before capitalism. But capitalism was the first social system to create an integrated world economy - a world knitted together by a dense network of international trade. Also, capitalism has a drive towards expansion which far exceeds that of any previous economy.
In Imperial China, in Mughal India, in ancient Egypt or in early medieval Europe, economic advance meant only an increase in the luxury and religious or military display of the ruling class. It was thus inherently limited. Capitalism, too, features ruling class luxury and military display. But these are not fundamental. As against "the old view, in which the human being appears as the aim of production", in the modern world, as Karl Marx put it, "production appears as the aim of mankind and wealth as the aim of production".
By making everything measurable against money, capitalism creates a form of wealth - capital, constantly turning from money into production and back again - which by its very nature seeks unlimited expansion and drives forward productivity. Pre-capitalist wealth was fixed in land, slaves, palaces, temples. Capitalist wealth is mobile, in the form of money. It constantly seeks expansion, by being invested and reinvested and yet again reinvested in production, each time seeking the most profitable enterprise.
Capitalism spreads. Before the capitalist era, feudal economies in Europe and Japan coexisted for centuries with systems where a bureaucratic central state owned all the land. Capitalism has spread all over the world.
Capitalism has a tendency to even out inequalities - to spread development to underdeveloped areas. It also has a counter-tendency, in many ways more powerful, to increase inequality between areas. There are three main reasons:
First: capitalism can and does mesh other modes of production into its own web. As Marx put it: "as soon as peoples whose production still moves within the lower forms of slave labour, the corvee, etc. are drawn into a world market dominated by the capitalist mode of production... the civilised horrors of over-work are grafted onto the barbaric horrors of slavery, serfdom, etc."
This happened particularly in the colonies. Politically, "the late-Victorians had to find their allies more and more among Indian princes, Egyptian pashas or African paramount chiefs" (Robinson, Gallagher and Denny et al). The imperialists not only allowed older modes of production to continue, often they bolstered them (or modified versions of them) in order to bolster the classes that were their allies in the colonies. The colonial or semi-colonial regime becomes "a political machinery for exploiting peasant economy for capitalist purposes - the real function, this, of all Oriental states in the period of capitalist imperialism" (Rosa Luxemburg).
Second: capitalist success breeds capitalist success. New capitalist investment in an area requires, and is encouraged by, good communications (road, rail, air, sea, telecoms, mail), nearby markets, ample supplies of trained and healthy labour, and easy access to sub-contractors, suppliers, repair people, and experts to consult. Thus, an area where capitalism is already highly developed will always tend to have advantages over one where it is not.
The advantages can be offset by other factors - cheaper labour, or easier access to raw materials, or lower overheads, in areas where capitalism is less developed - but they are sufficient to maintain great unevenness in capitalist development, often great unevenness even within a single state.
But - third - capitalism does not develop in a world without frontiers. It develops in different countries. The state builds communications, educates labour, organises markets, fixes tariffs and makes, promotes, subsidises - or obstructs - investment.
An independent capitalist state promotes the development of its own capitalist class. A colony suffers from the rule of a state serving the interests of another capitalist class. The colonial rulers may even - as in India - openly discriminate against colonial industry in order to protect the markets of imperial capital. Even if they do not, both nervousness about the political effects of widespread education and business development, and racist prejudice, inhibit all they do to promote development.
Even after independence, the legacy of colonialism usually obstructs development. The ex-colonies are usually small, weak units in a competitive capitalist world dominated by rich states and giant multinationals. Their currencies, for example, are not accepted in international trade; they have to buy most of the technology they need for expanding production from richer countries; they suffer chronically from balance of payments problems (shortage of foreign exchange).
Thus capitalism makes possible both unprecedented material advance and terrible inhumanity and inequality under the cloak of the impersonal laws of the market economy.
The grey revolution
The capitalist world economy was created not by free trade but by colonialism. The process had very different consequences for the colonised and for the colonisers, for the oppressed peoples and for the oppressors.
Colonial imperialism brought some of the elements of capitalist development to the Third World. But such features of capitalism as mark it out as an advance on previous societies - literacy, education, scientific health care, individual liberty and dignity - did not reach the mass of the people in the colonies. Sometimes they faced the opposite: destruction of their cultures, racism, genocide.
Such was colonialism. In Spanish America, independence (in the early 19th century) brought little advance. The independence struggles in the rest of the Third World, generally between World War Two and 1975, were significantly different.
Take, for example, the nationalisation of the Suez Canal in 1956, which closed 74 years of British semi-colonial control of Egypt.
"Built by hundreds of thousands of Egyptian peasants driven into forced labour under the foreign whip, serving later as the instrument of the financial penetration and direct occupation of British imperialism [British troops were stationed in the Canal Zone], the Suez Canal was, second to the occupation army, the cruellest symbol of imperialist domination.
"On that evening [when the nationalisation was announced] the Egyptian people could not sleep. Strangers talked to each other in the streets... Every Egyptian was suddenly gripped by joy, pride and the wildest of dreams" (Mahmoud Hussein).
The joy and the pride were at the heart of the revolutions which won independence for almost all the world's colonies (outside the USSR's empire) between 1945 and 1975, when Portugal's grip on Angola, Mozambique, and Guinea-Bissau was finally broken. Often, the new independent regimes were corrupt dictatorships; they were as intent on exploiting the workers as the old imperialists; sometimes they proved unable to develop modern industry. Despite all that, independence was a great victory. Hundreds of millions of people were drawn into modern politics, and became aware of their own dignity and their own ability to change the world, for the first time. They did not throw off capitalist exploitation; they did throw off alien rule and racist suppression.
If liberation from colonial rule took place quietly in some countries, it was only because huge wars and uprisings in other colonies had shaken the European powers. It was a real revolution, marking the end of a 400-year epoch in world history.
And it was not only a matter of "joy, pride and the wildest of dreams". Independence also led to a new era of capitalist development in the Third World.
From the 1950s to the 1970s, in many countries, under both right-wing and left-wing governments, large sections of industry were nationalised, and protective tariffs were set up. Despite the rise of the multinational corporations in that period, the percentage of local ownership in the economies of the Third World increased markedly. Even after falling in the 1990s, it still remains much higher than in the colonial or semi-colonial era. Industry grew fast - and that included manufacturing industry, not just the traditional Third World industries (mining, plantations, railways to serve the mines and plantations, etc.). "The colour of the revolution which I have seen in one area after another of India in the 1960s is steel-grey," wrote Daniel Thorner. "I call it an industrial revolution." Manufacturing output in the Third World grew by around 6% a year, and output per head by about 3 to 4% a year, between 1950 and the early 1980s. That growth was twice as fast as the growth of British manufacturing industry in the 19th century, and slightly faster (per head) than that of the advanced capitalist countries between 1950 and the early '80s. As late as 1960, the Third World made only 5% of the non-Stalinist world's steel. By 1980 it produced 15%, and today Korea, Brazil, India, Taiwan, Mexico and China are all among the world's top 16 steel-producing countries. Manufactured goods outpaced traditional raw material exports in the Third World's trade.
The resources put into education and health by Third World governments were almost everywhere smaller than those put into the armed forces. Nevertheless, they were far greater than those invested by the colonial regimes. At independence only one child in five in India got any primary education. By the early 1980s, 76% did. More than 70 years of British rule in Nigeria produced 15% adult literacy by independence. Twenty years of independence raised the literacy rate to 34%. These developments were paralleled in Spanish America - especially after the shock of the Cuban Revolution - by a decline in the power of the traditional landowning oligarchies.
Land reforms were proclaimed practically everywhere in the Third World. They were effective more rarely. Nevertheless, several countries -from South Korea through Egypt and Algeria to Mexico - saw dramatic changes in their structure of landholding. Elsewhere, capitalist relations in agriculture developed more gradually but nonetheless inexorably.
The political and industrial revolutions in the Third World after 1945 were not automatic processes. Their shape, form and extent were set by class struggle. Three examples of "success stories" in the Third World cast light on the many "failure stories" - and on the questions: Success for whom? At what cost? The examples are Egypt, South Korea and Cuba.
Egypt before its revolution was ruled by a triple alliance of big landowners, wealthy merchants and bankers (along with a few industrialists) and British imperialism. The country had become independent, on paper, in 1923, but British troops remained until 1956, and the British ambassador was able to make and unmake governments. Sixty per cent of the population were landless agricultural labourers or peasants with tiny plots. They received about 6% of the national income between them. Average life expectancy was 36 years; 77% of Egyptians over the age of five were illiterate.
In 1952, a group of middle-ranking army officers seized power. Among them, Gamal Abdul Nasser quickly took the lead. Over the next 10 years, Nasser's regime transformed Egyptian society. British troops were forced out and the Suez Canal nationalised. A series of reforms confiscated the big landlords' land and redistributed it to the peasants, who were later grouped into state-supervised cooperatives. Social services were expanded. Most major industry and commerce was nationalised, without compensation, in 1960-1.
The land reforms produced a considerable redistribution of income, and there were some lasting social improvements. By 1982 average life expectancy was 58 years and, by the late 1970s, adult literacy was 44%. Industry also grew, though not without problems. Between 1953-5 and 1963-5, electricity and steel production trebled, and production of cement and cotton yarn and fabrics doubled. Many capitalists were ruined, especially those (many) who were of foreign origin (Jewish, Greek, Armenian, Lebanese, etc.: there was a xenophobic and anti-semitic edge to Nasser's policies). The Egyptian capitalist class was reconstructed around the state bureaucracy.
From 1967, Nasser's "state capitalist" policy was gradually reversed and replaced by an all-out drive to promote private enterprise and attract foreign investment - though well into the 1980s the state remained by far the dominant force in the economy. The new course widened social inequalities again; increased the number of landless labourers to the same proportions as before the Nasser period; and produced a boom in speculation, commerce and luxury, but very little solid industrial growth. Only Egypt's share in the oil boom of the 1970s moderated the wretchedness.
Egypt's "success story" thus contained a very large dose indeed of failure. But between about 1956 and 1967 Nasser was a figurehead for a whole current of radical politics world-wide. Many other Third World states followed a similar state-capitalist course.
Cuba had been a colony of Spain until 1898, and then was dominated by the USA. The US monopolised Cuba's sugar trade and exercised considerable control over Cuban politics. US interests owned a large part of Cuba's economy. The local capitalist class was a corrupt and disorganised junior partner of the US, the capital, Havana, in the 1950s, an infamously sleazy city of 10,000 prostitutes and vast fortunes made through corruption.
There was a long tradition of popular revolt, of which Castro's revolution in January 1959 was part. The old regime fell relatively easily. But Castro's was a genuine revolution - albeit not a working class one. He acted boldly. He confiscated the big estates and, by the end of 1960, nationalised most of industry. No specially rapid industrial growth followed. The economy was, and is still, much dominated by sugar. But between 1959 and 1962 there was a radical redistribution of income which maybe even doubled the living standards of low-paid workers. The island was already much more developed economically than Egypt. In fact, it was one of the most advanced capitalist countries in the Third World. Infant mortality was lower than in Germany, France, Belgium or Ireland. Some 40% of Cuba's doctors left the island after the revolution, but the new regime established 63 hospitals in rural areas (by the late 1970s) where before there had been only three. Before the revolution 24% of the population had been illiterate. By the early 1960s illiteracy was reduced to 6%. Under the old system at least 25% of the workforce was unemployed for most of the year. By 1978 a sceptical US economist estimated unemployment at 1%. Slavery had been abolished in Cuba only in 1886, and the black third of the population faced severe discrimination. That was reduced.
In South Korea, by contrast, a social revolution was pushed through by US imperialism. When US troops seized the country at the end of World War Two, it was miserably poor -shattered by war and previous decades of brutal Japanese colonialism. Five per cent of farm households owned or managed 60% of the land; the poorer 57% owned less than 6%. There was virtually no industry. The American Military Government immediately distributed all Japanese-owned land to the peasants, limited rents and gave tenants security. In 1950, anxious to create a social base for its war against revolutionary-Stalinist North Korea, the US pushed through a further land reform. All large landholdings were seized with minimal compensation. The landlord class was in effect wiped out. In 1974, despite a trend in the meantime for large landholdings to be reconstituted, 83% of the cultivated land was in smallholdings.
The US saw the creation of a large class of smallholding farmers as their best way to build a social base for private-profit capitalism. They were right about that. US military might and lavish US aid made sure that the land reform was effective and successful. Easy credit was available to the small farmers, especially from the 1960s. This agricultural revolution was the basis for an industrial revolution - an industrial revolution which, despite the official free-enterprise ideology, was tightly managed and directed by the state through its control of credit. Manufacturing industry in South Korea grew 16% a year between 1960 and 1982. Manufactured exports worth $10 million in 1962 and $19 billion in 1981. Practically all South Korea's investment was financed by US aid and military contracts, especially during the Vietnam War. Nevertheless, by the 1980s South Korea had reached a point where its industrial firms could worry US capitalists as serious competitors.
And South Korea's growth (more so than that of some other "newly industrialising countries" like Brazil and Mexico) brought increases in real wages. There were substantial increases even before the growth of independent trade unions in the late 1980s and the 1990s saw big wage rises and improvements in work conditions. Literacy increased to 93% and life expectancy to 67 years (it was 52 years in the late 1950s). The land reform was crucial here. By one estimate it increased peasants' income by 40%. It thus put a floor under living standards and inhibited the growth of the mass of shanty-town misery - people who cannot make a living on the land and flee to the cities to a life of odd jobs and petty crime - which characterises most fast-developing Third World countries.
Development? Whose, and who pays?
South Korea represented the showcase of capitalism in the Third World. Cuba still calls itself communist. Nasser proclaimed Egypt's policy as a third way between capitalism and communism. Yet many factors were common to all three models: the overwhelming role of the state in development; a very high rate of investment; a gearing of resources to education and health; and radical land reform. Colonialism imposed an alien state power on Third World countries; drained their wealth away to the metropolis, with minimal local investment in education and welfare or even in industry; and collaborated with archaic economic structures in the countryside.
Three things are necessary for national development in the Third World. All represent a radical break from the heritage of colonialism. There must be land reform; otherwise millions of people are trapped into grinding low-productivity labour, with the profits going to exploiters who will invest very little productively. A strong state machine must be constructed, capable of effectively enforcing the land reform and constructing the groundwork for modern industry - education and health services for the working class, roads, railways, airports, telecoms, power stations, water supplies, sewage, efficient administration. The state itself will have to organise some major industries; no other unit will be big enough. If the state is not strong enough to maintain a high rate of exploitation of the working class, and to organise effective protection for infant enterprise against world competition, its industry will not reach the level where it can compete on the world market.
Generally, a substantial flow of funds from abroad is necessary to finance all this: otherwise the land reform falls back into a mass of peasant debt, with only a few rising capitalist farmers making good, and new industries will falter because of lack of infrastructure and lack of hard currency to buy vital equipment. South Korea got $12.5 billion from the US between the late 1940s and 1970; Cuba got $8 billion from the USSR between 1961 and 1976; Nasser's Egypt got aid from many sources.
Listing the conditions tells us why the development of the Third World has been so uneven and troubled. Almost all the Third World states are small and weak units in a world overwhelmingly dominated by the big multinationals and banks based in richer countries. South Korea got massive aid on easy terms for political reasons; most Third World countries still get ripped off by capitalists based in the richer states.
Some Third World states - especially large ones, like Brazil, Mexico, India and partly Indonesia - have been able to promote fairly fast capitalist growth without radical social reforms (or, in the case of Mexico, with social reforms that have been rolled back and corrupted over decades). The result there is that the horrors of capitalist exploitation are compounded by the horrors of a huge mass of people in absolute poverty, pushed out of agriculture yet not absorbed by modern industry.
By the 1980s South Korea was an industrial power. But it was a hell-hole for the working class. Its factories probably had the longest working week in the world - 60-odd hours normally, and worked at an incredible pace. The accident rate was among the highest in the world. Trade unions were kept under tight control by the dreaded Korean CIA. Strikes were banned. Every citizen was registered, with their fingerprints, in a central computer system, and kept under watch by a government-organised neighbourhood surveillance scheme. Only dogged struggles by the independent trade unions, operating largely outside the law, in the late 1980s and the 1990s, improved these conditions; and now the trade-union gains are under attack again, as the government makes deals with the IMF to tackle its economic crisis.
Nasser's "Arab socialism" was fundamentally just as concerned to secure the conditions for capitalist exploitation as the South Korean dictatorship. Its methods were different. Nasser wished to form an alliance between the working class and the middle class, against the old upper classes and against foreign domination. So he gave a number of economic concessions to the working class (protection against sackings, legal limits to the working day). But the trade unions were government-controlled, and strikes were banned. And once the middle class had established itself as the upper class, the methods shifted. Under Nasser's successor Sadat, they became more similar to (though less successful than) those in South Korea.
Conversely, South Korea always had a large dose of state capitalism and nationalism. It was never just a production platform for the multinationals. Foreign direct investment was no more than 2% of the total capital stock in South Korea, up to the 1980s. (And even in fast-industrialising countries with a much bigger presence of the multinationals, like Brazil, the local state in this period had the "central role in the process of accumulation" (Peter Evans), allying with, but also bargaining with and imposing constraints on, the multinationals.)
Cuba, too, had and has government-controlled trade unions, and no effective right to strike or organise for the workers. All major decisions were and are taken by a few people around Fidel Castro. And those people - though they genuinely wanted the improvements in education, health and income distribution made by the revolution - regulated their decisions by the goal, not of workers' liberty, but of national economic development (and later, increasingly, of bureaucratic self-preservation). Just like Nasser.
As early as 1970, Rene Dumont, a French socialist and firm friend of the Cuban revolution, wrote: "The delegation of full powers to those whom Fidel trusts is almost feudal... His right-hand men have just received, free, luxury Alfa-Romeos... that they can use for their personal needs... Add in the beautiful villas of the magnificent beach at Varadero, where the officials and their families take free holidays... Add in the sexual privileges of the Ônew class', which count for a lot in Cuba... And so a new leading group is being constituted in Cuba, certainly benevolent towards workers and the poor people, but in a sense often paternalist: for the latter no longer have the right to speak out if they become too critical."
Different paths of national economic development did prove possible, in the decades after colonial independence. But their success was always precarious and patchy. And even in the most "successful" variants, whether they were more "statist" or less, more "benevolent and paternalist" or less, was only a secondary variable for the workers, and one dependent on times and circumstances. What was in question, always, was national economic development on the back of the working class, where the workers had to fight fiercely even to gain the right to express an opinion or to secure some portion of the economic gains.
In the 1990s new patterns have emerged. Their immediate roots go back to the 1970s. In 1973, the major oil-producing states forced a big increase in oil prices. Among the big capitalist powers, the oil price rise hit the US less hard than others. It even made some of the US's own new oilfields profitable. Britain, too, would gain from the oil price rise, when North Sea oil production boomed in the early 1980s. But in essence the increase was a signal of the end of the colonial era. States like Iran, Iraq, Libya, Venezuela, and even Saudi Arabia, had their own capitalist ambitions. They were no longer willing just to serve as platforms for the ambitions of US or British oil companies.
Oil-producing states stashed a lot of their vast new revenues with the international banks, who in turn lent the cash to industrialising ex-colonial states. When the big capitalist economies lurched into slump after 1979-80, trade contracted, interest rates rose, and credit got tighter: those borrower states could no longer pay yesterday's debts from today's profits and new loans. In 1982, Mexico's failure to meet debt repayments signalled the start of a global Third World debt crunch. Third World capitalists who had put large slices of the loan money into safe US or European property or bank accounts now co-operated with the banks in making the workers and peasants pay the cost of the crisis, on a scale which made British Tory austerity look gentle.
The crunch was not just a sudden crisis. Third World capitalists and governments did not respond to the debt squeeze by shifting into their old mode of having their own national states as the main financiers for development, as some of them had when they became unable to meet debt payments in the 1930s. They made a new permanent regime out of heavy indebtedness, sharpened austerity and a drive for exports to cover the costs of debt. Their industrial development had reached a level requiring substantial imports - and thus international credit - to continue. Some of the costs of keeping internationally creditworthy were irksome to the Third World wealthy, but most of those costs they could offload onto the workers and peasants - and most of the benefits of the borrowing they could pocket for themselves. The US and other big economies recovered after 1983. Though the recovery has been sluggish, and interrupted by a new crisis in 1990-2, it has provided sufficient markets for the Third World capitalists to pursue their new strategy. In the 1980s, the Third World, in total, started to export more manufactured goods to the US than it imported from there.
The debt burden has increased for every Third World region except Latin America, and even there it remains heavy. Under the 'Uruguay round' of trade negotiations, average advanced country tariffs on manufactured imports will be cut to less than 4%. Tariffs of Third World states are set to fall from 34% (in 1984-7) to 14%. World merchandise exports have increased 137% between 1987 and 1997 - much faster than world output - and the merchandise exports of countries classified by the World Bank as 'low and medium income' have almost tripled, increasing by 187%. The ratio of trade (imports plus exports) to output (GDP) doubled for 'low and medium income' countries between 1970 and 1997. It increased from 18% to 40% in low-income countries and from 25% to 50% in medium-income.
Investment in Third World countries by companies which buy or construct facilities there (called foreign direct investment, as distinct from just buying shares or making bank loans) sagged in the 1980s but has increased fast in the 1990s.
Local private capitalists have also figured more largely, displacing the Third World states from their previous centrality in capital investment. Even states still run by 'Communist Parties', like Vietnam, Cuba and, most spectacularly, China, seek foreign investment and encourage private enterprise. Telecoms, other utilities and basic industries have been privatised in many countries since the 1980s. The Chilean state started privatising in 1973, and has sold off 95% of its state-owned enterprises. Mexico sold off or shut down 80% of its 1,500 state-owned enterprises between 1982 and the end of 1992, cutting 200,000 jobs in the process. South Korea started a new wave of privatisations in 1987, following previous sell-offs in 1962-66 and the early 1980s. In Pakistan, which started privatising in 1991, 43% of workers in the sold-off enterprises were laid off within the first year after privatisation, and many workers elsewhere have lost jobs, or job security, through privatisation.
In many countries, tariff reductions, a drive to make exports and attract foreign investment, and privatisation have been tied together with cuts in whatever minimal welfare provision existed - such as food price subsidies - through 'Structural Adjustment Programs' negotiated with the IMF or the World Bank as the price for further loans. Fifty-five countries borrowed from the IMF under Structural Adjustment Facilities between 1986 and April 1998.
This 'globalisation' has brought an increase in inequality both within and between nations. Millions have been pauperised. Since 1960, the gap between the richest and the poorest fifth of nations has doubled. Yet the development of an industrial base in the Third World continues. Power production increased 170% in 'low income' countries between 1960 and 1990, and 370% in 'middle income' countries. The number of telephone lines, the amount of paved roads, the extent of drinking-water supply and irrigated land also increased fairly fast. Between 1990 and 1997, manufacturing production increased 49% in 'low income' countries, 57% in 'middle income' countries (and 15% in 'high income' countries). Countries like Korea, Taiwan, Singapore, Malaysia, Thailand, Mexico and Brazil now export relatively high-tech goods. Even in the poorest Third World countries, there is generally some increase in the preconditions for industrial production, although that increase is outpaced by a parallel rise in misery and poverty. The proportion of illiterates has dropped fairly fast between 1980 and 1995 - from 30.5% to 22.6% - though the world's total illiterate population has increased from 877 million to 885 million.
Trade has changed in structure as well as increased. Manufacturing as a percentage of Third World exports has increased from 20% in 1960 to 60% in 1990. Within the reduced share of world trade due to agriculture, a new pattern has emerged 'where the South specialises in exports of labour-intensive luxury crops... and the North [especially the USA] specialises in exports of capital-intensive 'low-value' raw foods' (McMichael and Myhre).
The 'globalist' path has been followed by virtually all Third World governments, not only those pushed into it because their debt burden obliges them to do the bidding of the IMF or the World Bank. Although no doubt the governments would prefer to be able to choose their own tempo rather than obey the international bankers, the basic strategy suits their class interests. They impose the welfare-cutting, privatising, foreign-investment-seeking plans primarily because they are capitalist governments, not because they lack national independence. They queue up to join the IMF, while in the 19th century the peoples of Africa and Asia often fought hard to avoid 'joining' colonial empires. The IMF today has 182 members, as against 130 in 1975.
Despite the rapid rise of foreign direct investment in the 1990s, the economies of most Third World countries today are dominated by local capitalists. Those Third World states able to provide infrastructure and educated labour for enterprises competitive in world manufacturing and services - and they include some with vast hinterlands of absolute poverty, like India and Indonesia - are doing so not because their states have been weakened, but because they have been strengthened, because they are now established capitalist states, with local capitalist classes behind them of some substance and bulk, rather than what they often were, proto-capitalist states run by a thin middle class layer anxious to use all the levers of state protectionism to build a base and ward off big outside capital. 'Transnational capital may be more effective than was the old-style military imperialism in penetrating every corner of the world, but it tends to accomplish this through the medium of local capital and national states... it depends on many local jurisdictions - on, say, the Indian or Chinese state - to maintain the conditions of economic stability and labour discipline which are the conditions of profitable investment' (Ellen Wood).
Full-fledged capitalism has spread much more widely than ever before. But as the gleaming skyscrapers reach upwards in the cities of the Third World, the grim shanty towns spread outwards. Hundreds of millions of people suffer hideously - peasants pushed out of subsistence farming by the drive towards higher-priced world-market cash-crops; workers who lose their jobs in privatisations or debt crises; the urban poor, hit by cuts in food subsidies and increases in public transport fares and utility charges; and whole peoples in those ex-colonial countries still dependent on bulk raw material exports. But in the 1990s there is one thing worse for a poor nation than being integrated into the global economy - that is, to be excluded from it. Cuba suffers that plight. Real wages went down 39% between 1989 and 1996, and there is now open unemployment of 7%.
Historians have called British imperialism in the early and middle 19th century 'the imperialism of free trade'. In South America, for example, Britain did not need to establish its own colonial rule in place of Spain's. The competitive supremacy of its industry gave it economic dominance, and with that political influence.
An 'imperialism of free trade' is also the main form today. This is so partly because the great metropolitan capitalist interests can afford it. For example, exclusive control by their 'own' nation-state over sources of raw materials is less important to modern big capitalist concerns - often organised in transnational companies with substantial operations in many countries outside their home country - than to the big capital classes of earlier eras.
The central reason, however, is nothing to do with the metropolitan profiteers 'mellowing'. The social and political awakening of the peoples of Africa, Asia and Latin America, their transformation from populations with dispersed and illiterate peasant majorities into nations with big cities, substantial working classes, autonomous bourgeois classes and some industry of their own, has made the risk and expense of colonial or semi-colonial rule generally too great for the metropolitan powers.
Some Marxists have concluded that this amounts to the death of imperialism and the rise of a new 'post-imperialist' era. But capitalist imperialism has seen many forms since the 16th century. Often - for example, at the time Lenin wrote his famous pamphlet on imperialism, in 1916 - many different forms co-exist and intertwine at the same time.
It is dogmatism to insist that the world today is a replica of the picture painted by Lenin in 1916; and equally pedantic to claim that because the modern 'imperialism of free trade', led by the IMF, the World Bank, the big commercial banks, the transnational corporations and the military power of the US and NATO, does not conform to Lenin's picture (insightful, but not entirely accurate and complete even for 19161), therefore it is not a form of imperialism.
The new order is a 'lesser evil' than old 'High Imperialism', or imperialism-of-conquest, to the extent that it bears the impress of the victories of the colonial liberation movements. It still destroys and oppresses, and maybe on a larger global scale than its forerunners. It is a system which conveys the choicest fruits of the world's labour to the billionaires in 'highly concentrated command points in the organisation of the world economy... a new type of city... the global city... New York, London, Los Angeles, Tokyo... The more globalised the economy becomes, the higher the agglomeration of central functions in a relatively few sites, that is, the global cities' (Saskia Sassen). Despite all the relative capitalist advance in the ex-colonial world, and some significant advance in commerce within Latin America, the proportion of 'low and middle income' countries' trade done with the 'high income' countries, rather than with each other, increased between 1987 and 1997. The producers of the Third World still mostly have to do their haggling in trade with bigger, richer, more powerful concentrations of capital, centred in the rich countries.
The pillage of the workers and peasants of the Third World continues, but in different form - the urbane international banker replacing the colonial soldier and tax collector. This is a domination of rich over poor, and richer nations over poorer nations, achieved primarily, to use a phrase from Marx, by 'the dull compulsion of economic relations... Direct force, outside economic conditions, is of course still used, but only exceptionally'.
The difference of form has political significance. Battles to 'regain' or 'increase' national independence are today generally a snare. The ex-colonial states mostly have as much political independence as they can have in a dog-eat-dog capitalist world. No extra measure of 'independence' can undo economic dominance arising from the fact that the international banks have the dollars needed for international trade, and the big transnational corporations the technologies needed for world-competitive production. Imperialism can be fought only by working -class struggle, which must tackle the local capitalist classes as the most immediate enemy. If those capitalist classes, or factions of them, call on the workers and peasants to rally behind them in the cause of 'anti-imperialism' or 'national independence', then generally (though not quite always) they are lying, or promoting downright chauvinism.
For the old-style colonial, semi-colonial or military-conquest imperialism is practised today most often not by the big powers, whose capitalist classes find the 'dull compulsion of economic relations' cheapest and most effective, but by newer 'sub-imperialist' powers who have to resort to such risky methods for lack of economic strength. The last of the European colonial powers to relinquish their empires were the economically weakest, Portugal (in 1975) and Russia (in 1989-91). Today some ex-colonial or ex-semi-colonial countries have some military means to dominate their neighbours, but relatively little economic clout. They promote themselves as 'policemen' and local big powers in their regions - Nigeria in West Africa, for example, India in South Asia, or Brazil in South America, which was the case for which the term 'sub-imperialism' was first coined by the Marxist writer Ruy Mauro Marini. And sometimes they go for outright military domination: China in Tibet, Turkey in Kurdistan, Serbia in Kosova, Iraq in Kurdistan and Kuwait, Indonesia in East Timor...
This military 'sub-imperialism' is a small-scale parody of the high imperialism of the late 19th century. It is not anti-imperialist. It is not a progressive alternative to the economic domination of the big powers. It does not show a way out of underdevelopment, or towards a fairer and more equal world.
Only independent working class struggle can do that. And the working class which can wage that struggle is growing in numbers, and often in organisation, all across the ex-colonial world.
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