Awareness of capitalists’ use of colonialism invites rethinking of solidarity commitment / By W. T. Whitney Jr.

_{^{Mural by Dan Manrique Arias | Photo by Terence Faircloth, CC BY-SA 4.0}}

_{South Paris, Maine}

Studying capitalism, Karl Marx examined the Industrial Revolution in Europe. He explored conflict between worker and employer. In their book Capital and Imperialism (Monthly Review Press, 2021), authors Utsa Patnaik and Prabhat Patnaik emphasize that Marx’s followers believed that, with the onset of capitalism, “accumulation [has] occurred only on the basis of the generation of surplus value.” (Surplus value signifies that part of a product’s commercial yield which labor generates and employers keep.)

Many U.S. political activists oppose the overseas wars and interventions their government uses to maintain worldwide political and economic domination. More than a few know about stealing in the peripheral regions of the world at the hands of capitalism. They are aware of U.S. imperialism.

The stolen goods include: land, bodies, raw materials, food crops, forests, water, extractable underground resources, exorbitant interest on debt, and funding owed the world’s poor for subsistence. Non-payment for social reproduction is a kind of stealing.

The more these activists learn that capitalism from its start did call for oppression in the undeveloped regions of the world, the more likely might be their inclination to build an anti-capitalist international solidarity movement. The book authored by the Patnaiks contributes to this end by documenting that colonialism and, implicitly, imperialism have been essential to the development of capitalism.

In describing India’s colonial experience, their book – by no means reviewed here in its entirety – provides an explanation taken from Marx as to why capitalism needed colonialism. It details the workings of capitalist-inspired colonialism in India.

The Patnaiks declare that, “not only has capitalism always been historically ensconced within a pre-capitalist setting from which it emerged, with which it interacted, and which it modified for its own purposes, but additionally that its very existence and expansion is conditioned upon such interaction.” Capitalists sought “appropriation of surplus by the metropolis, under colonialism.” (“Metropolis” is defined as “the city or state of origin of a colony.”)

They explain that “Marx’s basic concept of capitalism [as expressed] in Capital is of an isolated capitalist sector … consisting only of workers and capitalists,” also that an isolated sector implies a capitalism “stuck forever in a stationary state or a state of simple reproduction … [and] with zero growth.” They insist that “a closed self-contained capitalism in the metropolis is a logical impossibility.”

There is “nothing within the system to pull it out of that state.” The economy “will necessarily get to that state in the absence of exogenous stimuli.”

The Patnaiks envision three kinds of exogenous stimuli: “pre-capitalist markets, state expenditure, and innovations.” The first of these represents the colonialism that would be essential to capitalists as they built the economies of European industrial centers.

Inflation a concern

Outlining how British capitalism dealt with colonial India, the authors highlight money as a device for holding and transferring wealth. The object has been to preserve its value. The system had these features:

· Officials in London used the surplus derived from Indian exports of primary commodities to finance the export of capital to other capitalist countries.

· British officials taxed the land of small producers in India, using the revenue to pay the colony’s administrative expenses and purchase commodities for export to Britain; some were re-exported to other countries.

· Britain exported manufactured goods. The flood of them arriving in India led to “deindustrialization of the colonial economy.” Displaced artisan manufacturers became “petty producers” of commodities.

· British officials dealing with “increasing supply prices” for commodities exported from the colonies, faced “metropolitan money-wage or profit margin increases.” Seeking to “stabilize the value of money,” they imposed “income deflation … [on Indian] suppliers of wage goods and inputs to the capitalist sector.”

· The claims of heavily-taxed agricultural producers in India were “compressible” especially because they were located “in the midst of vast labor reserves.”

Colonialism provided British capitalists the option of cutting pay or jobs in India so as to carry out the currency exchanges the system required and to “accommodate increases in money wages” in Britain, both “without jeopardizing the value of money.”

Global economy

The book outlines post-colonial developments. Colonial arrangements persisted throughout the 19^th century and collapsed after World War I, due in part, say the authors, to a worldwide agricultural crisis that peaked in 1926. The circumstances gave rise to the Great Depression. Spending for World War II led to recovery, mostly in the United States.

These were “boom years” for capitalism. The United States, confronted with increasing military expenses, turned to deficit financing. Western European countries took up social democracy and the welfare state. Some former colonies, now independent nations, sponsored agricultural and industrial initiatives aimed at relieving economic inequalities.

At that point, the centers could no longer impose income deflation on working people in the periphery to ward off loss of monetary value. Bank holdings increased and lending pressures mounted. In 1973 “the Bretton Woods system collapsed because of the emergence of inflation.” “The capitalist world of the stable medium of holding wealth …[through] the gold-dollar link” took a hit.

Next came worldwide take-over by global finance capital and neoliberalism. The Patnaiks explain that, with “barriers to capital flows” down, “state intervention in demand management becomes impossible.” “[A] regime of income deflation on the working people of the periphery” returned in order to “control inflation and stabilize the value of money.”

Concluding

This story is of continuities. One is capitalism at its start taking up with colonialism. Another is capitalism using colonialism to preserve the value of money in cross-border commercial and financial dealings. One more is the oppression and beggaring of the world’s working people to prevent inflation.

Karl Marx may have found data and other information on colonialism scarce as he studied capitalism. Additionally, his life of research and political activism may have been so full as to distract him from investigation of the colonial connection. Even so he championed international worker solidarity.

He and Engels supported India’s independence struggle. Marx defended “heroic Poland” beset by Czarist Russia. He writes to Engels that, “In my view, the most momentous thing happening in the world today is, on the one hand, the movement among the slaves in America, started by the death of [John] Brown and on the other the movement of the serfs in Russia.”

Addressing the International Working Men’s Association – the First International – in 1864, Marx reported that events “have taught the working classes the duty to master themselves the mysteries of international politics; to watch the diplomatic acts of their respective governments.”

The wreckage of people’s lives caused by capitalism now extends widely. The venue of capitalism is global, by its nature. Political support for workers and their political formations in the Global South hits at the essence of capitalist power. The promise of basic change lies in that direction, and that’s so too with alternatives to the capitalist system.

Those struggles for social justice and equality that are confined to the world’s industrial centers do target aspects of capitalism, but without far-reaching expectations. The full effort consists of: pushing for reforms that ease burdens placed upon working people, building mass opposition, and – crucially – advancing the international solidarity movement.

_{W.T. Whitney Jr. is a political journalist whose focus is on Latin America, health care, and anti-racism. A Cuba solidarity activist, he formerly worked as a pediatrician, lives in rural Maine. W.T. Whitney Jr. es un periodista político cuyo enfoque está en América Latina, la atención médica y el antirracismo. Activista solidario con Cuba, anteriormente trabajó como pediatra, vive en la zona rural de Maine.}

China, Brazil Lead in Chipping Away at U.S. Economic Power Abroad / By W. T. Whitney Jr.

_{^{United States hegemony in Latin America is in question | credit Prensa Latina}}

The United States proclaimed the Monroe Doctrine 200 years ago and ever since has arranged Latin American and Caribbean affairs to its advantage. Nevertheless, struggles for national and regional independence did continue and the poor and marginalized classes did resist. Eventually there would be indigenous movements, labor mobilizations, and progressive and socialist-inclined governments. Cuba’s revolutionary government has endured for 63 years.

The U.S. political hold may have weakened, but U.S. control over the region’s economies remains strong; after World War II it extended worldwide. Now cracks are showing up. In particular, the U.S. dollar’s role as the world economy’s dominant currency may have run its course.

In 1944, 44 allied nations determined that the value of their various currencies would correlate with the value of the U.S. dollar instead of the value of gold. The nations since then have relied on the U.S. dollar for their reserve currencies, for foreign trade and in banking transactions.

There seemed to be good reason. The United States was supreme in producing and marketing goods and so, presumably, the dollar’s value would remain stable and predictable. The dollar would be readily accessible to bankers and traders and its valuation would be unambiguous. Nations could also build their currency reserves through the dollars they accumulated in the form of bonds sold by an increasingly indebted United States.

The United States has benefited. In currency exchanges involving the dollar, U.S. companies and individuals experience only minor add-on costs. U.S. importers know that the more the dollar strengthens in value, the less expensive will be products they buy abroad. U.S. borrowing costs overseas are relatively low because U.S. bonds, and the investments they represent in dollars, are appealing abroad, for a variety of reasons.

Dollar dominance has caused pain abroad. Exporters to the United States take a hit when the exchange value of the dollar weakens. Importers of U.S. goods are hurt when the dollar strengthens.

Most importantly, the U.S. government gains an opening to punish enemy countries through their use of dollars in international transactions. It imposes economic sanctions requiring that dollars not be used in a targeted country’s overseas transactions. The U.S. Treasury Department penalizes foreign banks and companies that disobey. Sanctioned nations have included Cuba, Iran, North Korea, Syria, Venezuela, Nicaragua, and more recently, China and Russia.

The U.S. government’s frequent resort to economic sanctions has greatly contributed to new stirrings on behalf of a new international currency system. Confiscation of currency reserves deposited in U.S. and European banks that belong to Iran, Venezuela, and Afghanistan have likewise encouraged calls for change.

On March 29 China and Brazil announced they would use their own currencies in trading with each other. China is Brazil’s biggest trade partner. China’s renminbi currency presently constitutes a major share of Brazil’s currency reserves.

Earlier in 2023, Brazil and Argentina proposed cooperation toward creating a common currency for themselves. At the January meeting of the Community of Latin American and Caribbean States (CELAC), Brazilian President Lula da Silva opined that, “If it were up to me, I would promote a single currency for the region.” He would call it the “SUR” (South). The ALBA regional alliance in 2009 proposed an electronic currency called the “Sucre” aimed at reducing dollar dependency.

Former Brazilian President Dilma Rousseff is the recently named head of the New Development Bank which, headquartered in Shanghai, serves the BRICS nations (Brazil, Russia, India, China, and South Africa). The bank represents an alternative to the U.S. -dominated International Monetary Fund and the World Bank.

The shift away from dollar dependency is evident elsewhere. At a Russian-Indian “Strategic Partnership …Forum” recently, a Russian official announced that the BRICS states would be creating a new currency and that the formal announcement would be made at the BRICS summit meeting in Durban South Africa in August.

The BRICS countries account for “40% of the global population and one-fourth of the global GDP.” According to People’s Dispatch, Iran and Saudi Arabia, having recently signed a peace accord, will soon be joining BRICS. Egypt, Algeria, the UAE, Mexico, Argentina, and Nigeria apparently are giving consideration. The values of new currencies will rest not on another currency but on the value of “products, rare-earth minerals, or soil.”

Iran and Russia in January agreed on methods useful for bypassing the SWIFT banking system, the U.S. tool for servicing its dollar dominance. To evade U.S. sanctions, the two countries reply on their own currencies for most transactions.

At their summit in March, Russian and Chinese leaders reiterated their intention to expand bilateral trade and utilize their own currencies. China increasingly is using its own currency in transactions with Asian, African, and Latin American countries. The yuan “has become the world’s fifth-largest payment currency, third-largest currency in trade settlement and fifth-largest reserve currency,” according to Global Times.

Saudi Arabia is on the verge of selling oil and natural gas in currencies other than the dollar, and China occasionally pays Arabian Gulf nations in yuan for those products.

The finance ministers and governors of the central banks of the member states of the Association of Southeast Asian Nations (ASEAN) met in Indonesia on March 28. At the top of their agenda were “discussions to reduce dependence on the US Dollar, Euro, Yen, and British Pound from financial transactions and move to settlements in local currencies”. The ASEAN nations, an alliance of 10 southeast Asian nations, are developing a digital payment system for member states’ transactions.

Dollar dominance may be losing its appeal closer to home. Former Goldman Sachs chief economist Jim O’Neill claims that, The U. S. dollar plays a far too dominant role in global finance … Whenever the Federal Reserve Board has embarked on periods of monetary tightening, or the opposite, loosening, the consequences on the value of the dollar and the knock-on effects have been dramatic.”

Gillian Tell, chair of the Financial Times’ editorial board notes that, “concerns are afoot that this month’s US banking turmoil, inflation and looming debt ceiling battle is making dollar-based assets less attractive.” Plus, “a multipolar pattern could come as a shock to American policymakers, given how much external financing the US needs.”

There are wider implications. Argentinian economist Julio Gambina bemoans “disorder in the world economy …[and] this attitude of unilateralism represented by the US sanctions.” Interviewed on March 29, Gambina points out that “wealth has a father and a mother: labor and nature.”

He adds that, “Latin America and the Caribbean … where inequality is growing the most … have a highly skilled working class, willing to carry forward the production of wealth. We have the resource of assets held in common for sovereign development through which the interests of our peoples and the reproduction of nature, life and society are defended.”