[Years ago I took notes on the book mentioned below, which I thought I'd post here for the heck of it. Maybe someone will find them useful.]

Reading Anthony Brewer’s Marxist Theories of Imperialism: A Critical Survey (1980). Sometimes my living in a postmodern culture makes me forget just how obvious the economic interpretation of history is. “The motives for imperial expansion,” Brewer says, “were predominantly economic. Some historians now seek to deny this, but the men of the East India Company, the Spanish Conquistadores, the investors in South African mines and the slave traders knew very well what they wanted. They wanted to be rich. Colonial empires were exploited ruthlessly for economic gain as sources of cheap raw materials and cheap labour, and as monopolized markets.” Of course, “economic interests are filtered through a political process, policies are implemented by a complex state apparatus, and the whole system generates its own momentum.” So economic explanations alone don’t suffice.

What Brewer says offhandedly about the two world wars is true, I think. Aside from the various social origins of nationalism and the immediate political causes, the wars were a consequence of the fact that “once the division of the world was complete, any further territorial expansion had to be at the expense of rival colonial empires. There was a sharp increase of tension between the main powers, especially between Germany (the rising power) and Britain (with the largest empire), which culminated in two world wars.” Britain was the declining hegemon, Germany aspired to be the next one. Hence its being the main aggressor in both wars. To a large degree they resulted from economic dynamics built up over decades (from the 1870s) relating to which European country [or, rather, which national agglomeration of “finance capital”; see below] would be economically dominant. The explosive domestic social conflicts culminating in fascism heightened Europe’s inter-state instability and ultimately fed into the struggle between national power-structures over which nation would dominate. The “dialectics” of international competition and intra-national social conflict reinforced each other, since economic and political elites were able to channel social discontent into nationalist jingoism.

Another observation: in retrospect it isn’t surprising that in the twentieth century the world capitalist system “contracted as a result of the subtraction first of Russia, then of China, then Cuba, much of southeast Asia and so on,” nor is it surprising that later these subtracted areas would return, like repentant prodigal sons, to the fold of capitalism. The enormous social dislocation caused by capitalism led to revolutions and withdrawal from the capitalist world, hence to experiments with semi-capitalist, semi-statist modes of production, which inevitably failed in the long run because of their lack of dynamism compared to capitalism, so that in the end these countries had to reenter the world with their tails between their legs.

Thoughts on why capitalism tends to geographically expand:

Marx’s comments on Ireland in the mid-nineteenth century pertain on a broad scale to the twentieth century too. Why couldn’t Ireland develop industry? Why was it so poor? Because of English oppression and exploitation. As Brewer says, channeling Marx, “The expulsion of the peasantry [in Ireland] and the creation of capitalist farms under the aegis (and to the benefit) of the (English) landed aristocracy followed essentially the same course as in England (primitive accumulation), though it was carried out with even greater brutality, but: ‘every time Ireland was about to develop industrially, she was crushed and reconverted into a purely agricultural land. ...The people had now before them the choice between the occupation of land at any rent, or starvation.’” The main cause of industrial failure in Ireland “was the absence of protective tariffs; Irish industry could not survive English competition... Just like workers from rural areas of England, the Irish were forced to migrate to seek work in the industrial cities of England.” It's basically the same thing with the global South in the twentieth and twenty-first centuries. The enforced absence of protective tariffs.

Interesting observations on England’s trade patterns in the nineteenth century: “England had a trade surplus with India (as a result of cotton exports), which India financed from its surplus with China (the opium trade), while China in turn exported tea and other products both to England and to Australia and the USA, which had surpluses in trade with England, closing the circle. Marx analyses the way in which the opium trade was a lynchpin of this pattern of trade, and therefore had to be protected and expanded (by force [hence the Opium Wars]), while at the same time the effects of the opium trade in China actually diminished China’s capacity to import goods from the west.”

Let’s skip ahead to Rudolf Hilferding. Finance capital. Not to be confused with financial capital! “Hilferding argues that the separation of industrial and financial capital, which was characteristic of the era of competitive capitalism, disappears in the epoch of monopoly capitalism. Finance capital is the product of the fusion of industrial and financial capital.” To quote Hilferding, “Finance capital marks the unification of capital. The previously distinct spheres of industrial capital, commercial capital and bank capital are henceforth under the control of high finance, in which the magnates of industry and the banks are closely associated.” Brewer notes that multinationals, the head offices of which “perform many of the functions of financial capital in raising money from many sources (including small shareholders, by means of share issues), and also channel flows of capital from one subsidiary enterprise to another,” can be considered a part of finance capital, whose epoch has therefore lasted over a hundred years.

Finance capital seeks the help of the state in its desire to gain the benefits of monopoly: specifically, it wants protective tariffs that shield it from international competition. The artificially high prices made possible by tariffs lead to super-profits, which can subsidize exports artificially cheap enough to undercut the prices of competitors in the importing country. (Think of WTO agreements or NAFTA provisions that allow Western corporations to be protected at home but force “free trade” on other countries, which undermines both industry and agriculture in those countries.) But also, the benefits of protection cause finance capital to agitate for national territorial expansion, so that it can have access to more protected markets and more super-profits. This requires a strong, militaristic state, very different from in the era of competitive capitalism (when liberal, laissez-faire ideologies were popular).[1] Quoting Hilferding:

Typically reductive but no less perceptive for that.

While finance capital continued to exist after World War II, it had learned, I suppose, that aggressive militaristic expansion—at the expense of great powers, that is—was not in its long-term interest. (The U.S. continued to be militaristic around the world, but not at the expense of major European powers—except, indirectly, for the Soviet Union. The latter’s existence explains the cautiousness of America’s war-making in that era.) In fact, the U.S.’s interest was in helping Europe, helping it rebuild, so many American tariffs were repealed. Once foreign competition got strong again, however, tariffs were raised—though not militaristic expansion at the expense of great powers.

Moving on to Sweezy and Baran. I don’t see how Sweezy’s underconsumptionism can really be questioned. “With the development of capitalism, the share of wages, and hence of wage-earners’ consumption, in total output falls [I would say has a tendency to fall], while the concentration of capital into fewer hands means that a falling share of total profit is consumed. Consumption therefore absorbs a falling share of total output. (This prefigures the ‘law of rising surplus’ set out in Monopoly Capital.)” Stated this way, the argument seems obvious. For one thing, it is clearly true as a description of the contemporary world. Less money in the hands of the masses, hence less consumption, i.e. aggregate demand, hence less incentive for business to invest (because of poor prospects for profit), hence stagnation. Brewer argues against Baran/Sweezy, but he’s unconvincing. If income levels are extremely disproportionate between the elite and the masses—i.e. if there is an excessive and rising “surplus”—it’s logical to expect economic dysfunction. What you’ll get is not productive investment but elite gambling, speculation, money market bullshit, people and institutions in the elite playing the game of transferring wealth between each other in their financial bubble. Incidentally, all this is surely compatible with Robert Brenner’s emphasis on a fall in the growth-rates of profitability (especially in manufacturing). It has to be, somehow, because both Baran/Sweezy’s and Brenner’s arguments seem basically right.

You may recall, too, that another reason for Baran and Sweezy’s indictment of monopoly capitalism—a reason derived from Hobson—is that “monopolies” tend to invest less than they might (for reasons I won’t go into), so that there is a chronic lack of demand unless other factors take over.

Summary: “Baran argues that monopoly leads to a diversion of the surplus of output over necessary consumption away from productive investment towards wasteful uses. It is thus a cause of stagnation in both advanced and underdeveloped countries... Underdeveloped countries are dominated by foreign capital with its local hangers-on, and by mercantile and [semi-feudal] landlord interests. All are hostile to development.” All this is obviously true. Military Keynesianism, undertaken in the phase of monopoly capitalism, is more wasteful than productive investment in infrastructure. In the 1950s and 1960s, largely external factors counteracted tendencies towards stagnation, factors such as Europe’s and Japan’s reconstruction, the high level of demand in the U.S. that was a legacy of World War II, the extension of New Deal programs, and the stimulus of the automobile to infrastructure development. As these factors wore off, stagnation began to set in. At the same time, the situation was made much worse by the intensification of foreign competition. (Brenner.) As I see it, this foreign competition—ironically—sharpened certain tendencies of monopoly capitalism. Income polarization increased as businesses cut costs, which reduced aggregate demand, which reinforced monopoly capital’s tendency towards meager investment (in the absence of offsetting external factors), etc. Wasteful uses of the constantly increasing surplus (increasing in part due to cost-cutting) became more common as capital finally got its way in dismantling New Deal regulations and programs; financial speculation and Reagan’s military Keynesianism are examples.

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Anyway, on another subject....it’s surprising that few of the “dependency theorists” and their kin seem to argue that the stifling of labor movements in the global South—made possible by support from the North for reactionary governments and corporations—has been one cause of the South's underdevelopment. After all, low demand is one of the reasons for limited industrial development in these countries (i.e., there are limited incentives to invest), and effective labor movements would raise demand, as they did in the West. Instead, income polarization is so extreme that tens of millions of people live in gigantic shantytowns while a tiny minority are multimillionaires.

It’s true that higher wage-levels might eventually cause foreign companies to invest elsewhere, but insofar as demand increased, wouldn’t domestic business step up investment [in non-export activities]? Without protective tariffs, of course, it wouldn’t get very far. So what’s really necessary, to repeat, is that the state and its economy not be subordinated to the interests of foreign capital.

The South’s subordination to foreign capital causes the survival, for a long time, of pre-capitalist modes of production, in part because (1) wages are so low that laborers have to supplement their income with peasant-work on the land (as in much of Africa for a long time) and (2) cheap foreign goods prevent the development of domestic industry, ensuring a lack of economic opportunities in cities and thus the persistence for many decades of a huge agricultural sector. Much of this sector becomes capitalist, though, using hired labor.

Arghiri Emmanuel’s theory: “unequal exchange.” Inequalities between countries can arise not only as a result of monopolies etc. but also through free trade, as a result of inequities in the terms of trade. “Emmanuel’s arguments mainly come down to asserting that high wages are the key to development.” That’s reductive, but it surely contains a lot of truth. Relatively high wages, as in England and the U.S. during their industrialization, entail both high demand and incentives to mechanize, i.e. to improve productivity, thus making possible higher wages in the future. It’s a virtuous circle. In Latin America, Africa, Asia, and much of Europe for a long time, wages were a lot lower. It seems to me, though, that the “virtuous circle” of high wages is bound to end sooner or later: as mechanization gets sophisticated enough to become automation, more and more workers are thrown out of work, and the army of the unemployed or underemployed grows. This makes it harder for unions to maintain high wages, so wages start to fall. Etc. Tendencies towards stagnation are worsened if the economic context is one of increased foreign competition and thus pressures to cut costs. And since the cost-cutting reduces aggregate demand, firms are forced to rely, in large part, on more cost-cutting (instead of increased sales) in order to boost profits, aggravating the underlying problem. That’s where we are now [in 2011], for example with 2010’s “greatest recovery of corporate profits on record,” due to the corporate sector’s capture of all the spoils of recent productivity advances (or cuts in costs). Without a labor movement, productivity improvements can actually be counterproductive regarding long-term growth and development, that is if they’re due largely to massive layoffs or wage-cuts. That’s how I see it anyway.

In any event, as Brewer presents it, Emmanuel’s theory is quite complicated, so I won’t summarize it. Same with Samir Amin’s (which is partly just a synthesis of other theories). So I’ll stop here. It’s a good book, worth reading.

[1] In addition to protected markets, finance capital wants “exclusive fields for capital export.” As John Hobson had said. Incidentally, all this stuff about monopoly capital and protected markets is “the classical Marxist theory of imperialism,” of which Hilferding was the real founder.