by Utsa Patnaik
It follows as well that capitalism’s production of poverty must be seen as a phenomenon occurring at the global level, and not just locally within the metropolis through an increase in the absolute size of the domestic reserve army. And when we adopt this global perspective, we would find an increase in absolute poverty occurring alongside capital accumulation, at least in terms of the deprivation of goods subject to increasing supply price. Focusing attention solely upon the metropolis and interpreting Marx’s proposition solely in terms of the absolute size of the reserve army of labor within the metropolis (for which Marx must be held responsible) makes it easy to show that the magnitude of poverty produced by capitalism is relatively small. It makes it easy as well to present capitalism in a more favorable light, as a more benign system than it actually is. Such a benign picture of capitalism, however, turns out to be a misleading one once we look at its global or imperial character.
Capitalism and Its Socially “Progressive” Character
The second implication of seeing capitalism in its global setting has to do with the nature of the proletariat. Pre-capitalist societies consisted of communities to which one belonged by birth, not out of choice. They were highly oppressive, stratified, and stultifying. Capitalism was credited with breaking these communities through the process of primitive accumulation of capital, which took, for example, the form of “enclosures” in England. Those driven out from the villages came to the newly emerging bourgeois cities and towns and joined the ranks of the proletariat. These workers, though recruited from persons of diverse origins who barely knew one another to start with, and were in a situation of competition, forged over time a new community through “combinations” leading to trade union and political actions.
Marx, in The Poverty of Philosophy, talks of the bemusement of bourgeois economists that the workers pay significant amounts from their meager wages to keep these combinations going, even though they were scarcely effective in obtaining wage increases. This is because, he argues, even though combinations at the outset are formed for obtaining wage increases, the workers soon begin to value them for their own sake: keeping combinations going becomes more important for them than wage increases. They transcend their individual interests, in other words, to form a new community. Capitalism thus destroys the old community in order to form, despite itself and against its own wishes, a new community that will eventually destroy it.
While this picture Marx drew has validity for metropolitan capitalism, where, because of the mass emigration to the temperate regions, the reserve army of labor relative to the active army remained small, and powerful combinations or trade unions could come up uniting the workers in a new community (to which socialist politics was brought from “outside”), it is less pertinent in the economies of the periphery. This is because the process of primitive accumulation of capital is not followed by any significant absorption of the displaced petty producers and agricultural laborers into the active army of labor, whose growth remains limited. They swell the labor reserves and what is more, employment rationing takes a form in which the distinction between an active and a reserve army largely disappears, with almost everyone being employed for part of the time and unemployed for the rest. Casual employment, intermittent employment, part-time employment, and short-term “contract employment” proliferate, which makes any trade union action, any formation of a new community, that much more difficult. And to the extent that the existence of labor reserves causes a reversion to domestic production through the old “putting out” system, the problem gets further compounded.
The limited job opportunities in the capitalist sector also act as a damper on out-migration from the traditional petty production sectors, despite these sectors facing primitive accumulation of capital in “flow terms,” that is, through an income squeeze. The affected petty producers linger on in their traditional callings despite the squeeze on their incomes, which also means that the old community does not get destroyed. Capitalism in the third world therefore not only does not lead to the creation of a new community with anything like the vigor it had displayed in the metropolis; but it does not also lead to a destruction of the old community with anything like the vigor it had displayed in the metropolis. Thus, the revolutionary potential that Marx had associated with capitalism, looking at it exclusively as a metropolitan phenomenon, is singularly absent when we look at it in the context of the third world and as a global phenomenon. Its metropolitan vigor then appears both non-replicable and a product of specific circumstances like the massive emigration to the temperate lands of settlement, rather than of any necessary inner logic of the system.
The third implication is related to this. Bourgeois revolutions that were the progenitors of capitalism had inscribed on their banner slogans like “liberty,” “equality,” and “fraternity,” and advanced these ideas against feudal values and the feudal ideology, no matter how betrayed they might have been by the reality of capitalist development. In the third world, not only is the old community not destroyed, but the imposition of primitive accumulation first under colonialism and then by the domestic bourgeoisie linked to international finance capital occurs on the basis of an alliance with the landlord class, whose concentrated land ownership is not destroyed as they are “incentivized” to become capitalist landlords. This means the perpetuation of the ideological apparatus of the feudal order, and even several of its social institutions, such as the caste system. In addition, capitalism also brought, through colonialism, new institutions and ideologies of inequality such as racism and apartheid.
Some authors in India have suggested that colonialism, because of institutions like equality before the law, made a dent in the caste system. But the increased pressure of population on land, owing to the displacement of artisans through deindustrialization in the colonial period, impoverished the agricultural laborers, among whom the dalits preponderate, to a greater extent than any other section. And concepts like equality before the law remained only on paper. Until independence dalits, even in the neighborhood of the capital city Delhi, were not socially allowed to own any land.
Capitalism in the periphery, in other words, does not, through its own immanent tendencies, bring about in ideological terms or in terms of social institutions the kind of revolutionary transformation that is typically associated with it, at least in the metropolitan context.
This is not to say that ideological transformations are not effected in the third world, but these are the result of the anti-colonial struggle, of the struggle against metropolitan capitalism. To be sure, these ideas, which, at least in their modern form are new to the third world (though their own versions of such ideas may have existed earlier), arise because of the bourgeois ideology prevalent in the metropolis. And this, despite being severely challenged and even overwhelmed, both occasionally and for longer stretches of time, by anti-Semitism, racism, anti-minorityism, anti-Islamism, and patriarchy maintains its formal adherence to a certain notion of equality. But the institution of this notion of equality in the third world is the product not of capitalist encroachment or capitalist development but of a struggle against such encroachment and development.
The upshot of our argument is that when we look at capitalism in its global setting, its revolutionary potential, so prominent in the metropolis and highlighted in most writings emanating from the metropolis, appears singularly exaggerated. And this brings us to our fourth point.
In Marxist discussions there is usually a distinction drawn between a phase of capitalism when it was historically progressive and a phase when it becomes historically obsolete. While this is in conformity with the philosophical conception underlying Marxism, a demarcation between the two phases in historical terms is problematical. Following Lenin, the line is usually drawn between the pre-monopoly phase and the monopoly phase. The latter, which Lenin characterized as “moribund capitalism,” is identified as the period when capitalism becomes historically obsolete, as it enmeshes mankind in imperialist wars for r
epartitioning a world that has already been partitioned.
But whether there is such a clear distinction between the two phases has been debated. Anwar Shaikh has rejected this distinction.3 And Kalecki too sees not just perfect competition of the neoclassical economists but even the free competition of the classical economists as being historically inaccurate. He sees collusion among capitalists for fixing prices as a phenomenon that goes back all the way, in which case an analytical distinction between the two phases of capitalism, as distinct from empirical demarcations that would have little theoretical sanction, becomes unsustainable. Interestingly, even Adam Smith, the doyen of classical economics, had talked of capitalists being always and everywhere in collusion.
Once we look at capitalism as a global phenomenon, the basis for such a distinction in historical terms becomes even shakier. Capitalism from the very beginning was imperialist—Lenin’s “imperialism” being only one particular phase of this long history. Not only has its ability to develop the productive forces not been visibly impaired at any point in its earlier history (notwithstanding theoretical prognostications by many authors, notably Josef Steindl), but all such development has been accompanied by a ruthless and continuous process of primitive accumulation of capital at the expense of the working people of the third world. This distinction between a progressive and an obsolete phase cannot be drawn with any conviction in the history of capitalism, and certainly not if one looks at it from the point of view of its interactions with the working people of the third world.
Indeed, if we are to talk of a period when capitalism becomes historically obsolete then that period can be said to begin now, when we have seen that capitalism has run into an impasse from which there is no clear way out.
Marx on Imperialism
Marx was acutely aware of the phenomenon of imperialism, and in a series of articles in the New York Daily Tribune on India, he wrote with remarkable insight on the role of British colonialism in breaking up the traditional Indian society.4 Marx’s views here have been much discussed, and we need not enter that debate. What is remarkable is that in all his writings, for which he did considerable research, there is very little about the impact of imperialism on the metropolitan economy. What imperialism did to the colonies is discussed with great acuity and sympathy for the colonized, but how the metropolis benefited from imperialism is scarcely discussed, especially in his magnum opus. There are stray references here and there in Capital, and in Volume III, in particular, there is a mention of colonial trade as a counteracting tendency to the falling tendency of the rate of profit. But beyond that, there is not much on what role the colonies played in the dynamics of capitalism, or even whether they were necessary at all in this dynamic.
Marx’s views on the subject, however, underwent a change, perhaps as he found the prospects of a European revolution on which he had pinned great hopes receding. On February 19, 1881, he wrote an important letter to Nikolai Danielson, the Narodnik economist, in which he talked about the Indians “gratuitously and annually” sending over to England a sum amounting to more than the income of the 60 million agricultural and industrial laborers of India.5
This is the first time that Marx writes about the “drain,” which he would have known perhaps from the work of the pioneer author on the subject, Dadabhai Naoroji, whom he never appears to have met but shared a common friend with, Henry Hyndman, the British socialist author. Given the scale of the “drain” that Marx mentions, and his awareness of the squeeze it imposed upon the Indian people (resulting in a series of disastrous famines), he could not have believed that this unrequited transfer played only a trifling role in the development of the British economy. He could not, in other words, have believed that the dynamics of the British economy, the nature of its accumulation process, could be understood only by looking at its internal processes. And if the drain was important for Britain and hence for metropolitan capitalism, then surely the closed isolated universe analyzed in Capital, though invaluable for understanding how surplus value was extracted under the system and how and why it was realized and capitalized, could not constitute the whole story for Marx. That story could be gleaned only when metropolitan capitalism was analyzed in its global setting.
Marx died a couple of years after this letter to Danielson. So he could not develop his thinking in the direction of an analytical incorporation of imperialism into his schema, but a shift in the trend of his thought is clear from another instance. While earlier in his Tribune articles he had seen the development of Indian railways as part of the “regeneration” process of India under colonial rule that would follow the process of “destruction” of its old structure, even remarking that producer goods industries would develop in India in the wake of the railways, in the Danielson letter he talks of the railways as being “useless to the Hindoos.” Marx clearly had developed by 1881 much skepticism over the limited regeneration of the colonial economy, which he had earlier believed possible as a spontaneous effect of imperialism.
There is no reason today, when we have much greater information about the interaction between the metropolis on the one hand and the colonies and semi-colonies on the other, why we should continue to look at capitalism and its dynamics as if it constitutes a closed, isolated system. And yet almost fourteen decades after Marx’s letter to Danielson, Marxist analyses of capitalism continue to proceed as if it was a closed isolated system. This has to be given up. Capitalism has to be seen in its global setting and analyzed within a broader framework than the one in which the analysis of Capital had been located.
A point needs clarification: Marxist theory should be seen at two levels. In contrast to all liberal thought, Marx saw capitalism as a “spontaneous system” driven by its own immanent tendencies, where the individual economic agents, though they appear to be the subjects of the process, are coerced into acting in particular ways by the fact of competition. The capitalist accumulates not out of his or her own volition, but because of being engaged in a Darwinian struggle where not accumulating would mean falling by the wayside. Marx even referred to the capitalist, the supposed hero in the dramatis personae of the system, as “capital personified”: the immanent tendencies of capital work themselves out through the behavior of capitalists and other human agents, who are forced by the system to act in particular ways and therefore constitute alienated beings.
Within this overall perspective, where Marx differs fundamentally from Smith and the entire liberal tradition that sees the individual as acting out of his or her own volition, he locates his profound analysis of the extraction and capitalization of surplus value in a universe that consists of a closed isolated capitalist economy. Our call for going beyond this universe while retaining Marx’s discovery and looking at capitalism in its global setting still acknowledges the absolute necessity of keeping Marx’s perspective of a “spontaneous system” intact. The case for socialism arises from this “spontaneity,” for if capitalism were a malleable system (as the liberal tradition from Smith to Keynes believed), then there would be no need to overthrow it. Ours therefore is a call for a broader analysis that incorporates imperialism as an essential feature of the system, within Marx’s perspective of a “spontaneous” system.
Marx himself, as we have suggested, had been moving in this direction. Indeed, if a distinction has to be drawn between an “early Marx” and a “late Marx,” a more appropriate way of doing so would be between the Marx who looked at capitalism as a closed self-contained system and a Marx who saw it as the center of an imperial system, an idea that has been carried forward by other Marxists but not to the desired extent.
The Case for Socialism
The case for socialism has until now been entirely in terms of liberating mankind from the “spontaneous” system that capitalism is, which is not only exploitative but also antagonistic in a deeply ontological manner, in the sense that even when, for instance, a rise in wages does not reduce profits, capital is still opposed to it. Any improvement in the condition
s of the workers, even if it does not come at the expense of profits, poses a threat to the system by making the workers more resilient and powerful. And this ontological antagonism is not due to any malice; it is inherent in the system itself, which the capitalists, themselves an alienated entity within the system, are coerced into accepting.
But if primitive accumulation at the expense of the petty producers is a phenomenon that characterizes the system throughout its existence, and is also an immanent tendency within it, then this provides an important marker to socialism differentiating it from capitalism, namely that the journey toward it is one where petty producers are defended, protected, and promoted instead of being destroyed. To be sure, socialism is not a system marked with substantial petty production, but petty producers have to voluntarily come together to move toward more collective forms of property along this journey to socialism. Socialism rejects primitive accumulation, while capitalism’s immanent tendency is to inflict it. Thus the journey toward socialism is undertaken by workers in alliance with petty producers facing primitive accumulation under capitalism, in particular by a worker-peasant alliance under the leadership of the workers whose distinguishing characteristic is that they, having no property of their own, can move directly to collective ownership of property.
The idea of a worker-peasant alliance was put forward by Lenin in his Two Tactics of Social Democracy, in which he argued that in countries coming late to capitalism (like Russia at that time), the bourgeoisie, haunted by the fear that an attack on feudal property could rebound into an attack on bourgeois property, makes common cause with the feudal lords and thereby thwarts the democratic aspirations of the peasantry.6 These aspirations can be fulfilled only by the proletariat, which alone can break up feudal property and distribute land among the landless peasantry.
