Capital and Imperialism: Theory, History, and the Present

by Utsa Patnaik

  The case for a worker-peasant alliance, however, arises not just because of the bourgeoisie’s compromise with landlordism. It also arises because of the process of primitive accumulation of capital from which the peasantry must be rescued. The bourgeoisie’s culpability lies not just in its alliance with the landlord elements, but in the fact that the leading echelons of it directly squeeze the peasantry through primitive accumulation of capital, which becomes clear only when we see primitive accumulation not as being confined to the prehistory of capitalism but as being associated with capitalism throughout its life. And this requires looking at the capitalist system in its global setting, not in its closed isolation.

  The case for socialism in countries where a substantial sector of petty production exists is that the only way this vast mass of people, including the laborers engaged in this sector (for even peasant agriculture uses laborers), can be saved from destitution is by following a socialist trajectory. Such a trajectory overcomes the spontaneity of capitalism; it negates all its immanent tendencies and its animosity toward state activism for introducing land-augmentation measures. Socialism thereby overcomes the problem of increasing supply price through land augmentation, while capitalism, by contrast, overcomes it by increasing absolute poverty through the imposition of an income deflation.

  There has been a tendency within the Marxist tradition to underestimate the revolutionary potential of the peasantry. Most often this has taken the form of restricting the allies of the working class primarily to the small peasants, semi-proletariat, and the agricultural laborers, while excluding or being skeptical of any positive role of the middle and rich peasants in the revolutionary process, which has thereby circumscribed and enfeebled the revolutionary challenge. Whatever merit there may have been in this tendency, the era of neoliberal capitalism, which unleashes primitive accumulation upon large segments of the peasantry, robs it of this merit. It opens the possibility of forming a broad worker-peasant alliance that can take a major step toward transcending capitalism.

  As to who can be counted as a peasant rather than a rural capitalist or proto-capitalist it is a question that has to be answered from the perspective of forming this alliance. Those who may be engaged in agriculture but whose major source of income comes from non-agricultural activities, because of which they do not feel the impact of the primitive accumulation of capital that is squeezing the agricultural producers, will not be a part of this alliance and will not qualify as peasants in any meaningful sense. On the other hand, those who are engaged primarily in agriculture and bear the brunt of the primitive accumulation of capital will be a part of this alliance. The term “peasants” should be reserved for them.

  To be sure, even when worker-peasant alliances have been formed and have led to successful revolutions, maintaining these alliances during the journey toward socialism has proved to be an exceedingly difficult task, which has contributed greatly to the collapse or derailment of several of these revolutions. But here again the objective difficulties, which are undeniable, have been compounded by erroneous theory.

  A well-known proposition is that commodity production gives rise to differentiation among the producers, which throws up a class of capitalists or proto-capitalists from the ranks of petty commodity producers. Taken together with a definition of commodity production as any production for the market, this proposition has led to the revolutionary movement being haunted by fears of capitalist restoration from the ranks of peasants and petty producers. To prevent such restoration, extremist policies have been used against sections of the peasantry that have so weakened the revolutionary movement that the possibility of capitalist restoration ironically has been greatly strengthened.

  What is wrong with this extremist position is that any production for the market does not constitute commodity production. Petty producers in the form of sweet-sellers, eatery-owners, grocers, vegetable sellers, and innkeepers have been operating in India for millennia and transacting through cash in the market, but this did not produce capitalism or proto-capitalism in medieval let alone ancient India. The commodity production that does produce differentiation and a tendency toward the creation of capitalists on the one side and a semi-proletariat on the other from the ranks of petty producers is a particular type of market participation, one where the product for the seller is pure exchange value and not a use-value, where it represents to the seller only a certain sum of money. For this there has to be an impersonality to the act of exchange that is typically associated not with local exchanges but with long-distance trade.7

  It follows, therefore, that if the historical possibility of transcending capitalism that exists today, especially in view of the impasse of capitalism and the worldwide push toward fascism that it is generating, has to be realized, then the tendency of skepticism toward a broad worker-peasant alliance that is so prevalent within the Marxist tradition has to be overcome.

  CHAPTER 21

  The Road Ahead

  We have argued that the hegemony of international finance capital has to be overcome if the current conjuncture is to be transcended. Doing so within the framework of capitalism is clearly not possible. Hence, the process of overcoming this hegemony will have to be part of a process of transcending capitalism itself. Different countries will have to follow their own paths for doing so. In what follows, we focus attention only on the case of a third world country like India. Our remarks, however, have general relevance.

  The Need for De-Linking

  One way of overcoming the hegemony of international finance capital, the ideal way in fact, would be if a world state came into being, based on the support of the world’s workers and peasants, which then confronted international finance capital to introduce measures for reviving the world economy and ensuring a basic minimum of living standard for all the world’s people. This would mean that instead of a withdrawal from the current globalization for escaping domination by global finance, this globalization itself is carried to a higher level, even while the domination by finance is transcended.

  But this is clearly out of the question at present. There is no internationally coordinated struggle of the working class, let alone of the peasantry; so the question of a world struggle against the hegemony of global finance is not on the agenda at present, and waiting for such a struggle to develop would be like waiting for Godot in Samuel Beckett’s play. Struggles, whether of workers or of peasants, are largely organized within particular countries, and because of such struggles, what is feasible, and has happened repeatedly of late, is the coming into power in particular countries of progressive governments committed to taking their countries out of the impasse that capitalism has currently engulfed them in.

  Such a government, if it is to remain loyal to the interests of the working people on whose support it came to power, has to put restrictions sooner or later upon the free flow of finance out of the country. No matter what this government’s suppositions, this would be a necessity, for any agenda for bringing about an improvement in the conditions of working people would arouse opposition from global finance. And even if the eyes of global finance happen to be closed toward such efforts, financing such an agenda, which would require an increase either in the fiscal deficit or in taxes upon the rich, would open these eyes, giving rise to an exodus of finance and offering the government a stark choice between two alternatives: either roll back such efforts and thereby boost the confidence of investors in the economy or put controls on capital outflows. If the government wishes to remain true to the promise to its class base then it will have to choose the second option.

  This, itself, will mean a degree of de-linking from the current globalization. But matters would not end there. Even if capital flight is prevented through capital controls, meeting the current account deficit, which several third world countries including India habitually have, will be difficult if capital inflows dry up because of such controls. It would become necessary then to have some import controls as well. These would become al
l the more necessary if sanctions are imposed by advanced countries owing to the imposition of capital controls, which make the balance of payments even more precarious. For all these reasons there will be a dynamic movement of modification of the neoliberal regime that is currently in force in that country, involving de-linking from the process of globalization and putting in place trade and capital controls.

  A new regime would necessarily have to rely on the domestic market for its economic growth. And though the initiative for stimulating the domestic market will have to be taken by the government, the manner of doing that must be through government expenditure that brings about land-augmentation and an increase in agricultural output through it, so that inflation is controlled without any recourse to income deflation of the working people.

  This would not mean a return to the old dirigisme, which had avoided undertaking any radical land redistribution and had sought to develop agriculture along capitalist lines, though the capitalism it sought to develop was to come from within this sector itself rather than through the intervention of multinational agribusiness or the domestic big bourgeoisie. It is this development of capitalism in the countryside that widened economic inequalities there, keeping the mass of the people in a state of continued deprivation and leading to an atrophy of the domestic market. What a strategy for transcending neoliberal capitalism must do instead is to undertake land redistribution and develop agriculture along cooperative or collective lines through the voluntary consent of the peasants. (Extreme land concentration is inimical to the development of genuine cooperatives; the need for land redistribution is fundamental for this reason, too.)

  The development of agriculture on the basis of voluntary collectives would not only effect land augmentation to a much greater extent than the dirigiste regime had done, it would also enlarge incomes in the countryside, and in a more egalitarian manner than earlier, and thereby expand the home market. Because the goods demanded would be employment-intensive, this alternative strategy will also entail using up labor reserves rather than adding to them.

  But the increased supply of such goods for which demand would have increased due to the expansion of the home market would also have to come from a reenergized state sector, apart from petty producers, small capitalists, and various collective and cooperative units. This is because the imposition of trade and capital controls and of heavier taxation of the rich would lead most likely to an “investment strike” by big capital. In other words, even if we do not start with an emphasis on the public sector, we are bound to accord this emphasis to it sooner or later because of the logic of the situation.

  An additional point is that the essence of a path of democratic transition is not just that working people become better off, but that their being better off should not be a matter of largesse by the government. It should rather be a matter of their rights. Hence, while the trajectory of development will have to be along the lines suggested above, this trajectory must be shrouded in the institution of economic rights. The regime that transcends the neoliberal development strategy must introduce a set of universal, justiciable economic rights on a par with the political rights typically enshrined in a democratic constitution. A minimal set of five such rights, namely the right to employment (or of wage payment if the state fails to provide employment); the right to food at affordable prices; the right to free, quality, public healthcare; the right to free, quality public education up to at least the university level; and the right to old-age pension and disability assistance of an adequate magnitude can be immediately implemented. And for this no more than an additional 10 percent or so of GDP will be required. Ironically, it has never been attempted before. Indeed, it is a telling comment upon the growth effected by the neoliberal trajectory that, despite its supposedly high rate, it has not met these basic requirements in countries like India. On the contrary, it has actually been accompanied by an absolute decline in per capita total absorption of food grains, that is, of direct and indirect absorption taken together, the latter through processed foods and animal products into which food grains enter as feed grains.1

  The kind of development trajectory we have outlined appears at first sight to have little to do with socialism. But if socialism is seen as the ultimate destination of a trajectory of development, then its pursuit must be characterized by the measures we have just discussed. But even the pursuit of such a trajectory will face serious obstacles. Let us discuss some of these.

  Obstacles to an Alternative Trajectory

  The most obvious obstacle, as one would expect, is the direct political intervention by the metropolitan countries, and in particular the leading one, the United States. This was the case vis-à-vis the postwar dirigiste regimes in the third world that sought to control their own resources and their destinies by de-linking from metropolitan hegemony. And this remains the case even today, except that the need for intervention has gone down greatly, at least in the non-oil-rich third world, because of the “spontaneous” obstacle to de-linking that arises in any country that is caught in the grip of a neoliberal regime. But if spontaneity fails, then the C.I.A. steps in.

  This spontaneous obstacle is our second point. In any country that has a neoliberal regime and is open to the vortex of global financial flows, even before the political formation backing such an alternative regime has come to power, the very prospect of its doing so would start a capital flight. And the opponents of that formation would raise the question: If the country is already facing financial difficulties before the votaries of change have come to power, what a disaster it would face if these votaries did come to power. At this point the pro-change political formation would have to assure financiers and capitalists that it would not harm them an iota; it would be forced to backtrack from its vision. And in case it does not back off, many in the electorate will be persuaded by the prospects of disaster in the event of its coming to power and therefore vote against it, preventing it from coming to power.

  Coming to power is itself fraught with difficulties. And if a pro-change formation does come to power despite these, then financial outflows will become a torrent, causing a financial crisis that would bring it much unpopularity and encourage the pro-capitalist formations, with the backing, needless to say, of the United States, to plan coups against it, including parliamentary coups of the sort that we have witnessed in Latin America.

  These transitional difficulties arising from capital flight, which a country is bound to face in attempting an alternative development strategy, constitute the most powerful force keeping third world countries in thralldom to neoliberalism. It is their overwhelming deterring effect that makes any 1950s- and 1960s-style armed imperialist intervention for thwarting dirigisme unnecessary.

  Countries once caught in the grip of neoliberalism simply find it exceedingly difficult to escape that grip. And their state of helplessness, of being trapped, is then held up by the spokespersons of neoliberalism as vindicating the desirability of the neoliberal economic arrangement, that there is no alternative (TINA), and that there is a consensus among all political formations in favor of neoliberalism. What is held up as “consensus” is, in reality, the helplessness that most political formations know they would experience when they try to escape from the clutches of a neoliberal regime.

  There are, of course, certain exceptional circumstances when the international context is propitious for such an escape. A primary commodity price boom is one of them. The turn to the left in Latin America was made possible because of such a boom. The rise in oil prices was a factor that facilitated the leftist projects in Venezuela, Bolivia, and Ecuador, by making their problems of transition easier to handle. By the same token, the collapse of the primary commodities boom, and the collapse in oil prices in particular, has had the opposite effect, enmeshing the Latin American economies that had made a turn to the left in serious difficulties, for no fault of the left, resulting in setbacks.

  To be sure, one can criticize these progressive regimes that, whil
e pursuing laudable redistributive measures to ensure that working people benefited from the commodity price boom, they did not take steps toward a structural transformation of their economies. This would have better prepared them to face the consequences of the end of the primary commodity boom; but the point is that the collapse has hurt them and made the transition to an alternative regime that much more difficult.

  The left has to prepare the people of the third world better, to take them into confidence that a price has to be paid in the period of transition for their emancipation, instead of promising the moon to them as bourgeois formations habitually do.

  But in addition to these problems of transition, there is also an obstacle to the pursuit of an alternative path that arises from a certain ideological ambiguity within the left to the phenomenon of contemporary globalization. Let us examine this.

  The Concept of Nationalism

  An important manifestation of ideological ambiguity is the opposition within the ranks of the left to any alternative strategy to neoliberalism that involves de-linking from the current globalization. De-linking, it is argued, would involve a revival of nationalism, which is reactionary and unacceptable to the left, whose essence lies in being internationalist. The implicit presumption here is that while the domination of current globalization by international finance capital is objectionable, there is nonetheless something positive about it, since it transcends nationalism.

  The problem with this position is that it sees nationalism as one homogeneous category that is unambiguously reprehensible. It misses the distinction between nationalism that was invoked for the imperialist project in Europe, prompting Rudolf Hilferding (writing, on the eve of the First World War) to argue that the ideology of finance capital was a glorification of the “national idea,” and the nationalism that was invoked by the antiimperialist struggle in the colonies and semi-colonies. It misses, in short, the distinction between the nationalism of a Hitler and the nationalism of a Ho Chi Minh or a Gandhi, implicitly holding both to be reprehensible. This is a basic mistake.2