Thursday, May 18, 2017

Is “neo-imperialism” the only path to development?

As is well-known (or should be well-known) Marxism has gradually developed two approaches to imperialism. Marx’s own position was (until the very last years of his life) essentially and unbendingly positive: imperialism, however brutal and disruptive, was the engine whereby more advanced social formation, namely capitalism, was introduced in and transformed more backward societies. Marx’s own writings on the British conquest of India are fairly unambiguous in that respect. Engels’ writings on the French conquest of Algeria are  (as is usually the case when one compares Engels’ and Marx’s writing styles) even more “brutal”. In that “classical” view, Western Europe, the United States and the “Third World” would all develop capitalistically, may relatively quickly come to the approximately same levels of development, and capitalism will then directly be replaced by socialism in all of them.

This view  depended crucially on two assumptions: that (1) the Western working class remain at the low level of income (subsistence) which would then (2) assure its continued revolutionary fervor. Assumption (1) was common to all 19th century economists, was supported until the mid-19th century by the observed evidence, and Marx was not an exception. But towards the end of the century, Engels had noticed the emergence of “workers’ aristocracy”  which blunted the edge of class conflict in Britain, and possibly other advanced countries. The increase in wages was “fed”, Engels argued, from colonial profits realized by British capitalists. Although the increases were mere “crumbs from capitalists’ table” (Engels) they exploded the theory of the “iron law of wages” and, collaterally, the revolutionary potential of the working class in the West.  Thus the seeds of the idea that imperialism may undermine class struggle in developed countries were sown and that had far reaching consequences.

Bill Warren’s “Imperialism: Pioneer of Capitalism” (published in 1980; unfinished due to Warren’s death) credits Lenin of the post-1914 vintage for the change (or rather criticizes him for it). In Lenin’s “Imperialism…” the monopoly capitalism having lost the vigor of free-market capitalism and having become “decrepit” was seen in need of foreign expansion (to maintain profits at earlier levels). This in turn led to imperialist struggle for territories that ended up in World War I.  At the same time, working classes’ relative material ease in developed countries made them abandon the revolutionary path and support “opportunistic” and nationalistic social-democratic parties (and their leaders, notably the “renegade” Kautsky). The struggle of the “peoples of the East” (as they were called in the first congress in Baku in 1920) against imperialism become integrated into an overall struggle against capitalism, and imperialism ceased to be seen as a dynamic precursor of the forthcoming socialism, but rather the extension of moribund capitalism. In Warren’s words, “it is now not the character of capitalism that determines the progressiveness…of imperialism, but the character of imperialism that determines the reactionary character of capitalism” (p. 47).

This change of position had far-reaching consequences for the thinking of the left  that Warren excoriates. It led to the theories of “core” and “periphery”, “structural dependency” etc. (Frank, Amin, Cardoso, Prebisch). These theories, Warren argues, were wrong because they predicted faster growth if countries were to disengage from the dominant global system (which all proved to have been illusions—Warren is less sanguine on that than we can be now), and they had nothing to do with workers’ struggle in the emerging economies because they reflected the interests  of nationalist Third World bourgeoisies.

Now, I wish I could write a very lengthy review of Warren’s extremely stimulating book—which also contains many infuriating sections—but I will have to leave it for another time. (In the “infuriating area”, Warren, for example, celebrates the increase of inequalities in developing countries such as the concentration of land ownership into the hands of latidundistas because he regards it as an indicator of adoption of more efficient capitalistic methods of production in agriculture, p. 207). His celebrations of inequality throughout the second part of the book—dealing with post-1945 developments—would make Friedman and Hayek blush!)  But my point is not Warren’s book as such but its very contemporary implications.

It is directly relevant for the understanding of the rise of new capitalist economies in Asia. Richard Baldwin’s recent book (reviewed here), even if Baldwin does not make any allusions to either the classical Marxist position or to the dependency theory, clearly shows that the economic success of Asia was based on the use of  capitalistic relations of production and inclusion in the global supply chains, that is in active participation in globalization. Not passive—but a participation that was sought after, desired. It is thus no accident that China has become the main champion of globalization today. Therefore, Asian success directly disproves the dependency theories and is in full agreement with the classical Marxist position about the revolutionary impact of capitalism, and by extension of “neo-imperialism”, in less developed societies.

This has enormous implications on how we view and try to explain dramatic shifts in economic  power which have occurred in the past half-century (whence the origins of this transformation? the role of the nation-state and imperialism? the role of the bourgeois-led independence movements?) and how we see the developments ahead. I will not develop these issues now because my thinking is still evolving and I plan to lay it out in a book, but I think that, in trying to understand the changes in the modern world, the best we can do is to go to the literature and the debates from exactly one hundred years ago. (And Warren’s book although of course much more recent has its roots in what was discussed then). Short of that I cannot see any broader narrative that makes sense of the epochal changes we are living through.



Saturday, May 13, 2017

The unknown Tocqueville in America

Several years ago, a friend presented me with a small volume entitled “Quinze jours dans le désert” written by Alexis de Tocqueville in 1831 when he visited (the only time ever) the young United States. This is a short book of some 100 pages, on his travel to the then extreme confines of “civilization”, Flint (the city which in the 1989 was the subject of Michael Moore’s famous documentary “Roger and me”) and Saginaw, both of them situated on the eponymous rivers.

The book is written in the recognizable limpid prose that we associate with Tocqueville and although it has no depth or pretension of his “Democracy in America” it is interesting and worth reading—for the reasons which I hope to explain.

“The desert” in the title does not refer to the physical “desert” but to the civilizational desert. The level of development (if that term has some meaning in the context of these areas in 1831) is so low, the amount of physical difficulties that beset the traveler on all sides is so huge, the forests  almost impenetrable, the mosquitoes omnipresent, the log cabins so few and so uncomfortable, the people barely existent, that the story reads like the adventure of explorers penetrating the deep Amazon. Indeed, the landscape offers, at the rare times when the traveler can relax, some astonishing sights of beauty (“la beauté sauvage” as Tocqueville terms  it, the word “sauvage” occurring probably 100 times on 100 pages of the book) felt in presence of intact nature. As Tocqueville mentions, there was absolutely nothing similar in Europe and the Mediterranean at the time. Perhaps only Siberia, parts of Africa or Brazil’s Northwest come close to such a complete dominion of nature over civilization and absence of practically any trace of human activity that Tocqueville and his companion (Beaumont) witnessed in the 1831 Michigan.

This naturally leads economists to think that perhaps no part of the world had seen such a dramatic transformation from where it was in 1830-1850 and today like the American Midwest and the West. It would be hard to put a number such as modern GDP per capita on what the level of income was in the Midwest then. While the production of anything was very low, so was the population, and while Indians clearly lived at the level of subsistence, European settlers were better-off perhaps by a factor of 2 to 3.  The scale of relative incomes was clearly established with “colonists” of English and French extraction at the top, the Indian-European mestizos in the middle,  and the Indians on the bottom. However, if we (tentatively) put GDP per capita at the frontier at $500 in PPP terms (note that the Maddison project update gives GDP per capita for the eastern board of United States in 1830 at $1600), income per person has then increased in Michigan by almost one hundred times in less than two centuries. This gives an astonishing average rate of growth of 2.5% annually which I doubt to have been “bested” anywhere in the world.

Tocqueville is interested in Indians as a prototype of people who had not developed much of what is (was) considered “civilization”. He is to some extent testing the hypothesis of the “noble savage” and gives what seems to me a realistic portrait of the situation of Indians at that time. When he meets Indians the first time, in Buffalo, as they queue to receive US government money for the land they had sold, he is disappointed by their physique and general looks that bear little resemblance to the idealized free warrior living in the state of natural freedom. They looked, Tocqueville writes, “like the lowest layer of population in our great European cities” (p. 10).

But that perception changes later when Tocqueville and his companion are led by two Indians through the wilderness of forests between Flint and Saginaw. He appreciates their incredible stamina (the two Indian guides lead the two Frenchmen, riding on horses, by running ahead of them), knowledge of nature, resourcefulness and honesty. Indian honesty (and what to a European seems like a naiveté) is several times contrasted with European cupidity. When the two Indians are introduced by a European settler to Tocqueville and Beaumont as reliable guides, Tocqueville asks how much they should be paid for their work (one day of guiding the two through quasi impenetrable forests). The settler says that two dollars would be enough but that since Indians do not know what to do with money, he (the settler) would give them instead goods worth two dollars. Tocqueville notices that what the Indians did get could not have amounted to even one dollar worth, the settler clearly taking 50% as his “fee”.

Here is how Tocqueville describes the settlers he met: “It is not only Indians whom the American pioneers take for fools. We were ourselves every day victims of their extreme avidity for profit. It is true that they never steal. They have too much of intelligence to do such an impudent thing. Yet I have never seen the owner of a hotel of a big city [in Europe] overcharge with such shamelessness as these inhabitants of the desert in whom I expected to find primitive honesty and patriarchal simplicity of manners” (p. 57). 

The contrast between the external polish of civilization and indifference to the lives of “others” is brilliantly drawn: “In the midst of this [American urban] society, so well organized, so prude and full of morality and virtue, one meets complete insensitivity, a sort of cold and implacable egotism whenever indigenous population is concerned. The inhabitants of the United States do not chase these Indians freely as the Spaniards did in Mexico. But it is the same pitiless sentiment that moves the Europeans here as it does elsewhere.” (p. 13) We are indeed far from “Democracy in America”.

Later in Saginaw Tocqueville also notes that Indians are “swindled” by being overcharged, although to an economist the charge of trumpery is not easily defended since Indians (one would expect) paid for the moccasins, clothes etc. what they believed was an acceptable price in the goods they produced. The issue is rather, I think, that Tocqueville uses the European prices: at these prices, the trinkets European sold were evidently much less valuable than the goods they received in exchange from the Indians. But at Indian prices, the trade might have been equally advantageous to them. So, Tocqueville’s example may rather convince an economist of the value of trade then of European duplicity.

Indians seem indifferent to comfort and to many of the commodities of “civilization”. The only thing that attracts them are European rifles. Interestingly, alcohol, often used in the stories of American Indian decadence and fall in the encounter with the Europeans, is never mentioned in the book. 

This small book comes to us like a piece, a remnant of a great monument. In it are recognizable many of the traits that have made Tocqueville famous, precursor in a number of social sciences. The great themes of civilization, colonization, imperialism, and development are opened—the themes that will become so pervasive in the next one hundred years with European expansion to the four corners of the globe. 

Friday, May 5, 2017

The “deep state” as a tool for redistribution of income in favor of the rich. Review of Mike Lofgren’s “The deep state”

The term “deep state” started to be used in the United States during the last electoral campaign, and to some extent overshadowed its older “twins”, “the elite” and “the establishment”. There are certain advantages to the use of each of these terms to describe the web of organizations and people that run US domestic and foreign policies, and the “deep state” definitely has its place there.  The term “deep state” itself originated in Turkey where it described the occult power of the Army as opposed to the political sphere that functioned in a seemingly democratic fashion. It was used as well in Italy in the 1960s and elsewhere.

Mike Lofgren in his “The deep state: The fall of the constitution and the rise of a shadow government”  makes a good case that such a “deep state” exists in the United States too. It is not composed, as some mainstream media recently ridiculed the term, of a “shadowy combination of government bureaucrats”. Obviously, it is not bureaucrats who matter. Whoever has spent any time in Washington DC (even just by being around) knows that the “deep state” is not composed of flannel-suited, thick-sole-shoe wearing, pen-in-the-shirt-pocket bureaucrats living on modest salaries and in 90% mortgaged houses. Mike Lofgren, not being a political scientist, does not provide an exact definition, but comes close to it: the deep state  is “a hybrid association of key elements of government and parts of top-level finance and industry that…effectively govern the United States with only limited reference to the concerns of the governed as…expressed through elections” (p. 5).

The deep state includes the old-fashioned military-industrial complex, top of Wall Street and Silicon valley, think tanks and foundations, and the mainstream media, most of them (with the obvious exceptions of Silicon valley and Hollywood) located in Washington, DC and New York. These are people who often seamlessly move between government, its legislative and executive branches, and then when not in power, populate think tanks, sit on the boards of large financial, IT or military-related companies or pen editorials for the mainstream media. They are linked by shared backgrounds, same ideology and even more strongly by shared economic interests. It could be almost said that they are all but one person, so at ease at seemingly very different tasks, Deputy Secretary of Defense, writer of an editorial in the Washington Post, analyst in a top Washington think tank.  As Tocqueville wrote of another deep state from two and half centuries ago: “The nobles held identical positions, had the same privileges, the same appearance; there was, in fact, a family likeness between them, and one might almost say they were not different men but essentially the same men everywhere" (The old regime and the French revolution).

There are two very strong points of Lofgren’s book. First, Lofgren is somebody who knows the system from the inside (he worked for almost thirty years in Congress, sat on budget and armed services committees and knows personally a number of key political players). He thus brings to the book a knowledge that a political science professor just simply does not have. Second, Lofgren shows that there are strong links between domestic and foreign policy preferences of the deep state. The rising political power of the rich (documented by Larry Bartels and Martin Gilens) and increasing income inequality (documented by so many that it is superfluous to give citations) are, as Lofgren shows, intrinsically linked to domestic policy choices that reduce taxes on the rich, provide an increasing number of loopholes for the rich, curb social spending, but also (and only apparently contradictorily) increase military spending. Why the latter? Because the beneficiaries  from the military spending are precisely the members of the deep state. As Lofgren argues, TARP and military spending are just the two facets of the same coin: the use of government resources for the benefit of the rich.

We should, it seems, stop thinking of  government spending as the opposite of private spending. This is because government spending has two radically different constituencies and two very different objectives. One part of government spending (the one that we traditionally emphasize) serves the needs of the middle class and the poor: social security, Medicare, Medicaid, unemployment benefits. This is the part that, from the point of view of the deep state, should be cut. The second part of government spending is to support (when needed)  the financial sector and  to buy new military hardware. There, the beneficiaries are the people from the other end of the income distribution spectrum: the financiers, owners and managers of large military supplier companies, telecommunications, private security firms and the like. When we think of government in this way, the apparent paradox of Republicans (and many Democrats) being at the same time in favor of smaller government, and TARP and larger military spending vanishes. We are really witnessing a struggle over a quarter of GDP that is redistributed through the federal government: will most of that money go to the pockets of the rich, or to the pockets of the middle class and the poor?

What Lofgren argues is that the deep state has effectively kidnapped the government. Its objective is to use this enormous money-churning  machine to help its own members. But the deep state was able to kidnap the government because it was able to kidnap the Congress, that is to make sure that majority of the members of Congress vote the way that the deep state wants. They were able to do so thanks to an electoral system where winning is practically synonymous with having access to more money than your opponent. This is why Lofgren in the last chapter, where he discusses the changes that need to be done, puts the reform of electoral funding (“ Eliminate private money from public elections”) as the number 1 priority. It all starts there, and then logically unfolds further.  

As always, when you dig deeper, the origins of domestic and foreign policies are to be found in economic interests. An oft-used aphorism says that “all politics is local”. It would be more appropriate to say that “all politics is about money”.