A self-enriching pact: Imperialism and the Global South

1. there is an ongoing and systemic transfer of value from the Global South (including China) to the global North
2. the basis or source of this international transfer is the super-exploitation of workers in the Global South
3. while capitalist super-exploitation of labour has been present since Marx’s time, it’s scope has expanded rapidly to include manufacturing in the last period, and this drives neo-liberal globalisation.

Harvey does not deny the second point completely, at least he recognises that labour super-exploitation occurs, but he does not accept that any rethinking of Marx is required to take account of it as a concept. Harvey’s argument is rather that super-exploitation should not be made too essentialist, nor can he agree the systemic determinations of the first and third points.  In short, Harvey denies the categorical significance both of imperialism and of labour super-exploitation.

Smith’s important book Imperialism in the 21st Century proceeds from global patterns of value production and distribution, including a critical analysis of the very data available to us to identify those trends, in particular the distorting lens of the ‘GDP illusion’.[1] Both in the book and in response to Harvey, Smith assembles evidence of the massive and indeed increasing drain of value to the US, Europe and Japan from the Global South and challenges Harvey to substantiate his claim that this flow has been reversed.

In marked methodological contrast, so far Harvey’s response is absent of data and mostly rather anecdotal.  But even these anecdotes are to be qualified under scrutiny.  For example, Harvey writes: ‘A cursory look at land grabs all across Africa shows Chinese companies and wealth funds are way ahead of everyone else in their acquisitions. The two largest mineral companies operating in Zambia’s copper belt are Indian and Chinese.’

Taking indeed a cursory look at Zambia one finds that of the ‘big four’ copper mining companies, two are Canadian (Barrick and First Quantum), one is Swiss (Glencore) and one is owned by the Anglo-Indian conglomerate Vedanta. Chinese companies do run several smaller mines, but not one of these majors. China has been playing a distinct role in big infrastructure projects.

The sources of accumulated foreign direct investment stock in Zambia, as of mid-2016 are Canada 27.3%; the UK 20.3%; China 14.5%; Switzerland 12.9%.  So, China’s stake is significant, but what slips past unmentioned in Harvey’s overview, is the greater stakes of Canada and the UK, two traditional Western imperialist mining powers. UNCTAD data confirms the rapid increase in Chinese mining FDI in Africa. But is that the only message we take from the following table?

Top Ten Countries of Mining FDI in Africa

The unstated big picture that the table indicates is the continuing pre-eminence of the US, UK and France, the three established powers in Africa.  China is not yet ‘way ahead’ of Western imperialism, but is rapidly catching up and does threaten to soon begin to overtake them. Right now there is a whole industry of China watchers, but the point is in what context and against what competition does China rise?

Western imperialism is the unmarked legacy centre here. One hardly need add that the reality of the unmarked centre is that all such figures are routinely reported in US dollars, the de facto world currency. Where are the critical watchers of the continuing super-profits of the US, UK, France (Switzerland, Canada, Australia etc) whose banks and extractive corporations are still the main beneficiaries of the exploitation of the labour and natural resources of Africa, Asia and Latin America? 

At the same time, the global mining industry is an index of China’s dramatic rise. PWC publish an annual report on the top 40 mining companies in the world.  The two biggest companies ranked by market capitalisation are BHP Billiton and Rio Tinto Zinc, both UK/Australia bi-national corporations. There is just one Chinese company in the top 10, but it has 11 corporations arriving in the top 40. The report shows that China is moving from being the main source of demand, as it was in the last ‘super-cycle’, to anticipating the next cycle. At the bottom of the commodity cycle, Chinese companies have been buying up assets and are poised to take advantage of the next upswing, in other words to establish supply lines to manufacturing and become sellers as well as buyers of industrial minerals. This is a further challenge to the interests of the existing powers.

It was long ago pointed out by Kwame Nkrumah that mining corporations are a major agent of neo-colonialism. To what degree the growing incidence of Chinese corporations alters that exploitative relation in Africa is part of the even bigger discussion to which we now turn.

On roape.net Patrick Bond highlights the emergence of sub-imperialism of the BRICS countries as a major phenomenon of the last period that has to be taken fully into account. We can agree this, but, as Walter Daum’s post argues, the emergence of the BRICS does not mark the demise of imperialism, rather it is evidence of a modified imperialism entering a new phase.

There is in any case a strong differentiation within the BRICS grouping: between the former socialist giants Russia and China that are respectively actual and potential global powers on the one hand; compared with Brazil, South Africa and, despite its tremendous size, even India on the other. Big capital in the latter countries is not fully independent of the West, as a general pattern it works in alliance with Western capital, as the junior partner. These joint relations have various forms, but the key point is of an alliance to the advantage of both parties. One aspect of this is a reconfiguration of location to London as a financial centre. Some of the stronger extractive companies have moved their corporate HQs from their main country of operations to London, where they get better terms in the capital markets, and the protection of the UK state for their global operations. South Africa allowed its corporate big-hitters, the beneficiaries of apartheid, to migrate to London in the late 1990s. Vedanta has followed that trend. Vedanta is no longer simply an Indian corporation, it is bi-national between the UK and India. With its roots in the fortune of Anil Agarwal, and still over 60% owned by him, Vedanta is listed on the London Stock Exchange. This is a pattern of big capital based on super-exploitation that has emerged in the Global South, seeking to consolidate its position and scope through a partnership with finance and the state in the imperialist centre.       

It is important to remember the concept of sub-imperialism that Ruy Mauro Marini developed concerning Brazil, and which Bond extends more generally, has two sides to it. Sub-imperialist states are situated in a singular condition in the international hierarchy of nation states. As sub-imperialist states they are in a mid-level location that is constrained by rules set in the interests of more powerful states, whilst as sub-imperialist states they have some capacity to impose on their regional neighbours.  What this means in terms of international economic exploitation is a pattern where value is transferred into the sub-imperialist capitals, mostly from ‘their’ region, at the same time as it flows out of these countries to the imperialist North (or West as you prefer). Sub-imperialism is still based on the super-exploitation of those at the bottom, with a more refined division of the super-profits up the chain.

Imperialism in the 21st century does not for the most part rule directly through colonial means, but indirectly through an alliance with national elites who have captured their national state and thrown their lot into voluntary, self-enriching pact with the global system. Neo-colonialism is such a well known endemic condition in Africa and across the Global South that it is surprising that Bond should lose sight of it in his analysis. Concerning corruption in Africa Bond writes:

the sleight of hand here is the ability of local elites – not just Western or BRICS corporations – to accumulate offshore in places like Mauritius (the African continent’s leading hot money centre). This part of the outflow is not a function of ‘imperialism’ but local greed and higher profits gained by an unpatriotic bourgeoisie who can hold funds offshore (even idle), instead of investing in African economies whose currencies are often rapidly declining in value.

The point is relational, that the neo-colonial form of imperialism is an alliance of interests with two parties involved, but what underpins the locally sourced elite corruption is indeed a function of imperialism’s ultimate control over the destiny of African nations. Militarily, ever since Patrice Lumumba, the imperialist powers have intervened forcefully to make sure that it is the greedy and unpatriotic who rule. Economically, it is imperialist relations that determine that African currencies decline in value, it is imperialist corporations that are sucking out Africa’s wealth. Local oligarchs salt away their gains in the imperialist centres. If imperialism could be wished away by putting scare quotes around it, we would all have a simple job indeed!

Sub-imperialism does not mean the end of imperialism, rather it is a mutation out of neo-colonial capitalism and continues to demonstrate many of its features, with a further internalisation and class differentiation along pro and anti-imperialist lines.

Let us now turn to the theory of labour super-exploitation. Labour super-exploitation as a specific dimension of surplus-value further accentuates the distinction that Marx established between the cost of labour-power to the capitalist and its unique use-value as the source of surplus-value. Capital can increase surplus-value by reducing the cost of labour-power, the price it pays for labour-power of a given quality; this decreases the necessary labour time required to produce the equivalent value of ‘paid labour’, and increases the ‘unpaid labour’ that capital expropriates. By reducing the cost of labour-power, capital expropriates an extra surplus-value at the worker’s expense, the worker is even more exploited than hitherto. This dimension of increased exploitation by lowering wages (or even no wages at all) holds in combination with the other dimensions determining surplus-value, specifically the extent of labour time, its intensity and labour’s productivity. As I argue elsewhere, and building on the breakthrough in this field by Marini and other authors, labour super-exploitation requires a further elaboration of Marx’s concept of surplus-value beyond absolute surplus-value and relative-surplus value. [2] 

To explain the paradigmatic Foxconn/Apple case, where surplus-value is produced in one part of the world and realised in another, we need to fill in one more gap in the theory, and that is to explain the difference between a commodity’s cost of production and its full value. Marx examines this distinction, but not until Volume 3 of Capital, where he explains the relation between the production of surplus-value and its realisation as profit.  In the surface reality of capitalism, a commodity’s value appears not as itself but in the modified form of cost of production plus profit, this is indeed what capitalism knows of itself. But capitalism cannot explain, nor does it need to, that the source of profit is surplus-value extracted from the workers. Marx’s explanation is founded on the change in form, from surplus-value as essence into profit as appearance.  The capitalist only sees profit, yet behind profit there must be surplus-value.  As already noted, Marx did not integrate labour super-exploitation into his theory of surplus-value in Volume 1, but the need to do so is even more pronounced in Volume 3 when we consider this change of form from surplus-value to profit, both qualitatively and quantitatively. The extra surplus-value becomes super-profits that are either retained by a group of capitals that enjoy more favoured access to cheap labour, or spread to raise the general rate of profit.  

John Smith and several authors have analysed the relations involved in Foxconn/Apple, as does David Harvey, who seems to converge with our analysis when in his book Seventeen Contradictions he points out the difference between the location of surplus-value production and its realisation as profit:

By exerting immense pressure on the capitalist producers, the merchant capitalists and the financiers, for example, can reduce the return to the direct producers to the smallest of margins while racking up major profits for themselves. This is how Walmart and Apple operate in China, for example. In this case not only does realisation occur in a different sector, it also occurs across the ocean in another country (creating a geographical transfer of wealth of considerable significance) (2015, p. 84).

Indeed so. But then how does this explanation fit with Harvey’s reverse transfer thesis? 

Walter Daum comments wittily, ‘Hm, a transfer of wealth from East to West? In the same book, as John has already noted, [Harvey] argues that the transfer has been reversed: “The flow of wealth from East to West that had prevailed for some two centuries was reversed and China increasingly became the dynamic centre of a global capitalism as the West, after the financial crash of 2008, lost much of its momentum.” Is this David Harvey’s Eighteenth Contradiction?’[3]

We put the two ingredients of labour super-exploitation and profit realisation together and we get a theoretical explosion. The price at which Foxconn sells on to Apple allows both capitals to make a profit, but Apple’s buying price is set at the cost of production plus a significantly lower profit for Foxconn. This means that the extra surplus-value produced by the workers in China is realised as super-profits by Apple rather than by Foxconn, by virtue of the wide discrepancy between its buying price and its selling price. Labour super-exploitation is hidden in plain sight, in the terms of commodity exchange. Apple’s role compared to Foxconn in this relation is similar (not the same) as that of the landowner vis a vis the tenant farmer in Marx’s theory of ground rent. Ownership of the Apple technology and brand is an expression of monopoly within the law of value.[4]

Combine conditions of labour super-exploitation with high labour productivity and you have arrived at the gates of capitalist heaven, since both together really puts the cheap into cheap commodities. This combination is however deadly for the super-exploited work force, as in Foxconn, and often relies on gendered oppression in many sectors.

This general pattern has a further twist in the extractive industries. In extractive capitalism labour productivity is enhanced by capital’s appropriation of any particular condition found in nature that gives a high yield in use-values against effort expended, copper deposits for example. Under imperialist social relations cost reduction goes one step further, and does not cover the social and ‘external’ costs of the destruction of the environment. This now lethal cocktail is more than ‘accumulation by dispossession’, Harvey’s much overworked phrase. Access to the land and its conversion into means of production is at first obtained by dispossession, as in clearing off the local inhabitants from their territory, and then by combined super-exploitation in order to generate a high rate of surplus-value and realise it as profit. Framing extractive imperialism as dispossession carries a truth but its one-sided. Dispossession sets up the pre-conditions of extractive accumulation but does not alone explain the internal condition that generates super-profits from the realisation of extra surplus-value produced by the workers.

Capitalist accumulation by super-exploitation is the premature exhaustion of all forms of life; the life-giving energies of human workers and the life-giving energies that capitalism draws from nature, that it will never replenish.

Harvey is coming to the end of his Marx cycle. He points out that with the collapse of the Soviet Union and with it the traditional communist parties, Marxist thought has survived predominantly in academia. One can only add, with the distortions that entails. In my view Harvey’s lasting contribution is as a Marxist informed geographer, rather than in critical political economy. Notwithstanding his contribution as a communicator and educator, and his celebrity as ‘the world’s leading expert on Karl Marx’, nonetheless Harvey is an unreliable guide to Capital. 

Harvey jokes of a disease called ‘volumeoneitis’, whose afflicted believe that studying the first book is enough to grasp Marx’s theory, and he rightly argues it isn’t. He emphasises the need to study all three volumes of Capital to get a holistic view from Marx. But then he does not follow his own advice, and especially he has little helpful to say on the first half of Volume 3, Parts One to Three. As a geographer Harvey does foreground Part Six of Volume 3 and Marx’s theory of rent, but overall he draws his main lines of interpretation of the totality of the system from Volume 2, rather than Volume 3.

Indeed, Harvey suffers from the rarer but growing disease of ‘volumetwoitis’. Linked to this is his shorthand that Volume 1 is about production of commodity values, Volume 2 is about realisation and Volume 3 about distribution. This framing is only partially correct, for it misses the vital point that Marx completes his explanation of realisation, the realisation of surplus value as profit, in parts One to Three of Volume 3, culminating in the formation of the general rate of profit and the tendency of the rate of profit to fall.  Only once Marx establishes the laws of profit does he then move the analysis on to profit’s distribution as interest, merchant’s profit and rent, that is, from Part Four onwards.  Harvey’s rendering of Capital downplays the significance of Marx’s general, systemic laws of profit that demonstrate the capitalist mode of production’s inevitable tendency to crisis.

Harvey theorises capitalism as process as distinct from capital as social relation, whereas Marx’s methodology combines both aspects that become expressed in laws of motion. In Capital contradictory internal relations become articulated as systemic laws of motion that point clearly to the inevitability of systemic crisis.  Even before we get to Lenin, Harvey cavils against determinacy in Marx. There are many expressions of this in Harvey’s work: his preferred definition from Marx that capital is ‘value in motion’ rather than capital as ‘self-expanding value’; his misrepresentation of Marx’s explanation of relative surplus-value, a key concept in Volume 1;[5] his aversion to the law of the tendency of the rate of profit to decline; his preference for Volume 2 over Volume 3; the continued emphasis on surplus capital, and so on.  

But the revealing denouement of Harvey’s mistaken approach comes with his presentation of the capitalist mode of production as a circuit, an analogy with the hydrological cycle – water vaporises off the sea, forms clouds that rain, becomes rivers and returns – so the circuit of capital passes through production, realisation and distribution, and so on. The crunch comes next when Harvey asks the question ‘where does the energy come from to propel the system onwards?’ In the hydrological cycle the answer is the Sun, the Sun’s rays of energy. Next he asks, what is the source of energy coming into the circuit of capital?  Pause there, what answer would you give?

Would you not expect the answer be labour, or perhaps labour in combination with nature, as the energy source? Is it not from there, from inside the box labelled ‘production of commodities’, that labour’s living energy creates the new value that animates the entire system? Whether it be enslaved on the colonial plantation, loading at the docks, slogging away in the assembly plant, cleaning toilets or laying bricks – labour animates the system. The even more deeply hidden source of energy into the system is the unpaid and socially unrecognised caring labour, almost entirely performed by women, that contributes to the reproduction of labour power.  Yet Harvey’s answer mentions none of these, and is nothing short of jaw dropping. For him the new energy comes into the system from three places, capital in production, capital in realisation and capital in distribution. Not from labour at all.[6]

This then is the reductio ad absurdum of Harvey’s position: his prioritisation of capitalist process over capitalist social relations; his not seeing the agency of capital as anything other than an inversion, that its social power through accumulated money is entirely derivative from the expropriation of labour. The denial of imperialism is not only a denial of labour super-exploitation, in the end it is a denial of labour itself.

Finally, we come to agency. Harvey’s latest contribution was a ‘commentary’, more like a ‘correction’, to the Utsa Patnaik and Prabhat Patnaik’s articulation of drain theory.[7] These authors critique both Luxemburg and Lenin’s theories of imperialism, and emphasise that imperialism is an ‘abiding relationship under capitalism’ (p. 87). From their perspective capitalism has always been imperialist. Indian drain theory has a long tradition from the days of British colonisation.[8] Critical social science in Latin America and Africa has produced similar theories that correspond to the conditions of colonial capitalism and its aftermath. It is not only Marxists who recognise colonialism as exploitation, and that its legacy persists in India’s relations with the world economy. But since we are particularly interested in Marxist theoretical elaboration of drain theory, there is a risk that these voices will be drowned out.

Can the subaltern Marxist speak against imperialism? Even discussing imperialism as formative of contemporary capitalism invites the irritation of the world’s leading expert on Marx. After explaining the impact of British colonial and imperialist thought on India, Radha S’Souza concluded that ‘we cannot use capitalist knowledge to build socialism, or imperialist knowledge to exercise self-determination.’ David Harvey responded with ‘you could resolve all those questions without changing the capitalist dynamic’, and asks ‘what does it mean to be anti-capitalist?’ [9]    

This brings us to the question of where the power of imperialism resides and where resistance to it is coming from in the 21st century. The Third World War has already begun, in the form of structural violence and proxy wars against the oppressed in the ‘third world’, their significance largely unnoticed by the doyens of euro-centric Marxism.  

One exception to the rule of ‘unnoticed’ was the Marikana Massacre, the police shooting dead 34 striking miners, whose awful televised presence made it an immediate world event, entering into global consciousness. Thomas Piketty opens his book with the massacre. But, pace Piketty’s explanation, Marikana was about structurally exploitative social relations than cannot be understood through his limiting lens of inequality. The migrant labour system, the condition of racialised and gendered labour super-exploitation bedevils platinum mining as much as gold and diamond mining before it. As I know fellow activist Patrick Bond agrees, the massacre hinged on the toxic collusion between the ANC leadership, the police and the UK based Lonmin corporation.[10] After the massacre, one of its principal perpetrators Cyril Ramaphosa was protected by Farlam at the official enquiry and has since risen to the presidency, from which executive position he now appeals for more foreign investment. If the Marikana Massacre and its aftermath are not evidence of continuing neo-colonial imperialism, what is? 

The platinum mineworkers returned to strike action, and their struggle continues. As does the struggle of black students, against colonial education and neoliberal fees.[11] As does the struggle of the Amadiba Crisis Committee, fighting the destruction of their way of life by a coast stripping Australian corporation MRC.[12] As do the struggles of Abahlali baseMjondolo[13] and the Cape Town based Housing Assembly [14] for the most elementary, decent housing. The people in all of these struggles are facing criminalisation and assassination, yet they continue their fight for dignity. Theirs is the energy of humanity. 

As further demonstration of the structural and ongoing neo-colonial violence that is normalised as business as usual, in Colombia since the signing of the ‘peace agreement’ in November 2016 the state’s dirty war has led to 150,000 people being forcibly displaced and over 200 social movement and environmental activists have been assassinated.[15]  Yet here again real mass mobilisation continues, as evidenced by the three week long general strike of Afro descendant Colombians in Buenaventura in May/June 2017, literally a life or death struggle for half a million people to have a public hospital in their port city.[16] 

As for proxy wars, it was the US and UK as imperialist military powers who were the principal architects of the genocidal massacre of 70,000 and more Eelam Tamils in 2009, not China despite its economic strength and self-serving support for the murderous Sri Lankan regime.[17] The Eelam Tamils have the grave misfortune of seeking independence at a strategic location for the playing out of inter-imperialist rivalries, right by the crossing of the world’s major sea lanes in the Indian Ocean. The US and UK need a unitary Sri Lankan state, and especially Trincomalee harbour, as an integral part of their 21st century geo-strategy, the so-called ‘pivot to Asia’. Whether Obama or Trump or Clinton, the US is showing every sign it will use naval force to block the consolidation of China as an independent global actor. Such is the geography of imperialism.

Let us take one last example from the same part of the world, the popular uprising in Thoothukudi, Tamil Naadu against Vedanta subsidiary Sterlite copper, that planned to double production at its copper smelting plant that already produces 40% of India’s copper.[18] The nearby communities have suffered the smelter’s contamination for years and decided enough is enough. They mobilised action to demand the District Collector (designated as the revenue collector for the British in colonial times) block the expansion. The police shot thirteen protestors dead in what looks like targeted assassinations, followed up with mass detentions and torture.[19] One heartening aspect of a dreadful situation is the immediate response of Tamils in the diaspora, the Foil Vedanta campaign and others mounting strong protests in London. The London solidarity effort adds important leverage to the heart of the struggle, the mass movement in India.

Struggles like Marikana, Buenaventura and Thoothukudi are the real movement context of John Smith’s challenge to David Harvey. The debate confirms the urgent need for a rejuvenated Marxism that contributes to the renewal of anti-imperialism, with our special responsibility of doing so in the global North.

Can euro-centric Marxism continue to deny the fact capitalist imperialism is systemic plunder of the working class in the Global South? What indeed does it mean to be anti-capitalist, if not at the same time being anti-imperialist? If it does not aid the fight against imperialism what is Marxism worth? Capitalist imperialism has to be fought in theory and practice. Wherever imperialism exists, sooner or later the empire strikes back. These are values that also need to be transferred from South to North, and not before time.  

Andy Higginbottom is an Associate Professor at Kingston University, London. He is involved in solidarity groups supporting social movements in Colombia, South Africa and Tamil Eelam.

References

[1] See John Smith, Imperialism in the 21st century Monthly Review Press, 2015 Chapters 6 and 9; and John Smith ‘The GDP Illusion: Value Added versus Value Capture’ Monthly Review, July 2012

[2] Andy Higginbottom ‘Structure and Essence in Capital and the Stages of Capitalism’ in Journal of Australian Political Economy No 70, 2012; 251-270

[3] Personal communication, 15 June 2018

[4] Torkill Lauesen and Zac Cope give a good explanation in ‘Imperialism and theTransformation of Values into Prices’ Monthly Review July-August 2015 67(3) ; 54-67

[5] Harvey summarises Marx’s position as “Machines are a source of relative surplus-value but not of value” David Harvey, A Companion To Marx’s ‘Capital’, 2010, p169. This is just nonsensical, arrived at by snipping sentences out of context. The underlying point is that capital uses machines as a ‘source’ of relative surplus-value only because by doing so labour is rendered more productive and the individual labour time taken to produce a given commodity produced is less than the socially necessary labour time. Workers’ labour creates value and relative surplus-value, using machines to do so. 

[6] ‘Visualizing Capital’ with Professor David Harvey from minute 22 onwards

[7] Utsa Patnaik and Prabhat Patnaik, A Theory of Imperialism, 2017 Columbia University Press.

[8] For a recent reminder see Shashi Tharoor Inglorious Empire: What the British Did to India, 2017 Chapter 1.

[9] Radha D’Souza Industrialism, Law, Science and Imperialism, 2015 minute 22:14 and David Harvey Speech at Network AQ Conference II, 2015 minute 18:45

[10]  A term coined by Dali Mpofu. See Dali Mpofu, Mpati Qofa and Reghana Tulk Heads of Agreement On Behalf Of Injured And Arrested Persons, 2014

For a review of the literature, see Andy Higginbottom The Marikana Massacre in South Africa: the Results of Toxic Collusion, 2018   

[15] Stephen Gill, ‘Are Colombia’s social leaders facing another extermination?’ Colombia Reports 22 February 2018 

[16] See Seb Ordóñez and Patrick Kane Colombian strike: ‘To live with dignity, our people don’t give up’ 31 May 2017

‘The “military response” of the Government to Buenaventura: 300 wounded, 10 with firearms’ 5 June 2017

[17] See Bremen Human Rights Association  and Permanent Peoples Tribunal on Sri Lanka.

[18]  Vedanta Resources, A Great Diversified Story – Mining Indaba presentation, 7 February 2017 p. 19

[19] NDTV “No Warning”: Witnesses Describe How Police Shot Anti-Sterlite Protesters 29 May 2018