By John Smith,
David Harvey, author of The New Imperialism and other acclaimed books on capitalism and Marxist political economy, not only believes that the age of imperialism is over, he thinks it has gone into reverse. In his Commentary on Prabhat and Utsa Patnaik’s A Theory of Imperialism, he says:
Those of us who think the old categories of imperialism do not work too well in these times do not deny at all the complex flows of value that expand the accumulation of wealth and power in one part of the world at the expense of another. We simply think the flows are more complicated and constantly changing direction. The historical draining of wealth from East to West for more than two centuries, for example, has largely been reversed over the last thirty years (My emphasis, here and throughout – JS, p.169).
For ‘East to West’ read ‘South to North’; i.e. low-wage countries and what some, including this author, insist on calling imperialist countries. To repeat Harvey’s astonishing claim: during the neoliberal era, i.e. the last 30 years, not only have North America, Europe and Japan ceased their centuries-long plunder of wealth from Africa, Asia and Latin America, the flow has been reversed: “developing countries” are now draining wealth from the imperialist centres. This assertion, made without any supporting evidence or estimate of magnitude, repeats similar statements in Harvey’s earlier works. In 17 Contradictions and the End of Capitalism, for example, he says:
Disparities in the global distribution of wealth and income between countries have been much reduced with rising per capita incomes in many developing parts of the world. The net drain of wealth from East to West that had prevailed for over two centuries has been reversed as East Asia in particular has risen to prominence (p. 170).
The quote’s first sentence greatly exaggerates global convergence: once China is removed from the picture, and once account is made of greatly increased income inequality in many southern nations, no real progress has been made in overcoming the huge gap in real wages and living standards between the “West” and the rest.
The second sentence is refuted by a cursory examination of the single-most important transformation of the neoliberal era — the shift of production processes to low-wage countries. Transnational corporations headquartered in Europe, North America and Japan have led this process, cutting production costs and increasing mark-ups by substituting relatively high-paid domestic labour with much cheaper foreign labour. In his Outsourcing, Protecionism, and the Global Labor Arbitrage Stephen Roach, then a senior economist at Morgan Stanley responsible for its Asian operations, explained why:
In an era of excess supply, companies lack pricing leverage as never before. As such, businesses must be unrelenting in their search for new efficiencies. Not surprisingly, the primary focus of such efforts is labor, representing the bulk of production costs in the developed world… Wage rates in China and India range from 10% to 25% of those for comparable-quality workers in the US and the rest of the developed world. Consequently, offshore outsourcing that extracts product from relatively low-wage workers in the developing world has become an increasingly urgent survival tactic for companies in the developed economies.
The vast scale of production outsourcing to low-wage countries, whether via foreign direct investment or via indirect, arm’s length relationships, signifies greatly expanded exploitation of Southern labor by U.S., European, and Japanese TNCs, legions of workers who are moreover subject to a higher rate of exploitation. At times, David Harvey appears to recognise this reality. In his critique of the Patnaiks, for example, two paragraphs before his claim that the East is now draining wealth from the West, he notes “Foxconn, which makes Apple computers under super-exploitative labour conditions for immigrant labour in Southern China, registers a 3% profit while Apple, which sells the computers in the metropolitan countries, makes 27%.” Yet this, and the broader picture which this so eloquently illustrates, implies new and greatly increased flows of value and surplus value to U.S., European, and Japanese TNCs from Chinese, Bangladeshi, Mexican and other low-wage workers, and reason to believe that this transformation marks a new stage in the development of imperialism. David Harvey, in defiance of the evidence, but reflecting a widespread view among Marxists in imperialist countries, believes the opposite is the case.
Harvey’s The Enigma of Capital provides not only the earliest iteration of his view that the “East” is now draining the “West” of wealth, but also his source: Harvey quotes approvingly the “delphic estimates of the US National Intelligence Council, published shortly after Obama’s election, on what the world will be like in 2025. Perhaps for the first time, an official US body has predicted that by then the United States… will no longer be the dominant player…. Above all, ‘the unprecedented shift in relative wealth and economic power roughly from west to east now underway will continue’” (pp. 34-35). Harvey repeats this, but with his own twist: “This ‘unprecedented shift’ has reversed the long-standing drain of wealth from east, south-east and south Asia to Europe and North America that has been occurring since the 18th century” (p. 35).
Yet, elsewhere in this book, Harvey acknowledges that “awash with surplus capital, U.S.-based corporations actually began to offshore production in the mid-1960s, but this movement only gathered steam a decade later,” and that the shift of production to “anywhere in the world – preferably where labour and raw materials were cheaper” was driven by the decision of US capitalists to export their capital (directly, via FDI, or indirectly, via capital markets) rather than invest it at home. All of this implies increasing metropolitan power over the recipient economies and increased exploitation of their living labour, for which the most appropriate term is ‘imperialism’. A clue that helps explain how Harvey rationalizes his denial of imperialism can be found in The New Imperialism where he says “transnational capitalist corporations… spread themselves across the map of the world in ways that were unthinkable in earlier phases of imperialism (the trusts and cartels that Lenin and Hilferding described were all tied very closely to particular nation-states)” (pp.176-177). In other words, it is deracinated, de-territorialised, depersonalised “global capital” that profits from the shift of production to low-wage countries, not U.S. and European multinationals and their capitalist owners.
David Harvey’s Commentary in the Patnaik’s new book is also remarkable for its reference to super-exploitation, notable for its absence in the rest of his work on imperialism and value theory:
The tropical and subtropical landmass has a huge labour reserve living under conditions conducive to super-exploitation. Over the last 40 years (and this is new), capital has increasingly sought to mobilise this labour reserve in search of higher profits through industrial development. If there is any one map that confirms the distinctiveness of the tropical landmass, it is one that shows the location of export processing zones, 90% of which are on the tropical landmass. And it is the labour reserve that is the lure not the agrarian base (though the partial proletarianisation that occurs as social reproduction is taken care of on the land while capital just exploits the labour at a less than living wage is undoubtedly important) (p. 165).
He does not define super-exploitation, but even its invocation is an important departure. However, he departs…but he does not arrive: “capital” remains a disembodied, deterritorialised abstraction, not the millionaire owners of multinational corporations congregated in the imperialist countries, allowing him to avoid the obvious conclusion: that this new and hugely important development implies a major boost to flows of value from low-wage countries to the imperialist centres. Harvey’s obfuscation of continuing imperialist divisions extends, later on the same page as the above quote, to the assertion that conditions in labour markets in ‘metropolitan’ and low-wage countries are converging and the borders between them are disappearing:
the distinction between the reserve [army of labour] in the metropolitan centre and in the periphery has been much reduced by globalisation in recent times, such that we can reasonably think of the capital-labour confrontation as being more unified now across the spaces of the global economy.
Harvey’s denial of imperialism is anything but clear-cut. His credentials as a progressive social scientist and a Marxist theoretician could not survive a categorical rejection of the contemporary relevance of imperialism, or refusal to acknowledge the persistence of its most naked and familiar forms. Instead, he obfuscates, sows confusion, and pretends to be agnostic on this question of questions. In his critique of the Patnaik’s theory, for example, he talks of “the imperialism problem—if such there is,” and gives, as an example,
the case of cotton, the depressed price of which has been destructive, particularly for West African producers. The point here is not to deny the transfers of wealth and value that occur through global trade and extractivism, or from geo-economic policies that disadvantage primary producers. Rather, it is to insist that we do not subsume all these features under some simple and misleading rubric of an imperialism that depends upon an anachronistic and specious form of physical geographical determinism. (p. 161).
The last part of this refers to the distinctive theory developed by Prabhat and Utsa Patnaik in A Theory of Imperialism; whether Harvey’s characterisation of it is fair is beyond the scope of this article, but it is abundantly clear that Harvey’s target is not some specious variant of imperialism theory, it is the theory of imperialism tout court, and all who consider themselves to be anti-imperialists.
To conclude: Harvey’s claim that the “East” is now exploiting the “West,” a claim backed up by nothing more than his authority, is false. He could not be more wrong, or about a bigger issue. The root of his error is his denial that the global shift of production to low-wage countries represents a major deepening of imperialist exploitation. In an excerpt from my book below, Imperialism in the Twenty-First Century, I trace Harvey’s failure to acknowledge or analyse this characteristic feature of neoliberal globalisation through several of his works, as far back as his celebrated Limits to Capital.
Excerpt on David Harvey from John Smith’s book Imperialism in the Twenty-First Century (pp. 199-202):
Prominent among contemporary Marxist theorists, David Harvey has published a series of influential books on Marx’s theory of value, on neoliberalism, and on new imperialism. Because of the wide audience he has gained for his views, it is necessary to subject them to a severe evaluation, a task that can only be broached here.
The central argument in Harvey’s theory of new imperialism is that the overaccumulation of capital pushes capitalists and capitalism into an ever-greater recourse to non-capitalist forms of plunder, that is, forms other than the extraction of surplus-value from wage-labor, from confiscation of communal property to privatization of welfare, which arise from capital’s encroachment on the commons, whether this be public property or pristine nature.
He argues that new imperialism is characterized by “a shift in emphasis from accumulation through expanded reproduction to accumulation through dispossession,” this now being “the primary contradiction to be confronted” (The New Imperialism, Oxford: Oxford University Press, 2003, pp. 176–77). Harvey is right to draw attention to the continuing and even increasing importance of old and new forms of accumulation by dispossession, but he does not recognize that imperialism’s most significant shift in emphasis is in an entirely different direction—toward the transformation of its own core processes of surplus-value extraction through the global labor arbitrage-driven globalization of production, a phenomenon that is entirely internal to the labor-capital relation.
Harvey’s Limits to Capital (London: Verso, 2006; first published in 1982) has a deliberately ambiguous title. This book attempts to discover the limits to capital’s relentless advance, and also to identify the limitations of Capital, of Marx’s theory of capitalist development. Limits to Capital has far less to say about imperialism than Capital itself. In fact, imperialism receives just one brief, desultory mention (pp. 441-2): “Much of what passes for imperialism rests on the reality of exploitation of the peoples in one region by those in another…. The processes described allow the geographical production of surplus-value to diverge from its geographical distribution.” Instead of expanding on this important insight, it receives no further attention. Harvey returns to the subject of the geographical shift of production to low-wage countries in The Condition of Postmodernity (Oxford: Blackwell, 1990, p. 165), where this is seen not as a sign of deepening imperialist exploitation, as is implied by his passing comment in Limits to Capital, but of its accelerated decline:
From the mid-1970s onwards … newly industrialising countries … began to make serious inroads into the markets for certain products (textiles, electronics, etc) in the advanced capitalist countries, and w[ere] soon joined by a host of other NICs [Newly Industrialising Countries, such as] Hungary, India, Egypt and those countries that had earlier pursued import substitution strategies (Brazil, Mexico)… Some of the power shifts since 1972 within the global political economy of advanced capitalism have been truly remarkable. United States dependence on foreign trade … doubled in the period 1973–80. Imports from developing countries increased almost tenfold.
This stands reality on its head: far from signifying a power shift toward low-wage countries, the growth of foreign trade reflects an enormous expansion of the power of imperialist TNCs over these countries—and of the increased dependence of these corporations on surplus-value extracted from their workers.
This conclusion is suggested by Harvey’s recognition, in the same work, of (p. 153) “the enhanced capacity of multinational capital to take Fordist mass production systems abroad, and there to exploit extremely vulnerable women’s labour power under conditions of extremely low pay and negligible job security.”
Furthermore, the global shift of production processes to low-wage nations was driven by TNCs in order to buttress their competitiveness and profitability, and to great effect, yet Harvey presents this as evidence of declining imperialist competitiveness. According to Harvey, core capital attempts to resolve its overaccumulation crisis through a spatial fix, involving the production of (p. 183) “new spaces within which capitalist production can proceed (through infrastructural investments, for example), the growth of trade and direct investments, and the exploration of new possibilities for the exploitation of labor-power.”
This is what Marx called a chaotic concept. Instead of the deliberate vagueness of exploration of new possibilities for the exploitation of labor-power, what about something much more straightforward like intensified exploitation of low-wage labor? In the end, Harvey’s attempts to add a spatial dimension to Marxist theory of capitalism falls flat because he neglects to discuss the spatial implications of immigration controls, of the deepening wage gradient between imperialist and semicolonial nations, of global wage arbitrage.
In The New Imperialism, published in 2003, Harvey devotes two pages to the globalization of production processes. He begins by inserting this development into his basic overaccumulation of capital thesis (pp. 63-4): “Easily exploited low-wage workforces coupled with increasing ease of geographical mobility of production opened up new opportunities for the profitable employment of surplus capital. But in short order this exacerbated the problem of surplus capital production world-wide.”
Formally separating industrial capitalists and financial capitalists, he ascribes the driving source of the outsourcing wave to the unleashed power of finance capitalists asserting their domination over manufacturing capital, to the great detriment of U.S. national interests (pp. 64-65):
A battery of technological and organisational shifts … promoted the kind of geographical mobility of manufacturing capital that the increasingly hyper-mobile financial capital could feed upon. While the shift towards financial power brought great direct benefits to the United States, the effects upon its own industrial structure were nothing short of traumatic, if not catastrophic…. Wave after wave of deindustrialisation hit industry after industry and region after region…. The US was complicit in undermining its dominance in manufacturing by unleashing the powers of finance throughout the globe. The benefit, however, was ever cheaper goods from elsewhere to fuel the endless consumerism to which the US was committed.
Leaving aside its nationalist and protectionist perspective, and its failure to notice that cheaper goods from elsewhere are made possible by cheaper labor elsewhere, that is, super-exploitation, Harvey’s argument contains a fatal flaw. Outsourcing was not so much driven by the awakening of finance but by stagnation and decline in the rate of manufacturing profit and the efforts of the captains of industry to counter this.
Increased imports of cheap manufactured goods did much more than fuel consumerism, it also directly supported the profitability and competitive position of North Americas industrial behemoths, and was actively promoted by them. Far from ending U.S. dominance—in other words, the ability of its corporations to capture the lion’s share of surplus-value—outsourcing has opened up new ways for U.S., European, and Japanese capitalists to entrench their dominance over global manufacturing production.
Harvey’s fundamental error only goes so far in explaining the dreadful reformism of his conclusion to The New Imperialism, where he pined (pp. 209–211) for “a return to a more benevolent New Deal imperialism, preferably arrived at through the sort of coalition of capitalist powers that Kautsky long ago envisaged…. [This] is surely enough to fight for in the present conjuncture,” forgetting what he wrote two decades earlier in his conclusion to Limits to Capital (p. 444): “The world was saved from the terrors of the Great Depression not by some glorious new deal or the magic touch of Keynesian economics in the treasuries of the world, but by the destruction and death of global war.”
originally posted here
NOTE: In my view, with respect to any discussion on the nature of capitalist imperialism, it is requisite to highlight ex post balance of payments constraints (cf. McCombie, 1993), along with the formations that constitute international monetary hegemony (cf. Fields & Vernengo, 2013; Vernengo & Fields, 2016). Also, it is imperative to understand that, although not mutually exclusive, the organizing concepts of neoliberalism, financialisation, and globalization do explicate independent historically-specific social, political & economic contingencies (cf. Kotz, 2015).
Fields, David and Matías Vernengo. 2013. “Hegemonic Currencies during the Crisis: The Dollar versus the Euro in a Cartalist Perspective.” Review of International Political Economy 20(4):740-759
Kotz, David M. 2015. “Neoliberalism, Globalization, Financialization: Understanding Post-1980 Capitalism.” The Rise and Fall of Free-Market Capitalism. Retrieved March 8, 2016 (https://www.umass.edu/economics/sites/default/files/Kotz.pdf).
McCombie, J. S. L. 1993. “Economic Growth, Trade Interlinkages, and the Balance-of Payments Constraint.” Journal of Post Keynesian Economics 15(4):471–505.
Vernengo, Matías and David Fields. 2016. “DisORIENT: Money, Technological Development and the Rise of the West.” Review of Radical Political Economics 48(4):562–568.