Apartheid planet and the new racism
John Smith in his “Imperialism in the 21st Century” sees imperialism as evolving towards a form of global apartheid. Under the rule of the U.S. world empire, the freedom of capital to move across national boundaries in its endless search for the highest rate of profit has expanded. However, workers do not have freedom to cross national borders in search of the highest wage.
Since World War II, the nation-state, the cradle of the capitalist mode of production, has been in decline. One example of this decline is the limited sovereignty of Germany and especially Japan since World War II. Even the sovereignty of countries that were allies of the U.S. in World War II, Britain and France, has been severely restricted within the NATO “alliance,” and in the case of Britain within the “special relationship.”
The U.S. and its imperialist satellite states of Western Europe and Japan have opposed every attempt to establish new strong independent nation-states – though with mixed results – since World War II. In the pre-war era, the then-politically divided imperialist countries sometimes gave limited support to nationalist movements in their rivals’ colonies and semi-colonies. Since World War II, the entire imperialist world has been united against national liberation movements in the oppressed world. (1)
Taking the world economy as a whole, the productive forces have long outgrown the nation-state. This was already shown by the outbreak of World War I more than a hundred years ago. In recent years, the revolution in communications represented by the rise of the Internet and the smartphone is increasingly breaking down global, linguistic, and cultural boundaries.
But the nation-state has refused to peacefully fade away into the sunset as the productive forces have outgrown it. In the period between the two world wars, there emerged within the imperialist world a counter-tendency of resurgent economic nationalism, which found expression in increased tariff and other trade barriers. Economic nationalism was accompanied by growing political nationalism, racist anti-immigrant movements, and racism within the imperialist countries. These trends found their most extreme manifestation in Nazi Germany.
Today in the imperialist countries, we once again see a rise of economic and political nationalism accompanied by anti-immigrant movements and growing racism. This extremely dangerous tendency is currently represented by President Donald Trump and his supporters in the U.S., where it is now in power; the new government of Italy; the current government of Austria; the National Front in France; the Alternative for Germany in Germany, where it is the official opposition party; and their counterparts in other imperialist countries. Though they are not imperialist countries, similar movements dominate governments of many of the ex-socialist countries of eastern Europe such as Poland, Hungary and the Czech Republic
Trump’s recent decision to move the U.S. Embassy in Israel to Jerusalem and recognize Jerusalem as Israel’s “eternal” capital was accompanied by Israeli massacres that have left more than a hundred Palestinians dead and thousands wounded in Gaza. Trump’s move cannot be separated from the broader racist trend that Trump personifies. (2)
Israel itself is the product of an earlier wave of racism that accompanied the economic and political nationalism of the period between World War I and World II that ended with Nazi Germany’s attempt to physically exterminate the entire European Jewish population. Zionist Israel, therefore, links the “old racism” with the new.
Is a kind of global apartheid system emerging, as Smith suggests, that is replacing the increasingly outmoded bourgeois nation-state? Today’s political and economic trends suggest the answer could be yes if the coming period does not result in a victory of the global working class.
Apartheid versus the classical bourgeois nation-state
To understand apartheid and its relationship to the classical bourgeois nation-state, we have to examine the two chief apartheid states that emerged out of the U.S. victory in World War II. These are South Africa, which gave the world the term “apartheid” – which means apart or separate development – and the State of Israel (3), which is the U.S. – and earlier the British – sponsored “solution” to the “Jewish question.”
In economic terms, the nation-state is a fraction of the world market that is partially walled off by tariffs and other trade restrictions. It makes use of a common currency, and has often restricted the outflow of money from the country. In this way, the nation-state attempts to maximize monetarily effective demand within its borders at the expense of other nation-states.
In contrast, within the nation-state, all barriers to the movement of money capital as well as internal tariffs and other trade restrictions are abolished. The bourgeois nation-state through the system of passports and visas regulates the movement of workers in and out of the nation-state. Within the nation-state, the freedom of movement of the working class is guaranteed.
The bourgeois nation-state aims to ensure the largest share of the world market and maximum access to raw materials and labor for its capitalists at the expense of the capitalists of other countries. The relationship among bourgeois nation-states is therefore at bottom antagonistic. This is why diplomacy that talks about the “friendship” between nations is hypocritical. The nation-state makes use of economic measures ranging from tariffs to economic “sanctions,” and political and military measures up to and including war. The survival of the nation-state into the nuclear age, therefore, endangers the continued existence of our – and many other – species.
In contrast to pre-capitalist empires, which were typically ethnically and linguistically diverse, the bourgeois nation-state attempts to achieve a common sense of nationality within its borders. This means that persons who live within the national boundaries speak a common language; have a common religion, or at least a few closely related religions; share a common culture; and are educated in common in the national myths.
To take the example of the U.S., there is the the myth of the “founding fathers” – no founding mothers – who established democracy as the form of government of the new nation. In reality, the U.S. founding fathers rejected the concept of democracy as dangerous to private property, which at that time included private property in kidnapped Africans. According to the founding-fathers myth, from its very foundation the U.S. has been uniquely committed to democracy, opposed all “dictators” – which according to the U.S. national myth is the opposite of democracy – and has a unique mission to spread democracy around the world.
Since the bourgeois nation-state in an economic sense is a partially walled-off portion of the world market with no internal trade barriers, a common language is necessary in order to carry out trade. Trade itself is far more important than it was in pre-capitalist empires, because all production of any significance under capitalism takes the form of commodity production.
The language question and the bourgeois nation-state
During Britain’s rise as a nation-state, English grew out of a combination of the German-like Anglo-Saxon language of early Germanic invaders and the French-speaking Norman invaders, who in turn conquered the Anglo-Saxons during the 11th century. In the centuries that followed, English pushed aside the Celtic languages of Wales, Scotland and even Ireland. Recently, Welsh nationalists have revived Welsh with some success. This development, combined with the rise of the Scottish national independence movement, are signs of the decay of the British nation-state.
In the U.S., successive immigrant groups have lost the languages they brought with them in favor of American English. The descendants of enslaved Africans have forgotten the languages their ancestors brought with them from Africa and developed their own form of English, though with some differences in dialect from standard “white” American English. By and large, Black English is understandable to speakers of standard American English, though speakers of standard English will miss some of its subtleness. Native Americans, too, have been forced to “forget” their original languages, which developed over thousands of years in what is now called North America and replaced them with American English.
During the formation of the bourgeois French nation-state, a standard French dialect was developed that gradually replaced other dialects and languages descended from Latin that were once spoken in post-Roman France. The same process has occurred more recently in Italy, where local dialects and languages are still in the process of giving way to standard Italian.
Bourgeois nation-states are generally characterized by a common religion – for example, the Catholic religion in France, Italy, Ireland and Poland; the Orthodox form of Christianity in Greece and Russia – or several closely related religions such as the Catholic and Protestant forms of Christianity in Germany and the U.S. Common language, culture and religion, combined with common origin myths that establish the “mission” of the nation, give rise to a sense of nationality held in common by the ruling capitalist class, the working class, and all intermediate layers.
This sense of common nationality at first plays a progressive role in the development of capitalist production. But as the further development of the productive forces come into contradiction with the capitalist relations of production, nationalism becomes a major barrier to the global unity of the working class, which urgently needs to replace capitalism and its nation-states with a world socialist society. Today’s movements to establish truly independent bourgeois nation-states for oppressed nations is progressive, while nationalism of the imperialist countries, which aims at crushing other nation-states, is thoroughly reactionary.
As they develop, the strongest bourgeois nation-states establish their own multi-national empires where one nation rules and other nations are oppressed. But these modern empires are centered on a core nation that is itself organized as a bourgeois nation-state. In contrast, the Roman Empire, to take one example, was centered on the city-state of Rome and not the bourgeois nation-state of Italy, which did not come into existence until the 19th century.
Apartheid South Africa and the bourgeois nation-state
In South Africa under apartheid, there was no pretense that all South Africans belonged to a common nationality. On the contrary! Only the white population, defined in terms of race, was considered part of the South African nation. The native Africans were denied any South African identity at all and were treated as foreigners within their own country. So-called “colored” – people of mixed, African, Asian and European ancestry – were also denied South African identity, because they were only partially white, though they were somewhat privileged relative to the people of “pure” African descent.
Supposedly, native Africans were to express their nationality in the so-called Bantustans. However, the Bantustans were totally nonviable as national units, since they were far too small to support independent capitalist development.
This monstrous system was enforced by a series of “passes” – similar to the international system of passports and visas – which enabled Africans to work in white South Africa proper with the permission of the apartheid authorities. This permission was granted only to the extent their labor power was in demand by white South Africans, whether for domestic service or the production of surplus value. Africans were treated as “immigrants” in their own country with the further proviso that they could never under any circumstances gain South African nationality.
Under apartheid conditions, there was no chance that the various peoples of South Africa would ever amalgamate either linguistically, religiously or culturally, not to speak of “racially.” Indeed, apartheid aimed to prevent this from happening at all costs. When their labor power was not in demand, African workers were expected to return to their so-called homelands, the Bantustans, where they lived under conditions of the greatest poverty.
Not surprisingly, apartheid authorities assigned the greater part of the area of South Africa to the white population, allotting only a small portion to native Africans, who formed approximately 80 percent of the population. With their every movement controlled, and their democratic rights to organize into political parties and trade unions suppressed, there was no chance African workers could sell their labor power at a wage that corresponded to its value.
In addition to full labor rights, the working class can only freely realize the value of its labor power if there is no national oppression, no sexual oppression against women, no racial oppression – the very opposite of the conditions that prevailed in apartheid South Africa. John Smith sees imperialism, where the majority of the industrial working class is located in the global south, as a kind of generalized apartheid system, where workers are denied freedom of movement across national frontiers but where capital increasingly has unrestrained movement across the same frontiers. There is in my opinion, especially in the age of globalization, much merit to this view.
Israel has increasingly evolved into an apartheid state similar – though of course not identical – to South African apartheid. Today, Israel for all practical purposes rules all of historic Palestine. The Palestine that Israel rules over despite the expulsion of the majority of the Arab population in 1948 – al Nakba – is now once again more than 50 percent Arab. This is not – or rather is not yet – as demographically lopsided as South Africa, where only about 20 percent of the population is “white.”
But the Arab population is growing faster than the Israeli population. If this trend continues, the imbalance between the Jewish “Israeli” population and the Arab population will draw ever closer to the South African situation. Given enough time, it will exceed it.
Liberals – both in the U.S. and other imperialist countries, and the ever-shrinking number of liberals in Israel – argue that a separate Arab state must be established if Israel is to avoid becoming an apartheid state. If such a state were to be established, it would at most constitute about 13 percent of historic Palestine. But even if an “independent” Arab state is established in 13 percent of Palestine – a prospect that seems increasingly unlikely in these days of Trump and Netanyahu – it would be a bantustan-like entity. The reality is that the apartheid horse escaped from the Zionist barn long ago.
Indeed, the whole project to establish a “Jewish state” in an Arab country through colonization made apartheid inevitable from the beginning. This fact was fully realized by the most reactionary – that is, realistic – Zionists from the very beginning of the Zionist movement. Therefore, even if the Jewish population of Palestine were a nationally homogeneous people of “Israeli” nationality – which they are not – Israel within the framework of Zionist ideology can never become a normal bourgeois nation-state built on the foundation of a common nationality – not when more than half its inhabitants are of Arab nationality!
Like in South Africa, the apartheid system is maintained by a series of restrictions of movement and a system of passes that regulates the movement of Arabs in general and Arab workers in particular. Even the roads motorists use are organized on strict apartheid principles. Palestinian Arabs, like Africans in South Africa under apartheid, are treated as foreigners in their own country whether they have formal citizenship like they do within Israel’s 1967 boundaries or do not as is the case in Gaza and the West Bank, occupied by Israel in the 1967 war.
Israelis are discouraged from learning the Arabic language, which is spoken by all the surrounding peoples, including all Arab Palestinians. With more than half the people who live in the country speaking a different language, Israel fails the linguistic test. The original Hebrew language died out around 500 BCE as a living language and was used by Jews only for religious purposes after that. Hebrew was artificially revived by the Zionists as part of the Zionist effort to prevent any merging of the Jewish colonial population and the native Arabic-speakers.
The Zionists have gone out of the way to prevent the Israelis from being affected by Arab culture in other ways, emphasizing that Israel is culturally and politically a Western country and not “Middle Eastern” at all. This is a rather ironic – but revealing – attitude for a movement that claims it is reviving the long-defunct Jewish nation, which in its day often struggled against Greece and Rome, the ancestors of Western civilization. In contrast, the ancient Palestinian Jewish state was in many ways – not least in the sphere of religion – an ancestor of modern Arab civilization.
One of the differences between classic South African apartheid and the Israeli version is this: Since Palestine is a much smaller country than South Africa, it is possible for Arab workers to return to their “Bantustans” at the end of the working day. They, therefore, do not have to spend the night in Israeli territory proper like was the case with African workers under South African apartheid.
Zionist ideology demands a “purely” Jewish state where all the capitalists and all the workers share the same “Jewish” – or “Israeli” – nationality. In practice, however, Israeli capitalists, under the pressure of capitalist competition (which requires individual capitalists to strive for the maximum rate of profit and is far more powerful than Zionist – or any other – ideology) are dependent on cheap Arab labor just as the white South African capitalists were on African labor.
In order to reduce this “dangerous” dependency on Arab labor, the Israeli government has encouraged non-Jewish workers from the global south to temporarily move to Israel while denying them all possibility of gaining Israeli citizenship on the grounds they are not Jewish.
U.S. imperialism supports Israel above all in order to defeat Arab nationalism – the move to create a bourgeois nation-state that would include the entire Arab nation. The emergence of a true United Arab Republic that would unite all the people of Arab nationality would give a powerful impulse to capitalist development in the Arab world. Under a powerful United Arab Republic, Arab capitalists would take markets away from the capitalists that now dominate the markets of the Arab world and would be well positioned to expand their share of the world market beyond the Arab nation.
Besides Israel, the anti-national forces in the Arab world include Saudi Arabia, Kuwait and other oil monarchies. The majority of the working population of these thinly populated desert kingdoms and emirates is made up of immigrants from Pakistan and India. They like Israel – and South Africa under apartheid – are therefore not emerging bourgeois nation-states.
The interests of the U.S. world empire – not simply the inclinations of the temporary inhabitants of the Oval Office – require that the U.S. and its imperialist satellites oppose the creation of new viable bourgeois nation-states by oppressed peoples in order to prevent the rise of new capitalist competition. The prevention of the emergence of a united Arab bourgeois nation-state is a key plank of U.S. foreign policy that remains unchanged from administration to the administration. The U.S. and its imperialist satellites are also opposed to the more modest prospects of strong bourgeois nation-states emerging in Iraq, Syria, Egypt, Libya or any other Arab country.
Unlike South Africa in its apartheid era, countries such as Syria, Iraq and Egypt are not yet Bantustans. Therefore, the whole policy of U.S. imperialism is to break up the Arab countries and the countries of the global south in order to reduce them to Bantustan-like entities. The destruction of the emerging Iraqi nation-state began with economic sanctions against Iraq after it briefly ousted the Kuwaiti oil monarchy and moved to integrate it into Iraq in 1990. Then came the Gulf War of 1991 under Bush I, when the Kuwaiti oil monarchy was forcibly restored.
The drive to destroy the Iraqi nation-state continued under the Clinton administration, with its tightening economic sanctions, forced unilateral disarmament of Iraq, and “inspections,” combined with periodic and then constant bombing under the pretext of enforcing the “no-fly zone.” Finally, under Bush II came the outright invasion by U.S. and British forces.
Since the U.S. invaded and occupied Iraq in 2003, it has encouraged Kurdish separatism in the north. The Kurdish tribes themselves are divided into two bitterly hostile groups that function in effect as two separate Kurdish “countries,” both subordinated to U.S. imperialism. In the Arab part of Iraq, the U.S. has split Sunni and Shiite Iraqis into separate neighborhoods and encouraged members of the two religious communities to see each other as bitter enemies.
Through these policies, the U.S. has done everything possible to reverse the sense of a common Iraqi nationality that was growing under the nationalist rule of the Baath party. In order to achieve this, the U.S. forged alliances with reactionary clerical elements among both the Shiite and Sunni sects of Islam and bought off tribal leaders among the Kurds.
Then, under Obama, came the 2011 U.S.-NATO destruction of Libya, where slave markets selling black African slaves have reappeared. A fine legacy for the first African-American U.S. president! The U.S.-sponsored rebels in Syria – now supplemented by increasingly open Israeli intervention – is another example of the U.S. empire’s nation-destroying policies. The U.S. empire is attempting to split Syria into a Sunni area in the east, a Kurdish state in the north, and an Alawite-Christian state in the west.
Iraq and Syria, which have the potential to form bourgeois nation-states that could encourage new capitalist development and thus create unwelcome competition for U.S. capitalism, are being split into ever smaller and more Bantustan-like units. Recently, the African country of Sudan was divided into North and South Sudan.
There is another example, not in Asia or Africa but in Europe itself. Yugoslavia, a socialist country whose “independence” the U.S. championed against the Soviet Union during the Cold War, was broken up into tiny “independent” states following the counterrevolutions that swept the Soviet Union and eastern Europe in the 1980s and 1990s. As a result, the Balkans have been “balkanized” like never before. Even the mineral-rich province of Kosovo, which Albanian nationalists hoped would become part of Albania, was declared an “independent” state.
The U.S. world empire supports not only Israel and the oil monarchies against the Arab nation, but the Saudi Arabian oil monarchy against Iran. Unlike Saudi Arabia and other oil monarchies, Iran is a viable bourgeois nation based on the Iranian nationality. This explains why U.S. imperialism shows such great hatred for Iran despite the attempts of successive Iranian governments to improve their relations with Washington. Iran has a common language – Farsi – and a common religion in the Shiite form of Islam, common national traditions, vast oil resources, and a considerable territory and population. In the words of Trump’s current secretary of state, Mike Pompeo, the U.S. government is determined to “crush” it.
Israel as an ‘oil monarchy’
In contrast, Saudi Arabia and other oil monarchies like Kuwait are not real bourgeois nation-states, because they depend on the labor of workers from Pakistan and India. The majority of the working class in the oil monarchies have no possibility of ever acquiring the nationality of their rulers, just as was the case with South Africa under apartheid and is the case with the Arab majority in Palestine today. In this sense, the oil monarchies are also apartheid states, though with the important difference that the working class of the oil monarchies do not consider the states in which they are obliged to sell their labor power to be their real homelands.
Interestingly, Israel as much as possible attempts to bring workers from the other non-Arab nations of the global south to exploit as well. Therefore, Israel, though it produces little or no oil, is taking on some of the characteristics of an “oil monarchy” as well as an apartheid state.
Patrick Bond’s critique of John Smith
The Northern Ireland/South African Marxist Patrick Bond has published a highly critical review of Smith’s “Imperialism in the 20th Century.” Bond attacks Smith’s concept of a global apartheid system on the basis of the many differences between South Africa’s apartheid and global imperialism. Of course, there are many differences. There are also many differences in detail between Israeli apartheid and the South African variant. But apartheid is still apartheid. Back in the day, there were also many differences between Italian and German fascism, but both were fascist regimes.
It is what South African – and Israeli – apartheid have in common and not the differing details that is important. It is indeed true that the evolution of the U.S empire as it tries to hold out against the struggles of the oppressed and the internal economic forces tearing it apart is increasingly tending toward a global version of apartheid. Is it any accident that the current president of the United States, Donald Trump, is a racist who just called (May 16, 2018) “illegal” Latin American immigrants “animals” – the same epithet that he recently used to describe Syrian President Assad? (4)
Patrick Bond writes: ” … but a rounded Marxist-feminist-ecological-race-conscious critique of imperialism needs a stronger foundation. Smith’s problems begin with the South Africa metaphor and extend to the unconvincing binary of oppressed and oppressor nations [emphasis added – SW], whose main shortcoming is that it underplays national ruling classes aspiring to shift from the former to the latter.”
This argument is particularly dangerous for those of us who live in the imperialist countries. It opens the way for us to be “neutral” on the side of “our own” imperialism in the case of conflict between the real imperialists and countries – often led by bourgeois-nationalist forces – that are trying to gain independence from the oppressing imperialist countries.
The U.S. world empire’s tendency toward full-scale global apartheid
Today, the U.S. “white nationalists” – the U.S. fascist movement – combines the “classical” fascism of Mussolini and Hitler and the apartheid of South Africa and Israel by openly advocating that the United States be divided between white areas, Black areas, and Latinx areas, alongside the already Bantustan-like Native American reservations. Under the proposed U.S. fascist apartheid system, Muslims would be returned to their countries of origin – a fascist U.S. would be a Christian not a Muslim country, after all – and U.S. Jews would be forced to emigrate to Israel.
The U.S. fascist Richard Spencer – one of the chief organizers of the Charlottesville “unite the right” demonstration, where the demonstrators chanted “Jews will not replace us” – is extremely anti-Semitic. However, as the staunch anti-Semite and racist that he is, he openly admires Israel as an “ethnic-racial state” whose apartheid system is a model that Spencer hopes to duplicate in the U.S.
Bond writes: “Another leading Marxist, Claudio Katz, has recently reminded us of one such feature that deserves far more attention: Rau Mauro Marino’s 1960s-70s theory of sub-imperialism, which fuses imperial and semi-peripheral agendas of power and accumulation with internal processes of super-exploitation.” Bond refers to countries like China that have experienced a considerable growth of capitalist industrial production.
It is quite true that the capitalists of China, South Africa, India, and other countries industrializing on a capitalist basis preside over a system of cruel super-exploitation. Because of this undeniable fact, Bond following Katz and Marino proposes to label them “sub-imperialist countries.”
The grave political dangers of the theory of sub-imperialism
Among the countries Bond considers “sub-imperialist” is Vietnam. If another war were ever to come between Vietnam and the U.S., would Bond be neutral because both the U.S. and Vietnam are imperialist, or at least in the case of Vietnam “sub-imperialist”?
Bond and other supporters of the theory of sub-imperialism “forget” that imperialism means the domination of “finance capital” as opposed to industrial capital. In Lenin’s day, the centers of finance capital – the giant banks – and monopolistic industrial capital – the huge factories – were located within the same country. Today, the centers of finance capital in the sense of the corporate headquarters of the big banks and the ownership of the great bulk of corporate bonds, shares, and bank deposits – finance capital – are still located in the imperialist countries, just as they were in the days of Lenin. But industrial production – industrial capital – is increasingly located in the oppressed countries. In reality, the “binary opposition,” as Bond puts it, between oppressor and oppressed countries is far starker than it was in the days of Lenin.
The oppressed countries that Bond wants to label “sub-imperialist” are being exploited by U.S. imperialist monopolies far more than they ever were when they were “underdeveloped” countries. We now have a hierarchy of exploiters with the industrial capitalists of the oppressed countries super-exploiting their workers by paying them less than the value of their labor power but then handing over a huge amount of the surplus value they extract from their super-exploited workers to the capitalists and their hangers-on of the oppressor countries.
For example, China, a “global south” country, is described as either “sub-imperialist” or just plain imperialist because of the breathtaking expansion of industrial capital in that country since the “Volcker shock” at the end of the 1970s. The proof that is often given that China is “imperialist,” or at least “sub-imperialist,” is the growing export of capital from China to Africa. Didn’t Lenin stress that the export of capital was an important feature of imperialism?
In reality, the largest investors in Africa are Britain and France followed by the U.S., which is still in the process of catching up with these older colonial powers in this regard.
The consequences of paying workers less than the value of their labor power on commodity prices
Marx, as Smith notes, did not in “Capital” deal at length with the consequences of the purchase by the capitalists of the labor power of workers below their value – though he did acknowledge that it is an important phenomenon – because Marx’s method required him to assume in “Capital” that commodities including the commodity labor power sell at their values – direct prices. This assumption was necessary in order to show that surplus value – profit – does not arise from cheating and swindling but can be explained under the assumption that equal amounts of labor exchange with equal amounts of labor.
Only in Volume III of “Capital” does Marx modify this assumption somewhat, replacing it with the assumption that all commodities with the exception of the money commodity, which doesn’t have a price, and the commodity labor power, which doesn’t have a price of production, sell at their prices of production. The commodity labor power is not sold by the industrial capitalist but by wage workers who possess no capital and have only their labor power to sell. From the viewpoint of the industrial capitalists, labor power is a form of capital – indeed by far the most important – once they have purchased it, but unsold labor power is not capital.
Therefore, the workers do not sell their labor power at its price of production. However, assuming that the rate of profit is equalized in all branches of production, the workers purchase the commodities they have to consume to reproduce their labor power at their prices of production.
What happens if the capitalists purchase labor power at a price below that which will enable the workers to fully reproduce their labor power is a subject that lies beyond the scope of “Capital.” Marx had planned to write a whole book on “wage labor” where he presumably would have gone into this in depth, but as far as we know he never found time to write this critical book. Here I want to examine what will be the effect on prices if the capitalists purchase the labor power of workers at a price – wage – below the value of their labor power.
For purposes of simplification, I will assume that direct prices and prices of production are identical. In other words, I will assume that capital in all branches of production has identical organic compositions and turnover periods, so direct prices and production prices are equal. Introducing different organic compositions and turnover periods that cause prices of production to deviate from direct prices does not affect the essence of this argument. (5)
Let’s assume the workers that produce apples due to some special circumstance lose the ability to obtain the full value of their labor power. Remember, under our assumptions the workers purchase with their money wages the commodities that are necessary to fully reproduce their labor power. As we saw in earlier posts, the value of labor power includes both a biologically determined minimum and an additional moral element.
Assume that as a result of special circumstance capitalist farmers who grow apples are able to buy the labor power of their workers below their direct price while everything else remains unchanged. As a result, our apple capitalists will realize a super-profit. These super-profits, assuming “free competition,” will not last very long. Our apple capitalists’ fellow capitalists will notice sooner or later that capital invested in the apple-producing industry is higher than the rate of profit in any other branch of industry.
Therefore, additional capitalists will enter the apple-producing industry causing a rise in the number of apples offered for sale on the market. The supply of apples will now exceed the demand for apples at the prevailing prices. Competition among the apple capitalists will see to it that prices of apples are lowered to a level that will again equalize the rate of profit of the apple-producing industry to the profit in every other industry. In this case, the equalization of the rate of profit will be achieved by selling apples below their direct price. This phenomenon gives rise to the illusion among the (bourgeois) economists that wages determine prices.
In this case, the consumer – the purchasers of apples regardless of the class they happen to belong to – will benefit. The money – the quantity of gold the currency they use represents – used to purchase apples will represent a smaller quantity of abstract human labor than the apples they purchase. As a result of this unequal exchange, value will be transferred from the sellers of apples to the buyers of the apples.
A portion of the value wage that is stolen by the apple capitalists from their workers will thus be appropriated by the purchasers of apples. Insomuch as the purchasers of the apples are workers, and assuming all other things remain equal, the non-apple workers will appropriate a portion of the wages that have been stolen from the apple workers. If the apples are produced in an oppressed country while the buyers of apples are workers in an oppressor country, the latter workers will in value terms be pocketing a portion of the stolen wages of the workers in the oppressed country.
However, what happens if the fall in wages is not confined to the apple industry but becomes general? For example, suppose an apartheid system is established that enables the capitalists not only in the apple-growing business but in all branches of capitalist production to pay their workers radically lower wages than they did when a (bourgeois) democratic system prevailed.
The apple capitalists would just as before experience a rise in their rate of profit. But so would all the other capitalists. In this case, there will be no flow of capital from other industries into the apple industry. Instead, a general fall in wages would mean that all capitalists would experience a higher rate of profit.
In the real world, things are far more complex than our two simplistic models. However, the movement of industrial production from the imperialist countries to the oppressed countries means that the situation is moving from one where low prices prevail for a few commodities and closer to the situation where “cheap labor” means a general rise in the rate of profit.
Therefore in the situation where 80 percent of the workers live in oppressed countries, the benefit that workers in the imperialist countries gain from cheap commodities produced by low-wage workers is fading fast. Instead, it is the capitalists who are benefiting from rising profits, which is reflected – outside of crisis periods – in soaring stock markets.
This is not to deny that capitalists are still sharing a portion of their surplus value with a now shrinking portion of workers in the imperialist countries. For example, workers in “capital-intensive” factories with a high organic composition of capital located in the imperialist countries are paid wages that are still very high relative to the starvation wages paid to workers in industries with a lower than average organic composition of capital located in the oppressed nations of the global south. From the viewpoint of the capitalists, the “cost of labor” in factories with a higher than average organic composition of capital forms a much smaller part of the total cost of production. Therefore, capital-intensive industries are more likely to remain in the global north.
As cheap commodity prices fade in importance as a way monopoly capitalists of the global north share super-profits with the upper layer of the working class, the private ownership of homes takes on increased importance. The evil is not the private ownership of the houses but the private ownership of the land under the houses. Many better-paid workers who have built up substantial equity in their homes benefit from rising home prices – capitalized land rents. These land rents are ultimately a portion of the super-profits being squeezed out of the super-exploited workers of the global south. A portion of these super-profits – stolen wages – are then shared with better-paid workers who have built up equity in their homes – or rather in the land under the homes.
Recently in Silicon Valley, I attended a meeting of activists who had some proposals to help the growing number of homeless people in “the valley.” The current cyclical economic boom has driven up apartment rents so high that many working-class people are being either forced to leave the valley or face homelessness. One of the activists observed that even among immigrants, homeowners were quite hostile to proposals to locate shelters for the homeless in their neighborhoods. These homeowners are fearful that the proposed homeless shelters would make their neighborhoods “less desirable” and push down property values.
It is no accident that the capitalist U.S. Democratic Party has pushed the “American Dream” of home ownership since New Deal days. However, programs to encourage home ownership among workers divide workers between those who rent and those who own their own homes. In this way, an upper layer of homeowners is detached from the rest of the working class. On the other hand, the Democrats always fail to pass laws that would encourage solidarity among workers such as their long-abandoned promised to repeal the Taft-Hartley Law, and more recently their failure to pass “card check” (6), which would encourage unionization.
The importance of the law of the tendency of the rate of profit to fall
In terms of the long-term evolution of capitalism, the shift of industrial production from the imperialist countries to the oppressed countries is a consequence of the tendency of the rate of profit to fall and the measures that capital must take to resist this fall. Capital is therefore driven to find ever-increasing amounts of cheap labor to exploit.
Remember, cheap labor enables capital to resist the fall in the rate of profit in two ways. First, all other things remaining equal, a higher rate of surplus value means a higher rate of profit. But all things are not equal. The lower the value of labor power the more likely the capitalists will select a “method of production” that uses labor power – variable capital – rather than constant capital, therefore slowing down the rise in the organic composition of capital, which all things remaining equal lowers the rate of profit. Therefore, capital needs cheap labor like a person needs oxygen to breathe.
Here we see the importance of the law of the tendency of the rate of profit to fall, which Marx called the most important law in all political economy. Even if the rate of profit doesn’t actually fall in a particular historical period, the law shows why imperialists follow the policies that they do.
Bond’s one valid criticism of Smith
Bond quotes Smith as writing, “It is true that ultra-low wages in southern nations are being used as a club against workers in imperialist nations, but it is preposterous to suggest that the North-South gulf in wages and living standards has been substantially eroded.”
While Smith is correct to say that the gap between the wages of the workers in the imperialist countries and countries in the global south has not disappeared, he ignores the devastating effects of “de-industrialization” that Hobson and then Lenin warned against more than a hundred years ago. The disappearance of unionized industrial jobs has condemned much of the current generation of young workers – both white workers and workers of color, native and immigrant workers alike – to low-paid, low-quality, often non-union jobs such as warehousing workers, retail clerks – these jobs are now rapidly disappearing due to the rise of online shopping – fast-food workers, security guards, and janitors. These jobs are often located in the very same office buildings where high-tech engineers write the software that increasingly controls every aspect of our lives.
The radical weakening or complete disappearance of the once-powerful industrial unions has also pulled the rug out from the labor-based parties of Western Europe and Japan. The once powerful Italian Communist Party, which after the fall of Mussolini had the majority of the Italian people behind it and continued to be a powerful party for decades after that, has now completely disappeared. In Germany, the oldest labor-based party in the world, the Social Democratic Party, recently received its lowest vote, 20.5 percent of the total cast, in postwar German history. The French Communist Party, which got around 25 percent in the early years after World War II, now gets vote percentages in the single digits.
In a parallel development, the U.S. labor-liberal faction of the Democratic Party, which bases itself on the unions, lost influence to Bill Clinton’s “New Democrats,” who oriented away from industrial workers and tried to build a voting base among conservative white-color professionals instead. Many remaining white industrial workers – or would-be industrial workers – whose parents and grandparents voted the Communist ticket in Western Europe after World War II have fallen victim to the demagoguery of far-right racist parties like the National Front in France and the League Party and Five Star Movement in Italy.
The collapse of the old workers’ parties is historical punishment for the failure of these parties to carry out the socialist revolution when they were powerful and, in the Italian case, had the majority not only of the working class but the nation as a whole behind them.
Some final observations on Smith
Smith’s book is so rich that we could spend more months on it. But it is time to move on. So I will make some final observations.
Smith’s last chapter, “All Roads Lead to Crisis,” is perhaps the weakest in the book. It was obviously written after the rest of the book was written and seems to have been added to the manuscript at the last minute just before publication. It describes what was a developing partial global crisis of overproduction that hit the energy industry in 2016. During this partial crisis – or “Kitchin recession” – the rise of global industrial production was halted briefly while the global prices for primary commodities fell sharply. In the U.S., capital spending fell slightly for the first time since the 2007-09 crisis.
However, after Smith’s book was published in 2017, the “minor recession” of 2016 gave way to a new boom, which has continued through the first half of 2018. This boom has brought the strongest rise in capital spending in the capitalist world of the current industrial cycle. This boom, combined with the Republican tax cut, is now sharply pushing up interest rates indicating an approach of a new downturn that has every prospect of being far worse than the minor recession of 2016. However, no matter how deep the coming recession proves to be – even if it is worse than the 1929-33 super-crisis – it won’t be the “final crisis” of capitalism.
There is no such thing as a final cyclical crisis of capitalism. Capitalism and cyclical crises will continue until the working class overthrows the capitalist class, or world civilization collapses due to nuclear war, climate change, or similar disaster leading to the common ruin of the two contending classes of our era, the capitalist class and the working class.
John Smith’s “Imperialism in the 21st Century,” despite some shortcomings, is overall the most important book on post-1979 imperialism that has appeared so far. I consider it must reading.
Next month, I will review “Modern Money Theory,” a book by the radical non-Marxist L. Randel Wray. MMT is gaining support as a “third way” between neoliberal capitalism and Marxist socialism and as such is gathering support among progressives. Reviewing this book will enable us to examine many of the points we have developed in this blog with a fresh perspective.
1 Before World War II, imperialist nations sometimes offered a degree of support to nations oppressed by rival imperialist powers. For example, the U.S. championed the cause of China against Japan, while Japan supported enslaved India against Britain. Similarly, Nazi Germany supported the Arab countries against Britain and the Zionists, who were colonizing Palestine with British support even as the Holocaust was unfolding in Europe. In all these cases, the support offered by imperialist nations to oppressed nations fighting for independence against its imperialist rivals was treacherous and limited, but it existed. After World War II, this door was closed as the imperialist countries under the domination of the United States formed a solid united front, especially after the Suez crisis of 1956, against all national liberation movements. (back)
2 Many people are puzzled how the Trump administration, which has been amazingly tolerant toward anti-Semitism, and many of whose supporters are indeed extremely anti-Semitic, can at the same time be the most pro-Israel administration ever. If they knew the real history of the Zionist movement’s friendly relationship with anti-Semites, they would not be so surprised. Zionist ideology claims that anti-Semitism is eternal among so-called Gentiles – a catchall term that describes all non-Jews – and can never be eliminated. Therefore, Zionism makes no attempt to fight anti-Semitism but rather seeks to work with open anti-Semites. And the anti-Semites have often returned the favor. For example, the second most anti-Semitic government in Europe in the 1930s, the government of Poland, strongly supported Zionism as a way to rid itself of its unwanted Jewish population.
And the Nazis themselves – the all-time champions of anti-Semitism – flirted with the Zionists as part of Hitler’s program to expel Jews from Germany and later from German-dominated Europe. The Hitler government only stopped supporting Zionism when it became clear that there was no way to deport the unwanted European Jews to Palestine under wartime conditions. During World War II, Palestine was controlled by Britain and not Germany, and Germany never made any serious attempt to capture it. Only when it became clear that deporting the European Jews to Palestine – or Madagascar, considered an alternative to Palestine by many anti-Semites and Zionists alike – wasn’t possible did the Hitler government finally come out against Zionism. (back)
3 Notice the term “State of Israel,” not the Republic of Israel. The very name is a provocation because before 1948 the “term” Israel was never used to describe a geographical area but rather for thousands of years was used as a name for the Jewish people as a whole. Israel is not the ancient name for the geographical entity historically called Palestine like many people are led to believe. By choosing the name State of Israel (Jewish people), the Zionists were emphasizing the principle of Zionism that their state does not even claim to represent its citizens but rather the Jewish people as a whole, whether or not they are citizens or actually live or even want to live in Israel.
On the other hand, the State of Israel does not even pretend to represent its Arab citizens. Second, since the name “Israel” has long been used both in religious and sometimes in secular discourse as an alternative name for the Jewish people, opposition to or even criticism of “Israel” can more easily be presented as “anti-Semitism.” Indeed, in the pre-1948 context, denouncing the “crimes of Israel” – for example, the murder of Jesus Christ – would indeed have been anti-Semitic. (back)
4 Trump and his supporters have since walked this back by claiming that the U.S. president was only referring to members of the El Salvadorian gang MS-13. This itself is rather ironic from Trump, with his well-documented ties to organized crime. More importantly, by describing any group of human beings as “animals,” the door is open to remove all the “animals,” including by physical extermination if necessary. In this way, the road to future holocausts is prepared. (back)
5 Introducing these kinds of simplifying assumptions is central to Marx’s method. It enabled him to examine the central questions he was examining such as the origin and nature of surplus value without dealing with secondary factors before the primary question was thoroughly examined first. For example, Marx had to explain how surplus value can be produced when all commodities are exchanged at their values before he went into equalization of the rate of profit and transformation of values into prices of production, the transformation problem, and so on. (back)
6 The Taft-Hartley Law is an anti-union law passed by the GOP-Jim Crow Democratic coalition in 1947 in the U.S. Congress over President Truman’s veto. Among other things, it enabled U.S. states to pass right-to-work laws that outlaw the union shop. Originally, these laws were passed in the Jim Crow South, but gradually they have passed in other states, including Michigan, which was considered the center of the CIO. For years, the Democrats promised to repeal the Taft-Hartley Law when they controlled Congress and the White House but never did. Today, no Democratic or Republican politician that I know of even suggests repealing this reactionary legislation.
Though having long ago dropped their promise to repeal Taft-Hartley, the Democrats did promise in 2008 to pass so-called card check, which would enable a union to be recognized if a majority of the workers in an enterprise merely checked a card indicating that they desired union representation. If passed, this would indeed have made organizing unions a lot easier. However, once elected, President Obama and the congressional Democrat majority that emerged from the 2008 election failed to take any action to pass card check. This shows that the U.S. Democratic Party is not a European-style Social Democratic or Labor Party that though pro-capitalist and pro-imperialist is based in the unions. Instead, it is in the European sense of the word a thoroughly right-of-center bourgeois party. (back)