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Globalisation and Vulgar Marxism

This is a well produced and vigorously launched book on a very topical subject based on a study commissioned by the two leftwing journals Lal Parcham and Lok Dasta. The authors claim that most of their observations in this book are about the qualitatively new round of globalisation in recent years which touch upon many contentious issues that have been subject of much controversy in the Left movement. From these observations they have drawn some conclusions regarding the globalisation process, capitalism in developed countries, nation-state under globalisation, globalisation and Third World capitalism, changed character of bourgeoisie in Third World countries, the relationship between imperialism and bourgeoisie in Third World countries and colonialism and imperialism etc., expressing the hope these conclusions will kindle much debate.

The 'objective' presentation of vast statistics on the recent trends in the world economy in this book, albeit with a selective and onesided slant on globalisation, is more than matched by highly speculative and opinionated 'observations' and 'conclusions' the LPLD Study Team has drawn in the concluding chapters. But there is a method in this. Their 'objective' account of globalisation turns out to be an apologia for imperialism. Commenting about similar objectivity of Proudhan - who too had written about the 1851 coup d'etat in France - in his Preface to the Second Edition of The Eighteenth Brumaire of Louis Bonaparte, Marx said: "Proudhan, for his part, seeks to represent the coup d'etat as the result of the preceding historical development. Unnoticeably, however, his historical construction of the coup d'etat becomes a historical apologia for its hero. Thus he falls into the error of our so-called objective historians. I, on the contrary, demonstrate how the class struggle in France created circumstances and relationships that made it possible for a grotesque and mediocre personality to play a hero's part." Here too we have a sample of objectivism on globalisation which, as we shall see, makes a mockery of historical materialism.

Let us first begin with their key conclusions and examine their simplistic and onesided understanding and observations on globalisation from which these are deduced.

I
Globalisation and Third World Capitalism

Imperialism's 'Big Stake' and Third World's 'Greater Gain'
The entire analysis of the authors revolves around two central theses: "imperialist capital has a big stake in the capitalist development of the Third World" (p.256) and "Third World bourgeoisie stand to gain more than lose (from globalisation) in the partnership with imperialist capital" (p.163). Both the questions have been posed and the conclusions drawn from the point of view of vulgar economics rather than Marxism.

Globalisation, like all other earlier international drives of capital, is bound to bring about some degree of fresh capitalist development in the Third World. If British colonialists introduced railways in India it was more to their own interests of reaching out to, and facilitating transportation of, raw material sources and markets for their goods and no nationalist, leave alone Marxist ever interpreted it as British imperialism 'having a big stake in the capitalist development' of India. The first textile and jute mills in India came up under the patronage of the British even as they destroyed the vast and skilled artisan production base of India which perhaps could have given rise to a broader-based capitalism. Imperialist exploitation of the Third World has always promoted a thin layer of bourgeoisie in the Third World who always 'stood to gain more than lose' by serving imperialist interests looked at from a narrow point of view. In short, imperialists always had a stake in promoting a distorted capitalist development subservient to their interests in the Third World and this is not new under globalisation. Marxists have never denied this. Whatever 'confluence of interests' may exist between the Third World bourgeoisie and the imperialists cannot be equated with confluence of interests between Third World countries and the developed capitalist countries which is what the authors do. Greater the gains of Third World bourgeoisie more is the loss to the people and the nation. It is precisely because of this that Marxists have characterised and targeted this class as a basic ally of imperialism. Or, have things changed under globalisation?

International Finance
The authors seem to have been overwhelmed by the dizzy heights the international financial flows have reached. They have indeed well documented the data to show that international financial flows have increased several times faster than international trade which in turn has been increasing faster than international production. However, the net capital flows among countries, including between developed and developing countries as against the breathtaking gross figures of cross-border financial transactions, would tell a different story that would have been less impressive. Also production by MNCs has grown faster than international trade and this has its implications for the real growth of 'Third World Capitalism' and the extent of its participation in globalisation. Unfortunately, the elaborate presentation of data in this book has missed out these two crucial aspects which when taken into account would give a more sober account of globalisation.

The global financial markets may be flush with funds. Does it mean any amount of capital can flow into Third World countries and bring about unlimited growth and turn these countries beyond recognition into industrialised economies in record time? Those who harbour such notions only betray their ignorance of elementary fundamentals of economics. Free capital account convertibility has been prevailing among almost all the developed countries themselves for the last three decades and surplus capital could move unhindered from any region to any other region among them and yet why the OECD GDP growth has not been impressive in this period and its share in world GDP is declining? It is nearly a decade and a half since most of the Latin American countries liberalised capital inflows, yet why their GDP growth has been lower in this period - with a historic debt crisis as a trade-off in between - and their per capita GDP has registered negative growth? Can any country absorb capital to any unlimited extent? Why has the mindboggling success story of China in attracting foreign investments not been repeated in India, a country of comparable size and cheaper labour? Finance capital 'which appears to have acquired a life of its own', has to depend, in the final analysis on industrial and other forms of productive capital and rate of interest is ultimately governed by the rate of profit. If one remembers such basic axioms one wouldn't lose one's head while looking at the massive growth of finance capital and its globalisation. No matter how flush the international financial markets are, the capital inflows, a country's capacity to absorb finance capital, is mediated by several other factors, the principal ones being rate of profit, availability of profitable avenues of investment, exchange rate and export growth. In fact, it is not due to low savings and capital scarcity that countries like India are witnessing relatively low growth and periodic recessions. Those days are long gone. The Indian bourgeoisie is not without money and there is a fairly well-developed capital market within the country itself. The real problems are rather different: the market expansion is low due to the low level of expansion of incomes and this is also the reason why FDI inflows are also low. In such a situation no amount of liberalisation or globalisation would be able to act as a magic wand. The hard-nosed multinational investment bankers, mutual funds and FIIs who periodically calculate the credit ratings of each country to precision before committing their funds, know better.

The myths of constantly high levels of investment - sustained through high levels of savings and supply of capital through other means including low interest rates and external flows - bringing about sustained high growth through 'accelerator' and 'multiplier' effects, the myths peddled by various shades of monetarist theories and their Reaganomics variants, have proved to be bankrupt long back in the West. Now they seem to have resurrected themselves to inspire the globalisation enthusiasts. Globalisation has, of course, brought about certain new opportunities to the Third World bourgeoisie and also tremendous risks in their wake which calls for a level-headed study of the impact of these trends on one's own country in concrete terms. This doesn't mean one should go gaga over globalisation.

Muddled Ideas on Multinationals
Much of what the authors say about the multinationals is true. But somewhere along the line they get carried away by the arguments about their 'supra-national' and 'purely global' character. Are MNCs really creatures hanging in the global air? Even the Economist survey that they refer to clearly admits that in terms of ownership structures they remain very much national. The authors compound their mistake when they argue, in an unqualified manner, on this basis that the sovereignty of the nation-state in the developed world itself is eroded by the rise of MNCs and MNCs and the nation-states there are working at cross-purposes. Where would be those mighty states be if they cannot feed on the taxes from the repatriated corporate profits of MNCs and their shareholders' incomes. An MNC might shift its production bases to hundred and one places but do the shareholders also shift their assets and the ownership rights over them to those places even though they are free to do so? Do they adopt a Third World state as their own state because it is more pliable and cease making claims on their original state? Not for nothing the imperialist bourgeoisie has built up such mighty states which go all out to promote their class interests even in their operational form as MNCs. Their commerce departments and their trade representatives are at their beck and call whenever an Enron deal runs into rough weather and their diplomatic backchannels get activated when a state government makes a mock gesture at arraigning a Warren Anderson before a court for as big a genocide as Bhopal. The MNCs would lose their raison d'etre without the backing of the political muscle and military teeth of these states.

Limits to Exploitation of Cheap labour
The authors seem to be impressed by a single factor - cheap labour - and harbour exaggerated expectations on relocation of industries and capital movements to the Third World due to this. If this is going to be the sole or even principal factor deciding capital flows, then Sub-Saharan Africa or a country like Bangladesh would be witnessing a boom in capital flows. If, in the ultimate analysis, the colossal finance capital has to valorize itself by finding investment avenues and increasing the rate of profit in production, it can be done only by increasing the rate of surplus value and this is better done not by increasing absolute surplus value for which there are definite limits but more by increasing relative surplus value. This means substituting high-skilled and high-paid workers in the West by low-skilled and low-paid workers in the Third World beyond a point by relocation and automation-based 'de-skilling' and informalisation would not solve the problem for capital as a whole but only lead to serious macro-economic effects in the West. Shifting some production to Third World - one of the main features of globalisation which the authors have misunderstood as "imperialists' high stakes in the capitalist development in the Third World" - might help some individual firms to tide over the crisis but would only aggravate the crisis of overall global capital in the medium and long run and the Third World would have to bear the brunt of it. All its additional advantages from globalisation might come to nought.

Myth of Multilateral Equality
The developed countries have 'more stake' in globalisation for their own interests rather than having 'more stake' in the capitalist development of Third World countries. Take the case of Uruguay Round and WTO. The widely propagated myth is that a multilateral mechanism of rules and regulations has been put in place to provide a framework for globalisation which will provide great trading opportunities to the Third World and also protect the weak against the strong. But the facts are different. Under Uruguay Round, in major developed countries the trade-weighted average tariffs on industrial products from all sources were to be reduced by 40% whereas the reduction of tariff on imports from the developing countries will be only 30%. On 22% of dutiable imports of developed countries - like leather, rubber, footwear and travel goods etc. which mostly originate from Third World countries - there was no reduction in tariff. Additionally, a relatively high degree of tariff escalation will persist in most products groups which are of export interest to the developing countries. The book itself elaborates the rise of protectionism and the erecting of other trade barriers in the developed countries. Even the trading benefit that would accrue to the developing countries due to the GATT agreement would be far less significant compared to the gains of developed countries. An example of "confluence of interests"? An indication of the "high stake in the capitalist development of Third World"?

Has globalisation brought about any significant improvement in the structure of traded goods in favour of Third World? "Most remarkably, developing countries, traditionally known as exporters of primary products mainly, have managed to increase their manufacture-exports from 2.1% of the world trade in 1960 to 13.5% in 1990", says the book. But the authors themselves add that within the developing group a large percentage of the exports of low-income economies consist of textiles and clothing. They also mention that the middle-income and faster developing economies have a much larger share of technologically sophisticated products in their manufacture-exports but add that this is due to MNCs shifting production bases to select few countries like Mexico, South Korea or Thailand, they clarify. What is so remarkable in this? If you leave out China, and other countries like Malaysia and Thailand accounting for a large share of MNC exports, it is doubtful whether the Third World has been able to maintain its share in world exports. This much is evident from Table 7.3 given in the book itself which shows a clear decline in the share of developing (Latin and Central) America and Africa over the last three decades and decline in the globalisation decade of 80s has been exceptionally sharp.

Many Third World countries do participate impressively in the process of globalisation but few of them can escape its logic of a new but skewed structure of international division of labour with ominous social fallout. While the growth and trade indicators will look nice, the bulk of the population will be trapped in sweatshops producing garments, leather goods and electronic components and so on, the better paid workers will be service sector key-board slaves working for foreign firms and the sophisticated manufactures will be monopolised by the MNCs - with a thin layer of local bourgeoisie as 'junior partners' of course, but such '(un)equal partners' that they would often be no more than glorified labour contractors.

Take the case of GATS. Theoretically speaking, as a multilateral treaty, it offers equal opportunities to both developing and developed countries. But only romantics can hope that the firms from the Third World - given their weak financial clout, management and distribution capabilities and labour market restrictions - would be able to take advantage of this and set up service enterprises in the West. Service sector is not fully open for each other among the OECD members themselves. The only reason why Indian bourgeoisie rejoiced over this and readily agreed for this treaty, after some hesitation about opening up its own insurance sector, was not because they can send out their banks and insurance companies abroad to do business but they would get sizable job orders from foreign legal and accountancy firms and for related software exports. And the authors have the gumption to say that some leftists "underestimate the strength of capitalism in the Third World"!

GATS is a patently onesided treaty included within the purview of multilateral GATT-WTO under the bilateral bullwhip of Super 301. The Singapore Ministerial Meeting of WTO members was still worse where the developing countries were arm-twisted to accept enlargement of the agenda to discuss investment treaty and labour standards and so on. Does this really corroborate the authors thesis when they say that "It ought to be indisputable, however, that in the present round of globalisation countries of the Third World are participating from a position of relative independence."

Social Indicators
Since when did capitalist development in the Third World countries come to mean only growth or trade statistics for Marxists? Why the authors have chosen only some selective set of data and omitted a study of vital social indicators in Third World under their much glamourised globalisation? It is now an indisputable fact that social sector spending is going down everywhere in the Third World, including India, in the globalisation era. Latin America, which moved early and much too far into globalisation and invited for itself the debt crisis - about which the book gives a graphic description - had to subject itself to savage SAPs and stabilisation programmes and the net result is that in most of the cases in this region the per capita spending on social services, in real terms at the turn of the 90s, slipped below the levels attained in 1970s.

Erosion of Sovereignty
These aspects mentioned above do not fully reveal how the Third World is at receiving ends due to globalisation. A more vital issue is the erosion of political sovereignty which the authors acknowledge only in a limited sense. The RBI Governor when asked about making RBI more autonomous from the Finance Ministry made a wry comment that such autonomy under new conditions would make little sense because his powers to set interest rates an decide on the level of government borrowing are circumscribed more by the international environment under new conditions than by the ministry. Were we not witness to high interest rates inspite of low inflation and despite recessionary trends which would have been considered a paradox a few years back? The powers to decide upon fiscal policies like the level of subsidies for any particular sector, say agriculture, for bringing about structural balance or achieving vital national goals like food security, stand much eroded. This apart, the fiscal elbow room for realising other macro economic objectives like desired growth rate, rate of inflation and level of employment etc. is getting narrowed down under strict adjustment regimen.

Globalisation is not something taking place among homogeneous economies and it is a very anarchic but partial process. There is no exchange rate mechanism which makes different currencies of globalising countries fluctuate within a safe and narrow band. Even in the case of Europe, the ERM didn't work. There is no world currency and there is no super state that can regulate governments' spending levels within limits. You have a WTO without its financial and fiscal parallels. The result is not 'relative independence' for the Third World bourgeoisie but a lot of extra-legal pressure and arms twisting by IMF and World Bank. Globalisation provides concrete material grounds for further erosion of whatever relative independence was enjoyed by the Third World. While some of the powers of the Third World states in the sphere of economy have been 'voluntarily' ceded to supposedly 'multilateral' institutions like WTO, other residual powers are being curbed by 'supra-national' imperialist institutions like the Fund-Bank combine through structural adjustment conditionalities. This is what is happening to the relative independence of the Third World bourgeoisie under globalisation.

The issue of erosion of sovereignty however should not be confused with the question of diminishing role of the state. Marxists can never reduce the question of state to this or that economic policy. In fact, the development of core views of Marxism preceded the direct role of the state in the economy and production. The neo-liberal clamour for reduced role of the state in the economy was going strong so long as there was a need for powerful ideological offensive for initiating liberalisation and privatisation. When these have become fait accompli, the World Bank itself has changed its tune. Those left ideologues who jumped to the conclusion that the state is on the retreat are baffled by the new and strengthened role being defined for the state by the ideologues of neo-liberalism themselves.

India Misses the Bus
Seen in this context, the Indian bourgeoisie has probably already missed the bus in the present round of globalisation. They can no longer pursue policies which even the Asian Tigers, leave alone the developed countries, were free to pursue earlier: policies like heavy state subsidies to agriculture, to handpicked monopoly houses (e.g, to Chaebols), import restrictions, export incentives, conscious state intervention in technology transfer and diffusion and so on. India can neither emulate the policies of China where a strong internal market acts as a powerful magnet for foreign investment without the country having to give up any of its powers on economic policy or that of Tiger economies like Malaysia, Thailand and Indonesia where the export-led globalisation was spearheaded by multinationals.

In India for instance, it is no longer possible to repeat the impressive growth performance of the 80s through expansionary fiscal and monetary policies and letting the level of inflation run high because that would send rupee into a tailspin and induce capital flight. Expansionary policies would also lead to a BoP crisis similar to what was witnessed in 1990-91. The 1995 convulsions of rupee is still in recent memory. Depreciation of rupee value by a few percentage points would mean corresponding increase in the rupee resources to be mobilised to service the mountain load of debt. The 14% depreciation of rupee value in late 1995 meant an increase in the debt burden in the order of Rs.35000-40000 crore in rupee terms. This is a kind of drain before which the total current capital inflows coming into the country pales into insignificance.

Such common phenomena to be seen in many of the 'globalising' Third World countries, Mexico being the most glaring example. Mexico, after its brief flirt with globalisation, 'voluntary', of course, as our authors would argue, would enter the next millennium far poorer than it was decades ago.

Mexican Syndrome
Globalisation of capital also means globalisation of the crisis of capital. No serious study of globalisation can afford to miss out on this aspect. An increase in interest rates in one country, US, caused a bond market collapse all over the world in 1994. The direct impact on the Japanese banks and thereby the indirect effect on the East Asian countries are well known. When Mexican meltdown occurred tremors were recorded in stock exchanges across the globe including in our BSE index. One Mexico gave the high priests of international finance enough nightmares as one can make out from the book itself. What will happen if two, three, many more Mexicos simultaneously blossom in the face of international capitalism? Can our theorists of globalisation who see immense opportunities in it visualise the scenario when the present huge American bubble bursts with a huge flight of capital and causes a bigger Black Monday?

Globalisation is not a linear path where the 'partners' can march ahead in mutual bliss. The interrelationship between imperialism and Third World countries have become so complex that through a series of such crises and explosions the Third World countries stand to lose more than what they gain temporarily and it wouldn't be surprising if future economic history were to characterise the drain of this period as worse than that of colonial period.

When the Pendulum Swings...
Things when they reach their extremes are bound to turn into their opposites and this is true for globalisation too. Initially, globalisation was spurred by a wave of liberalisation everywhere, most of the Third World countries opened up and with the onset of the first crisis everywhere new macro-economic pressures are building up and country after country, not only in Latin America but also in East Asia, are contemplating new regulatory measures on FII investments, financial markets and overseas fund raising by domestic firms etc. Moreover, globalisation taking place under uneven development of capitalism in the Third World, leaves its own devastating trail in different areas in different manner. When the pendulum swings in the other direction the countries which have witnessed sharp spurts of globalisation-induced growth find themselves in a soup. The Latin American debt crisis and the Mexican syndrome and the resultant shift of focus by the finance capital to the East Asian region has been well documented in the book, albeit on a surface level. What the authors have missed out is that the East Asian miracle is probably slowing down. A budding Tiger like Thailand finds itself in big trouble due to its globalisation and liberalisation policies (Liberation, June 1997).

China and India
Whether a Third World country 'gains more' or not depends not so much on the general logic of globalisation itself as the authors assume but more on its internal conditions. A comparison with China would glaringly reveal the weakness of the Indian bourgeoisie, or for that matter the Third World bourgeoisie in general. China's real economic growth (1985-97) is 8.2% while for India it is half of that. While India took four and a half decades to double its per capita GDP China doubled it within a single decade. China's forex reserves and exports are about six and five times that of India's. Anticipated FDI inflows into China at the end of 1997 will be $52 billion compared to about $1-2 billion for India. Coming on top of the rural reforms and public enterprises reforms, the guided integration of China's economy, where the state still retains the paramount role, has become a success whereas Indian bourgeoisie starts squealing about 'level-playing field' at the first signs of trouble. China called the US' bluff whenever the latter attempted to blackmail the former on economic and political issues. China is keen to join the WTO while the imperialist countries are desperate to keep it out. While the mafia rules the roost as the midwife of a market economy in India and the state abdicates in many areas of the economy in the name of liberalisation and globalisation, the Communist Party exercises an iron grip over the transition to market economy in China. There you get an example of independence as against the dependence of Indian bourgeoisie.

It is no surprise that the East Asian bourgeoisie now look up to China to bail them out after their initial tryst with globalisation under the aegis of imperialist bourgeoisie is beginning to turn sour. The striking performance of the Chinese proletariat should serve as a touchstone for the authors to verify their theories on Third World bourgeoisie with their sordid performance.

II
Globalisation, Nationalism and the Nation-State

The views of the authors on nationalism and nation-state can be summarised as follows: Nationalism has become outdated in the era of globalisation. The bourgeoisie themselves are discarding it. If there is an erosion of sovereignty of the nation-state it is not due to subjugation of the Third World countries by imperialist countries; it is rather a general phenomenon where imperialist governments are also unable to protect their sovereign space. (See pp.238-239) With this premise they render the following advise: "What should be the attitude of classes of the working people? Should they be afraid of nation-states losing their sovereignty? It ought to be self-evident that they also should look at the issue from their class viewpoint. If nationalism means advising the bourgeoisie of one's own nation to be aware of the threats and dangers from bourgeoisie of other nations, while they have themselves decided to collaborate with each other to further their class interests, such nationalism would be nothing but dangerous naivety and foolishness on the part of the working class. Nationalism makes sense only to the extent it serves the class interests of the working people. And such a sense is fast being drained out of the idea of nationalism by recent developments in the world economy and politics. Globalisation undoubtedly is a grand strategy of the world bourgeoisie, but the proletariat cannot fight it on nationalist basis. If it attempts to do so, it would be reduced to being a bargaining advantage for the bourgeoisie of its country at the negotiating table of world capitalism where working class is not even acknowledged today as a party to the negotiations." (p.239-240)

In other words, the recent developments in the world economy and politics, viz. globalisation, has rendered nationalism useless for the class interests of the working people. Hence, nationalism cannot serve as a plank for the proletariat to fight the imperialist bourgeoisie and still less the bourgeoisie of its own country. But their rhetorical poser based on a very narrow interpretation of nationalism nails their own premise: if proletariat's raising the banner of nationalism is going to bring bargaining advantage for the bourgeoisie of its own country then nationalism has not lost its relevance to the local bourgeoisie after all. Still, if the local bourgeoisie is not raising this banner on its own then it must be due to their own spinelessness and not because it has lost its relevance. Globalisation, far from rendering nationalism redundant, has triggered off explosive popular nationalism in many Third World countries. It would be a one-sided view if one overlooks the fact that globalisation is bound to unleash powerful countercurrents. In fact, the old nationalism itself was an offshoot of old 'globalisation' - 'international-isation' of capital under colonial times. To say that globalisation has exhausted nationalism would amount to saying, in a certain sense, that nationalism has exhausted regionalism. Of course, proletariat never fights purely on a 'nationalist basis' but nationalism is a very important plank in the fight of the proletariat not only against the world bourgeoisie but more importantly against the bourgeoisie of its own country. And this is all the more true in times of globalisation. This progressive nationalism, of course cannot be of the old variety and a lot of redefining needs to be done in the course of practice. We have elaborately dealt with this elsewhere (Economic Nationalism and the Indian Left, Liberation, April 1997 Special Number) and are not going to repeat those arguments here but only one thing we can say - proletariat abandoning progressive nationalism would not only be 'foolishness' but 'dangerous naivity'.

III
Imperialism and Third World Bourgeoisie

Criticising the positions of some major parties of mainstream left in India on the question of relationship between imperialism and bourgeoisie in Third World countries, the authors argue like this: "Generally, there has been varying degree of reluctance in recognising the political independence of post-colonial regimes in the Third World. Meanings and usages of terms like "semi-colonial" and "neo-colonial" have been stretched to convey an understanding or impression that colonialism continues though in changed forms. Behind such positions there seems to be a belief that a genuine national liberation movement could not have been led by the bourgeoisie. Real independence could be gained only through people's or new democratic revolutions which were to be led by the proletariat. It follows then that the ruling bourgeoisie is comprador in character though there may be a range of variation from outright puppets to those who dare at times to stake their claim to independence. There have also been debates about the mode of production in these societies and a sizable part of the organised Left, though not participating in such debates, has held on to the position of `semi-feudalism'. Capitalist development, to whatever extent it is recognised, is considered to be stunted or diseased. Imperialism is obviously a party to all this. In short, there is no qualitative change in its modus operandi according to such views. There are continued anticipations of a strategic split in the local bourgeoisie along comprador and nationalist lines with the national bourgeoisie expected to join in the future people's democratic revolutions. "Obviously there is a lot to disentangle and reconcile." (p.257)

Neo-Colonial or Not?
Most of the Third World countries which attained their 'political freedom' in the course of decolonisation process have been enjoying relative independence in the post-war decades. But are they really totally free as the authors imply? In the first place, it is not obvious from their long summary of the contemporary trends in international capitalism how they 'reconcile' their assertion about independence of Third World countries with the real life happenings where these countries surrender and succumb to imperialist dictates on every issue of economic and political import. It is still less clear how they 'reconcile' this position with their own assertion elsewhere that the Third World countries losing their sovereignty. It is only with some effort we are able to 'disentangle' the source of this confusion: the authors equate the question of sovereignty with the role of state and on this terrain consider both the state both in the Third World and in the First World - the state in both these places are supposed to be autonomous - on an equal plane and argue that the state is losing the 'sovereignty' in both the countries. They have also invented 'economic sovereignty' as an independent category as distinct from political sovereignty.

The authors who loathe any 'stretching' of the meanings of the terms like 'semi-colonial' and 'neo-colonial' do not however offer any clue to the reader as to why and how these terms, even in their 'unstretched meaning', lost their currency. According to their explanation, the Third World countries remained neo-colonial for the first two or three decades in the aftermath of Second World War - so long as they were confined to import substitution-industrialisation, agricultural modernisation, expansion of market relations and infrastructure etc. which they clumsily call decolonisation (p.252). But "Today things are different. Capitalism is well consolidated in a large number of Third World countries. Their political independence is a fact accepted by all including the imperialists. At the world level a process of globalisation is in full swing and the spread of capitalism is more global than ever before. More importantly, a world system is being put in place wherein all countries are being promised participation in accordance with more or less uniform rules of capitalism.

"Under these conditions the earlier stance of anti-imperialism has lost all relevance for the Third World bourgeoisie. There seems to be, at least for now, ample room for capitalist development in the Third World and the bourgeoisie here has plans of realising this potential in partnership with imperialist bourgeoisie." (p.252-253)

In our previous section we have already examined the merits of 'independence', 'partnership', 'participation in uniform-rules-based-global system' and so on and they don't need repetition here. Additionally, we can point out that the authors' understanding of the whole thing is that the Third World countries were just 'underdeveloped' capitalist countries in the wake of the war a la Spain, Portugal or Turkey etc., and globalisation would do to them what Marshall Plan and European integration did to the latter. Under globalisation, marching hand-in-hand with the developed capitalist countries, the Third World bourgeoisie - with the blessings of the imperialist bourgeoisie which now regrets its 'earlier' restrictive and exploitative control over the Third World but is more keen on promoting capitalist development and expansion in the Third World - would lead the politically free Third World countries along the path of rapid industrialisation and capitalist transformation.

If this is true how then do they 'reconcile' the position of middle and low income countries which are totally at variance with the above-said 'underdeveloped' countries of Southern Europe in terms of almost all the economic indicators - and various social and human development indicators - they themselves have listed in their book? If there is no neo-colonial structural bind, why inspite of more than a decade of globalisation the middle income, 'semi-industrialised' countries are nowhere near the erstwhile underdeveloped countries of South Europe in terms of development or even China in terms of growth? Why subjugation to imperialists remains the central internal political issue in a country like Brazil, if not South Korea, even today?

The Third World bourgeoisie has toned down its anti-imperialism now in the post-Cold War conditions not because there is a confluence of interest between the imperialist and Third World bourgeoisie. Rather they are quite helpless given their dependence on the imperialist bourgeoisie even if the globalisation is going to pinch them hard. Nor they have the necessary wherewithal to chart out an independent course of development including their participation in globalisation. But the material conflict of interests has not vanished and may be under more favourable conditions or when they are pushed to the brink, they may again resort to a tone of opposition. Even in the colonial times the bourgeoisie in the Third World had a love-hate relationship with the contradictions sometimes hidden and sometimes coming into the open.

Interpreting Colonialism
Talking about the 'rapid' capitalist development in the erstwhile subjugated countries, the authors say: "Colonialism was really not an essential part of imperialism. In spite of their natural intransigence imperialists have been forced to adjust to the post-colonial reality. It is no longer part of their strategy to put impediments in the path of Third World's capitalist development or to use local feudal classes as their social prop. Remarkably, but not surprisingly, all this has led to a big spurt in the global expansion of capital and with hindsight imperialists may look upon many of their older methods as grossly mistaken and detrimental to their own interests".

Thus colonialism is some kind of restrictive structure which the imperialists wear on their sleeves and can deploy whenever and wherever they feel like. Now that enlightened by a spurt of globalisation they have undergone a change of heart, they might even regret having followed a colonial policy to the detriment of their own interests. A splendid piece of historical materialism indeed!

The long wave of expansion of capitalism in the post-war period as well as the present trend of globalisation are inconceivable in the absence of colonial plunder. It was the awakening and the upsurge of the peoples of the colonial and semi-colonial countries which put an end to the colonial structure and not its 'lesser profitability'. (See Economic Nationalism and the Indian Left for a more detailed critical evaluation of authors views on colonialism)

Neither Comprador,
Nor National...
Just Independent?
While ridiculing some communist parties for holding the belief that a genuine national liberation movement could not have been led by the Third World bourgeoisie, the authors add in the same breath that the Third World bourgeoisie is neither national nor comprador.

If we are to 'disentangle' this we get the following meaning: it is totally free and independent and not subservient to the imperialist bourgeoisie and hence it is no comprador; nor is it national in the conventional sense because it has no need to overthrow imperialism because no such neo-colonial structure of domination exists. Except for pointing out that they can hardly 'reconcile' this position with their own numerous 'objective' observations, any more comment from us would be superfluous.

Incidentally, they have also challenged some left parties in India, in passing, for holding on to the position of 'semi-feudalism' without 'reconciling' their implied notion of capitalist agriculture in the Third World (comparable to that of Australia or Europe?) with the wide prevalence of semi-feudal landlordism with tenancy, sharecropping etc. based on pre-capitalist ground rent, and other pre-capitalist remnants like usury, bonded labour, abysmally low wages, low level of mechanisation under conditions of simple reproduction and so on in many of the Third World countries including India. When they unjustly accuse the left parties of not participating in the debates they themselves make this unsubstantiated assumption that all these semi-feudal relics are being swept away by globalisation.

Capitalist development in the Third World, no matter how impressive it looks in terms of growth statistics, remains very much stunted - in terms of their economic and industrial structures, still heavy dependence on primary products production and exports, low per capita income and high unemployment and so on - and imperialism no doubt has a cardinal role in this. This role is not just a legacy of the past but very much an ongoing process whether under present spell of globalisation or earlier.

Faulting some communist parties for harbouring 'continued anticipations of a strategic split within the local bourgeoisie along comprador and national lines' under the era of globalisation they further add: "In the colonial era they (indigenous bourgeoisie of Third World countries and the imperialist bourgeoisie) stood by and large opposed to each other. In these days of globalisation they have joined hands in the project to integrating the Third World into the global capitalist system." After having said this the authors are back to their characteristic obfuscation and open-ended vagueness: "While this transition is evident, the exact nature of this relationship is not clear enough, at least to us, to either predict or rule out (though they unashamedly do both in several places) future eruptions of irreconcilable conflicts between the two sides. This question is enmeshed with other large-scale questions inherent in today's global reality and specific examples such as that of Iraq during the recent Gulf War do not shed enough light on the general problem." They further add: "In particular, this question is entangled with the question of what shape inter-imperialist contradictions will take in future. In colonial times these contradictions had much sharper edges resulting in violent conflagrations. Today they seem to be relatively blunted and confined largely to the economic domain. In principle they are irreconcilable and basically antagonistic. Yet, can one say with certainty that they will inevitably result in another world war?" (p.259)

Thus, in the colonial era, the imperialist bourgeoisie and the bourgeoisie of the colonial and semi-colonial countries (the latter-day Third World countries) were 'by and large opposed to each other' and in the globalisation era 'they have joined hands' in the project to integrate Third World into the global capitalist system. Implicit behind this assertion is the assumption that globalisation is some neutral process which is destined to benefit all, both the developed countries and developing countries, even if not in an equal measure, and hence it is some magical thing which has unobtrusively overturned the basic structure of imperialism that has been intact for nearly a century where the imperialist powers flourished at the expense of the Third World. Thus laissez-faire capitalism which was negated by imperialism has been in turn negated by globalisation. Hence, under the sunshine of benevolent-to-all globalisation, there is a new global partnership between the imperialist countries and the Third World countries where the imperialist bourgeoisie and the Third World bourgeoisie have joined hands to bury the past and proceed towards a brighter future of common good.

It is in fact the authors' one-sided view of this relationship in the colonial era which goes hand-in-hand with their equally one-sided assessment of it at present. The Third World bourgeoisie's relationship with the imperialist bourgeoisie was primarily characterised by collaboration and dependence in the colonial era and it is basically no different now, in the socalled era of globalisation. How many collaborationist treaties the Chiang Kai Shek and Chinese bureaucrat capitalists - who were supposed to be 'by and large opposed' to imperialism - entered into with various imperialist powers and how much they depended on them to stem the tide of Chinese revolution and how they ultimately went over wholesale to the side of imperialism against Chinese nation. How many compromises did Gandhi and Indian bourgeoisie, the 'by and large opponents' of British imperialism, enter with it and to what extent they colluded with them against the resurgent Indian people to bring about an orderly transfer of power to the Indian bourgeoisie under conditions of decolonisation. How much the Indian compradors were hand in glove with their British capitalist masters and acting as their managing agents.

The authors seem to be not only ignorant of history, like typical Johnny-come-late upstarts they start pompous lectures to Indian communists of various parties setting upon themselves the lofty task of 'disentangling and reconciling a lot' in their positions, totally oblivious of their entire theoretical heritage and without even bothering to know about the historic debates within the communist movement on this vital question.

Both Comintern as well as Mao recognised a fundamental division in the imperialist era among the Third World bourgeoisie along pro-imperialist anti-imperialist sections. The relationship between imperialist bourgeoisie and the Third World bourgeoisie, though basically collaborationist in nature, is also simultaneously marked by 'opposition', frictions and even sometimes severe contradictions and they may well intensify at critical junctures in future. Especially so under globalisation when they are assumed to have 'joined hands' in the common project of integration. Such contradictions existed even during the colonial era and sometimes came to a head. But the basic collaborationist feature seldom changed.

The point for communists is to assess to what extent this contradiction can be utilised and whether any section of the Third World bourgeoisie would come over to the side of the people in their struggle against imperialism. Historical experience has proved that they, their overwhelming majority, won't. It was this section which was rightly characterised as the enemy of the revolution and ally of imperialism.

It was to highlight this class character, they were called compradors and not due to the predominantly commercial form of their existence under colonial conditions. That is why despite their taking to industry in the fag end of colonial period they were continued to be called compradors. This was in contrast to the vacillating 'national bourgeoisie' which may remain neutral or take the side of the victorious people in their struggle against imperialism and which was called 'national' for this reason and not because it possessed the might to overthrow imperialism and bring about national capitalist development like some of the 18th and 19th century national bourgeoisie of Europe.

If one is uncomfortable with this word 'compradors' under the post-colonial conditions, one is free to use any other characterisation like 'dependent' or 'collaborationist' and so on. But the authors who pretend to be very objective and precise when they claim that the Third World bourgeoisie is neither national nor comprador evade this central question of evaluating the role of the bourgeoisie from the stand point of the revolution and people's anti-imperialist struggle and that is why they avoid giving any precise alternative characterisation of the Third World bourgeoisie.

No revolution in a Third World country in this era can succeed without having to confront imperialism no matter how independent its bourgeoisie is assumed to be. It is quite possible that when confronted with revolution the Third World bourgeoisie may go over to the side of imperialism wholesale. It is right that the proletariat need not have to go out of the way in search of a national bourgeoisie. Yet, in view of the experiences of post-revolutionary societies like China in tackling the bourgeoisie and in view of the potentially sharp contradictions, sections of bourgeoisie may come develop with the imperialist bourgeoisie under new conditions of imperialism, it is necessary that the party of the proletariat maintain this distinction in theory which can lend a conscious element in its political struggle to intervene in the contradictions within the ruling classes.

The Principal Contradiction in the World
The contradiction between Third World countries and imperialism remains the principal contradiction in the present-day world no matter to what extent the Third World bourgeoisie 'join hands' in globalisation partnership. They may join hands and when confronted by revolution may fully go over to the side of imperialism, yet their contradiction with imperialism also remains basic and doesn't vanish. By saying that this question is entangled with what shape inter-imperialist contradictions would assume in future, the authors imply that the former is dependent on the latter. Rather it might be the other way around. Growing assertion by Third World countries might widen the chinks in the imperialist armour. Here again they confuse inter-imperialist contradiction as a fundamental contradiction of our present epoch with the question of outbreak of inter-imperialist world war. Well, high degree of economic integration among imperialist countries, their ability to arm themselves with weapons of mass destruction and deterrence through them and, above all, the powerful peace movements in these countries against militarisation and war etc. might have made a war between the socalled 'democracies' quite remote. In any case it is futile to speculate any further on this question at this stage. But this doesn't mean this basic contradiction has ceased to be so under 'globalisation'.

The authors can rest assured that future eruptions of irreconcilable conflicts will necessarily take place between Third World countries (people) and imperialism. Especially if a radical political force takes over power in a Third World country in a region crucial to imperialist powers. The authors for whom this dynamics 'is not clear' should study the US policy towards Nicaragua or Cuba. And the forms of intimidation like economic embargo and sanctions are also not accidental. These forms are primarily chosen lest these regimes - and even those like Iran targeted for non-proliferation purposes - participate in globalisation and stabilise their economies through trade and borrowings from other developed countries. When Saddam Hussein was dealt a heavy blow it may not be because Iraqi capitalist development has run into 'irreconcilable conflict' with imperialism. Yet his aggression of Kuwait threatened the oil supply lines of the western world and therby challenged its neo-colonial domination that has become 'invisible' to the authors. It is also quite possible that before long the US might even be reconciled to Saddam's continuation in power if only they are more keen on putting down a resurgent Iran or undercutting an assertive Saudi Kingdom, all with the intention of tightening their control over the oil resources of this region and to make the regional powers conform to their geo-political geometry. Nevertheless, this would also be under the overall gamut of neo-colonial order under which growing conflicts between Third World and imperialist powers are inevitable.

IV
Capitalism in Developed Countries and Globalisation

The authors try to drive home the point that imperialism has somehow grown out of the pressing need to exploit Third World countries to sustain its impressive, crisis-free capitalist expansion. According to them, "The post-war spurt in the global expansion of capital has played a very significant role in diffusing the crisis of capitalism. This aspect has been the principal theme of this work and we have dealt with it with reasonable care and in sufficient detail. This, however, does not provide a complete explanation of the "moribundity" issue. As we have seen, most of capital's expansion has taken place within the advanced capitalist countries. Third World has played a much smaller role. Such an expansion militates against the prevalent understanding that imperialist countries are mired in too much of capital and there is hardly any room for further capitalist development within such countries. In fact capitalism in the developed economies has undergone intensive restructuring during the second half of this century and there have been far-reaching changes in the way it now operates. Advent of welfare states, predominance of service sector in the economy, emergence of a large "middle class", new technologies and new markets and many other such factors are associated with these changes. In this work we have not been able to undertake a systematic study of this intensive restructuring of capitalism." (p.260)

The authors have obviously been taken in by the myth of 'crisis-free' global expansion of capital - and in one place they even say that capitalism has 'got over' the crisis - though they themselves keep referring in several places to the crisis faced beginning with the 70s after the long-wave of expansion as well as to the potential for crises under globalisation.

The apparently less significant role of the Third World in the impressive capitalist expansion in the West is a myth. The remarkable post-war expansion of capitalism in the West could not have been achieved without the unequal exchange - constant depressing of the prices of raw materials and other primary products brought about by repeated and forced devaluations in the Third World countries. The trade figures and capital exports, or even the reverse flow of capital from the Third World, taken in nominal terms can hardly reflect this enormous shift of surplus from the Third World which fuelled this expansion. This will be more clear if one ponders over the kind of impact the rise in oil prices in the 70s and the temporary spurt in the prices of primary products had on the western economies. In any case, the authors themselves have mentioned the sharp increase in FDI going into Third World countries in the 90s and it has been forecast to increase more than the FDI going into developing countries themselves.

The authors have cited several factors - advent of welfare states, predominance of service sector in the economy, emergence of a large "middle class", new technologies and new markets and many other such factors - that have caused an `intensive restructuring' and `far-reaching changes' in capitalism in developed countries which they think have enabled it to `get over' the crisis and go ahead in its march of unhindered expansion and globalisation. True, all these factors had sustained the long wave of expansion of capitalism and, up to a point, mitigated and postponed its crisis. But that is an old story. The authors seem to be oblivious of far-reaching changes and a restructuring of a different kind that is being witnessed in recent times: rollback of the welfare state, relative slowdown of service sector expansion, inability to transfer the tremendous breakthroughs in science and technology into the production process, relative stagnation in the expansion of the `middle class' and so on.

It is not just the absence of any immediate threat of socialism or ascendant workers movement but purely 'economic' factors, primarily the unsustainable government deficits, that have led to the attacks on welfarism which is a uniform phenomenon in all advanced capitalist countries.

For a Marxist the limits to the expansion of service sector should be obvious. Something must be produced before services can be rendered around that and surplus value should be produced first before it can be apportioned in the circulation process of capital. Can the latter go on increasing beyond a point irrespective of whether the former keeps in pace or not? How far can the latter fuel overall growth on its own overshadowing the former?

It is also true that there has been a huge expansion of 'middle class' in the developed countries, much beyond the expectations of the classical Marxists and this 'class' also accounts for a large chunk of savings. But is it also not true that during the recessions, which have become deeper, longer and more frequent of late, it is the middle class consumption expenditures which is keenly watched as the single most important indicator that can bring about a turn around? Is it also not true that it is not increasing as fast as it used to do a few years back or as the capitalists would desire?

Why no new product category, save perhaps the personal computers, has been able to find a mass market that can sustain mass production and capitalist expansion like automobiles and consumer durables did? Why the growth promises of information technology, micro electronics and genetics remain largely unfulfilled and despite their far-reaching impact on generation of relative surplus value and shortening of turnover time of capital why their effect on overall capitalist expansion has not been as impressive as the earlier 'overhaul' technological breakthroughs like steam engine, electric power, machine building, industrial chemistry and automation? Why while all other earlier technological breakthroughs led to significant overall capitalist expansion and aggregate employment growth, the 'new technologies' have earned the distinction of being the net 'job-eaters'?

Without answering all these questions one can no longer go on talking in a simplistic vein about unhindered capitalist expansion and its 'overcoming' of its crises. Rather the globalisation that we witness today has come about because of the limitations of all these factors in enabling capitalism to overcome its crises and sustain its impressive expansion. In fact, if there is anything qualitatively new in globalisation it is the intensification of the imperialistic exploitation of the Third World contrary to the authors' evolutionary view on capitalism and their assumptions of global partnership and imperialism's non-restrictive relation vis-a-vis Third World under globalisation etc.

Conclusion
The authors claim to "hold perfectly `traditional' views and have no doubts about the necessity, and in the final analysis inevitability, of capitalism being replaced by a more advanced system." (p.258) But they wouldn't entertain, in the immediate analysis, any idea of the proletariat and the broad masses championing any alternative path of development in the Third World where they can negotiate with the trend of globalisation on their terms dictated by their national interests but would rather resign themselves to globalisation defined as an objective economic logic of capitalism that operates above classes, above states and above national interests. It is a strange logic of all or nothing - `inevitable' socialism in the ultimate analysis and `inevitable' imperialists-led globalisation in the immediate analysis!

There are variations among the Third World bourgeoisie themselves. While some are more guarded and go in for tough bargaining with imperialism on this or that issue, others jump at the first opportunity to act as 'globalised compradors'. The all-or-nothing formula of the authors would only deprive the proletariat a concrete policy approach to intervene on each and every major policy issues relating to globalisation and make it politically passive.

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