7

The Bourgeoisie in Triumph and Decay

The classic Marxian model of modern social change has a dual aspect. On the one side are the growing productivity and the deepening contradictions of the bourgeois social order; on the other, the growing strength of the proletariat. "What the bourgeoisie produces, above all," the Communist Manifesto states, "are its own grave-diggers," the proletariat (Marx and Engels 1848:24). As the workers become aware of themselves as a class, they organize as a class to wrest state power from the capitalists. Eventually, the upward trajectory of the proletariat's growing strength will intersect with the downward trajectory of the decline of the capitalist system. At this point, the proletariat will seize state power and build a social order in their own interest, socialism.

From one point of view, the events of the twentieth century have indeed verified the explanatory power of the Marxian model. World War I, the Great Depression of the 1930s, and World War II are all manifestations of the profound crisis of capitalism in the first half of the twentieth century, while the Russian and Chinese revolutions serve to illustrate the growing strength of the international proletariat.

Viewed from another perspective, however, the twentieth century has been most cruel to the optimism of classic Marxian theory. On the one hand, where the working class has indeed taken power and placed communist parties in power, the results, according to many, have been less than satisfactory. On the other hand, the American bourgeoisie emerged from the general crisis of the first half of the twentieth century and was able to build a new world order that has proved remarkably viable since 1946.

We shall deal with the rise of socialism in the next section. In this section we shall look at the causes and consequences of the apparent triumph of the bourgeoisie.

By the beginning of the twentieth century, the European bourgeoisie was in complete control of the world. The feudal nobilities were no longer serious contenders for power, and the proletariat had not yet seriously challenged bourgeois rule. Capitalism, it would appear, was here to stay. But no sooner had the bourgeoisie triumphed than the system it established began to decay. In the twentieth century, the irrationalities and contradictions of capitalism took new and even more inhumane forms as the system has matured.

Marx would have been impressed with the achievements of twentieth century capitalism but not surprised at the sufferings and misery that capitalism still entails. Marx would have been impressed with our automobiles, airplanes, and computers, but not surprised that one half of humanity lives in poverty. Marx would have been impressed with the achievements of modern medicine, but not surprised at the millions who lack elemental health care. Marx would have been impressed with our placing a man on the moon, but not surprised at our inability to provide full opportunities for African Americans, Latinos, and other minorities. Capitalism is no less contradiction ridden in the twentieth century than it was in the nineteenth, but these contradictions have taken new forms. Our task in this chapter is to analyze twentieth century capitalism.

The fundamental nature of capitalism has not changed: the motive force is still profit, this profit still comes from the exploitation of the working class; unemployment continues to be an essential tool for continuing this exploitation; the system continues to be run by and for the capitalist class; and the fundamental contradiction, between the increasing productive potential of the system and its inability to meet the basic human needs of the majority of humanity, remains. But there have been two fundamental changes which require discussion. First, the competitive capitalism of Marx's time has been replaced by monopoly capitalism, and second, capitalism can no longer be analyzed as a national system but is rather an international system of imperialism. Each of these features has additional ramifications.

By the beginning of the twentieth century, the competitive capitalism analyzed by Marx had transformed itself into monopoly capitalism and imperialism, an international system of exploitation and oppression that exists in perpetual crisis, resulting in what Raymond Aron called, "the century of total war" (1954). It is out of this general crisis of capitalism that the world revolutionary process is unfolding.

7.I. Capitalism or "Post-Capitalism?"

It has been widely argued that as capitalism matures it changes in character and is no longer dominated by the drive for profits (see, e.g., Bell 1973, Galbraith 1963, 1967). Consequently, it is asserted, the dreaded "inner contradictions" of capitalism have been resolved. Modern society should no longer be described as "capitalist," but rather as "post-capitalist," "post-industrial," or even "post-Marxist." Such ideas are seductive but have little intellectual substance. Capitalism has clearly changed, but its underlying character and inner dialectic remain the same. The triumph of the bourgeoisie has only permitted capitalism's inner contradictions to ripen and the bourgeois social order to decay. Before elaborating on this Marxist view, however, it may be well to examine more closely three aspects of the "post-capitalist" argument, the "managerial revolution" thesis, the "affluent worker" thesis, and the idea of "pension fund socialism."

7.I.1. The Managerial Revolution Thesis

The managerial revolution thesis, originally proposed by Berle and Means (1932), holds that, as a result of the dispersal of stock ownership and the need for technical expertise, actual control of the modern corporation has passed out of the hands of the capitalists and into a neutral elite of managers and technocrats. This elite runs the corporation by balancing a number of conflicting social claims, those of employees, of consumers, and of the general public, as well as those of the owners and the managers themselves. Consequently, it is argued, the so called "laws of motion" of capitalism no longer operate, and the new system has eliminated the worst abuses of the old.

There have been a variety of criticisms of this view (see, for example, Baran and Sweezy 1966:20-51, Domhoff 1967:38-62), which have not been answered by its proponents. These criticisms include the following:

1. Although there has been some dispersal of stock ownership, this has only extended to a small portion (less than 20%) of the population, and the majority (80%) of stock continues to be held by less than 2 percent of the population.

2. Many firms continue to be controlled by particular families, and there are clearly defined interest groups that dominate the economy.

3. Top management tends to be drawn from the capitalist class, so that management does not form a neutral elite but is rather the most active and influential segment of the bourgeoisie itself. Managers who are not bourgeois in their class origins are rapidly assimilated into the bourgeois class.

4. The managers and technocrats who make decisions about the day to day running of the corporation are in fact paid functionaries of the capitalist class, and "he who pays the piper calls the tune." If the decisions of management do not promote the interests of capital, management can and will be replaced.

5. Most importantly, the nature of capitalism does not flow from the psychological quirks or avarice of the capitalists, but vice versa. The owner-capitalist is simply the creature of capital. Even after the "managerial revolution," the force of capitalist competition (between the giant corporations for market shares and on the stock market) lays down the same law for the corporate manager as for the entrepreneurial capitalist: "Accumulate, accumulate! That is Moses and the prophets!" (Marx 1867:595).

There is thus no conflict of interest between the managers and owners of capital since in most cases they are the same. If anything, the managers are more efficient servants of capital, since they have greater technical expertise at their disposal. To the extent that there has been a "managerial revolution," then, this has in no way altered the fundamental character of capitalism.

7.I.2. The Affluent Worker Thesis

It is often said that the worker in mature capitalism has become "affluent," that wages have risen to the point where the working class now has a stake in the system so that a socialist revolution would no longer serve the workers' interest. Again, this is a half-truth. It is certainly true that workers in the United States have higher incomes than do the masses of workers in Africa, Asia, and Latin America. But, as the statistical analysis earlier indicated, in 1983 the average pay for all production workers, organized and unorganized, was only $17,400, just above what the Bureau of Labor Statistics computes as the bare minimum for an urban family of four. In short, as Sexton notes,

the myth of the "middle class" worker is kin to the negro of folklore who "lives in the slums but drives a big Cadillac." He's there all right, but his numbers are grossly exaggerated. (Sexton 1970:194)

Available statistics, discussed in Chapter One, indicate that as many as one fourth of all workers live in poverty, and the overwhelming majority must struggle just to get along. It is true that a significant minority of workers (largely white male Anglos) are living rather well, but as we shall discuss below, the overwhelming majority of workers in the United States would still benefit from the transition to socialism.

Further, it should never be forgotten that capitalism is an international system. The "underdeveloped" world is not "pre-industrial," as Bell (1973:117) and many others would have us believe, but is rather an integral part of the world industrial system. The relative affluence of the white male worker in the United States must be set against the grinding poverty of workers and peasants in Asia, Africa, and Latin America, for they are all parts of a single economic system.

7.I.3. Pension-Fund Socialism?

Another widespread misconception is that the workers, by virtue of the fact that the pension funds they own in turn own stock in the major corporations, now control the corporations themselves. Socialism, according to Peter Drucker, has come to America through "pension fund socialism," rather than revolution:

If "socialism" is defined as "ownership of the means of production by the workers"—and this is both the orthodox and the only rigorous definition—then the United States is the first truly "Socialist" country.
Through their pension funds, employees of American business today own at least 25 percent of its equity capital, which is more than enough for control. The pension funds of the self employed, of the public employees, and of school and college teachers own at least another 10 percent, giving the workers of America ownership of more than one-third of the equity capital of American business.… well before the turn of the century, their holdings should exceed around two-thirds of the equity capital (that is, the common shares) plus a major portion—perhaps 40 percent—of the debt capital (bonds, debentures, and notes) of the American economy.…
In other words, without consciously trying, the United States has "socialized" the economy but not "nationalized" it. America still sees herself, and is seen elsewhere, as "capitalist"; but if terms like "socialism" and "capitalism" have any meaning at all, the American system has actually become the "decentralized market socialism" which all the Marxist church fathers, saints, and apostles before Lenin had been preaching and promising, from Engels to Bebel and Kautsky, from Viktor Adler to Rosa Luxemburg, Juares, and Eugene Debs.
Socialism came to America neither through the ballot box nor through the class struggle let alone a revolutionary uprising, neither as a result of "expropriating the expropriators" nor through a "crisis" brought on by the "contradictions of capitalism." Indeed, it was brought about the the most unlikely revolutionary of them all—the chief executive of America's largest manufacturing company, General Motors. Twenty-six years ago, Charles Wilson, then GM's president, proposed the establishment of a pension fund for GM workers to the United Automobile Workers Union. The UAW was at first far from enthusiastic … The union leaders saw clearly that Wilson's proposal aimed at making the pension system the business of the private sector.… Wilson's major innovation was a pension fund investing in the "American economy"—in other words, the free enterprise system. (Drucker 1976:1-2, 4-5)

Although it is difficult to believe that Drucker is serious here, it is clear that pension funds are very important. As Ghilarducci notes, "Pension fund assets now equal $1.7 trillion and, before the October 1987 stock market crash, were growing by more than 15% per years since the later 1970s" and "own almost 23% of all outstanding equity in American firms and 50% of corporate bonds" (Ghilarducci 1988:25). This is impressive, but before thinking that it constitutes movement toward socialism, one needs to consider several points.

First of all, less than half (44.87%) of the U.S. work force is covered by pensions (aside from social security), and even fewer (21.43%) are vested, that is, have worked long enough to be eligible for benefits. Coverage also varies with ethnicity and gender. White coverage was 45.2% while nonwhite coverage was 41.9%. Male coverage was 52.9% while female coverage was only 33.3%. Among actual beneficiaries of private, state, and local pension plans, nearly 94% are white, and over 60% are male. Further, pension funds tend to be concentrated among higher wage-earning and salaried workers (Kotlikoff and Smith 1983:4-5). Clearly, it is only a privileged sector of the working class that benefits from the pension plans.

Secondly, the capital accumulated in pension plans is not controlled by their beneficiaries. Of the $916 billion held by pension funds in 1979, only $245 billion was held by funds that had any union representation among the trustees (Ghilarducci 1988:27). Typically, these funds are administered by the firms themselves, or by banks or insurance companies that are required by law to administer them according to established fiduciary principles.

The basic requirement … is that the investment provide growth, security of principal, and yield. There are of course, ancillary or secondary concerns for the prudent investor of pension funds, such as diversity, liquidity, etc. (Levin and Brossman 1982:5)

The interests of pensioners, of course, is the same as that of any other owner of capital, maximization of yield. Pension funds are clearly important in providing a measure of security and dignity for some workers, but they do not challenge the capitalist system. Indeed, pension funds

function as a low-cost pool of capital for American firms. The system also enriches the growing pension fund management industry. So far, capital has been accumulating into pension funds on terms favorable to corporations and flows to retirees on terms favorable only to the highest income elderly. (Ghilarducci 1988:27)

There has been some concern among progressives that perhaps these funds can be used to further social and environmental concerns (Ghilarducci 1988, Levin and Brossman 1982, Rifkin and Barber 1978). In some cases, such investment can also be profitable. In 1972, the Dreyfus Corporation formed the Third Century Fund, "a mutual fund aimed at selecting stocks of socially responsible companies" which "proved an excellent investment," growing 384% from 1975 to 1980, compared with 140% for the Standard and poor's 500 (Levin and Brossman 1982:15). The difficulty arises, of course, when socially responsible investments do more poorly than ordinary investment, e.g. when hospital bonds pay 6% and the company trading with South Africa and violating health and safety guidelines pays 8% (Levin and Brossman 1982:5). By and large, however, the pension funds are operated according to standard capitalist principles. There is no evidence that pension funds have been used to further the struggle for socialism.

Pension funds, owned by only a segment of the working class and operated according to capitalist principles, then, do not constitute socialism, or even a move in that direction. Rather, pension funds tie a privileged segment of the working class to the capitalist system. They thus constitute a very important aspect of the aristocracy of labor, which we will discuss more fully below. (For addition discussion of the role of pension funds in modern capitalism, see Darby 1976, Harbrecht 1959, Minns 1980, Zeitlin 1978).

The idea that contemporary capitalism has become "post-capitalist," then, is simply untenable. Both the underlying motive force and the laws of motion of the system remain as capitalist as ever. The Robber Barons may have gone, but the financial swindles have not disappeared, as the Savings and Loan crisis demonstrates. This is not to say, of course, that capitalism has not changed in the twentieth century. It has, and we need to understand these changes. We shall examine the changes involved with the emergence of monopoly capitalism and then look at the internationalization of the capitalist system.

7.II. Monopoly Capitalism

The relatively small firm of the competitive era has given way to the giant multinational corporation that exerts a degree of control over its market. Prices are no longer set by supply and demand to approximate values, but instead are set by the corporation itself at a level designed to maximize profits. Monopolization, then, provides superprofits to the giant corporation.

Monopolization of the economy is associated with what has been called the "Second Industrial Revolution" of the second half of the nineteenth century (Magdoff 1969:24-30, Mandel 1968:II, 393-394). The development of new productive processes, such as the Bessemer process in steel production, and the emergence of new spheres of production, such as railroads and automobiles, tremendously increased the scale of industry and industrial corporations. The effect of this was, first, to increase the investment-absorbing potential of the system (see below on "epoch making inventions").

Second, with the Second Industrial Revolution, the scale of production increased to the point where further refinements and new machinery cost no more than the old. Consequently, the tendency for the organic composition of capital to rise is no longer operative. Just as increases in productivity led to a decline in the value of labor power (v), so continued increases lead to a decline in the value of capital goods (c), and the ratio c/v, which is the organic composition of capital (o) no longer rises but begins to fall. Thus, the organic composition of capital in the United States rose continuously until about 1923, when it stood at 4.2. Since then, it has been falling, to 3.6 by 1952. At the same time, the rate of surplus value (s') has been increasing, from 121 in 1923, to 132 in 1952 (Sweezy 1974:47, citing Gillman 1957).

Now, as discussed earlier, a rising organic composition of capital leads to a systemic tendency for the rate of profit to fall, and many Marxists saw this as the fatal contradiction of the capitalist system. But a declining organic composition of capital, coupled with increasing rates of surplus value, causes the rate of profit to rise. But this does not resolve the contradictions of the capitalist system. Why not?

As will be recalled, capitalists only produce commodities in order to make profits. But they only make profits in order to reinvest them. These are the dual aspects of the realization problem: 1. capitalists must sell commodities in order to realize surplus value in its money form; and, 2. capitalist must re-invest these profits in order to make more profits. Both of these aspects become more intense as capital accumulates and productivity increases, leading to a systemic tendency toward crisis and stagnation.

The first problem, that of selling commodities in order to realize a profit, has already been discussed. As relative wages fall, the workers can no longer buy back what they produce. The capitalist system must therefore expand, geographically into new markets or technologically into new spheres of production, or collapse into itself.

The second problem, that of re-investing profits in order to make more profits, becomes more intense with accumulation and monopolization. With accumulation and increasing rates of profit, capitalists have more profits to re-invest. But monopolization of the economy tends to choke off additional investment opportunities. During the period of monopoly capitalism, therefore, there is a tendency toward stagnation resulting from the inability of capitalists to find investment opportunities for their increased profits.

Monopoly capitalism, then, even more than competitive capitalism, is characterized by a profound tendency toward stagnation since the superprofits of the monopolists cannot be reinvested. The clearest manifestation of this tendency may be seen in the Great Depression of the 1930s, but it may also be seen in the periodic recessions of the postwar period.

Although it may be temporarily offset by expansion of the system, this systemic tendency toward stagnation in monopoly capitalism leads to new forms of capitalist irrationality. As Gilman observes,

in the monopoly period the conditions which block the realization of surplus-value combine to drive surplus-value increasingly into channels of unproductive expenditures. (Gillman 1957:110)

In their seminal work, Monopoly Capital, Baran and Sweezy argue that the monopolistic system would continue to stagnate as in the 1930s were it not for offsetting factors which serve to absorb the surplus which otherwise could not be invested. These factors include: epoch making inventions; the export of capital; the sales effort; government spending, especially military spending; wars and their aftermath; and the Cold War (1966). Let us examine each of these in turn.

7.II.1. Epoch Making Inventions

Baran and Sweezy argue that three epoch making inventions, the steam engine, the railroad, and the automobile, stand out because they opened up new areas of investment opportunity. The significance of these inventions lies not only in the opportunities they provide within new sphere of production, but also in the related opportunities they provide. Thus, the development of the automobile provided new investment outlets not just in automobiles but also in the oil, steel, rubber, and glass industries, in spending on highways, and in permitting the suburbanization of the population with new subdivisions, shopping centers, and so on. Other inventions, such as television, may have a profound effect on cultural life, but they do not provide the same opportunity for investment and profit making and thus their purely economic impact is not as great.

These epoch making inventions have served to define entire periods of economic history. By their capacity to provide profitable investment opportunities they absorb surplus and permit the capitalist system to expand and prosper.

7.II.2. The Export of Capital

As capital fails to find profitable investment opportunities within its own nation, it seeks them elsewhere. The historic tendency for capital to seek the highest profit led, in the late nineteenth century, to the export of capital to colonial nations. This was the period analyzed by Lenin as "the highest stage of capitalism," imperialism.

Capitalism, of course, has always been imperialist, from the Crusades and the conquest of America, through the African slave trade and the conquest of Asia, to the modern period of neocolonialism. Such imperialism, however, was frequently simply the plunder of non-Western societies by the West. The new imperialism of the nineteenth century, by contrast, was marked by the export of capital, by the complete partition of the globe among the imperialist powers, and by the conflict between imperialist powers for the re-division of the world, a conflict resulting in WWI and WWII.

The export of capital has accelerated during the "Pax Americana" following WWII. The international operations of United States business have not only been very profitable abroad, they have also, in the form of runaway shops, served to undercut the working class at home.

7.II.3. The Sales Effort

Although modern capitalists can easily enough produce all they can sell, they cannot sell all that they produce. Unlike competitive capitalist firms, giant corporations do not compete with one another in terms of price. Instead, they compete for market shares through the sales effort. Advertising makes little sense in a situation where there are a large number of small producers, each of which has only a small share of the total market. Advertising comes into its own, however, in monopoly capitalism, where a few firms dominate the market and it is easy to emphasize brand names and minor differences between products. Consequently, concomitantly with the rise of monopoly capitalism, there has been a fantastic growth in advertising. In 1857, only $51,000,000 was spent on advertising. In 1890, this had increased to $360,000,000; in 1929, to $3,426,000,000; and in 1962, to over $12,000,000,000! Additional millions are spent on re-tooling for periodic style changes, commercial design, market research (Baran and Sweezy 1966:118-119). The entire effort devoted to sales by the corporations may be essential from their standpoint, but from any human standpoint, it is simply waste. Such waste, however, is essential to the capitalist system.

7.II.4. Government spending

The Great Depression drove home to the capitalist class a clear message, that private enterprise itself could not lift the capitalist system out of stagnation. As the English economist John Maynard Keynes stressed, government spending was essential to preserve the capitalist system. Such spending need not involve any socially beneficial purpose other than maintaining capitalist prosperity:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish and then leave it to private enterprise on the well-tried principles of laissez-faire to dig up the notes again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this the above would be better than nothing. (Keynes, as quoted in Lekachman and Loon 1981: 95)

During the period of monopoly capitalism, the role of government spending has steadily increased, rising from 7.4% of Gross National Product (GNP) in 1903 and 9.8% in 1929, to 19.2% in 1939, and 28.8% in 1961 (Baran and Sweezy 1966:146).

But there are indeed "political and practical difficulties in the way" of using government spending as an instrument of promoting the economic well-being of the working class within the capitalist system. For example, public spending on such things as mass transit and public housing conflicts with powerful private interests in the automobile and oil industries and in the real estate business. Worst of all, spending on welfare tends to undercut the role of the Industrial Reserve Army as an enforcer of labor discipline on the working class.

Military spending, by contrast, does not conflict with any entrenched private interests. Consequently, such spending is an ideal solution to the problem in increasing aggregate demand, and 60% of the increase in government spending from 1929-57 has been on the military. This is not to suggest, of course, that such spending is purely for the purpose of floating the monopoly capitalist economy. The military is also essential in preserving United States imperialism and protecting the capital that has been exported abroad.

Figure 7.1. Contradictions of Monopoly Capitalism.

This chart diagrams some of the interrelationships discussed in the text. Monopoly and the decline in the organic composition of capital lead to a tendency for the surplus to rise. The resulting realization crisis is offset by imperialism, the sales effort, and government spending, especially military spending.

7.II.5. Wars and their aftermath

Baran and Sweezy divide the effects of war into two phases (1966:222-225). The first is the combat phase, in which the military machine creates a tremendous demand, re-organizing the economy for military purposes, and causing normal consumer demand to be curtailed. The second is the aftermath phase, in which the pent-up consumer demand is released, the economy has to be reoriented to peacetime pursuits and absorb returning veterans, and the destruction of war rebuilt.

The nineteenth century was a period of relative peace, and the colonial wars exerted a relatively slight direct economic impact (although their indirect impact in opening new markets was crucial in preserving the expanding capitalist system). The "total wars" of the twentieth century, by contrast, have exerted a tremendous economic influence, comparable to that of epoch making inventions such as the railroads and the automobile.

7.II.6. The Cold War

The underlying causes of the Cold War lie in the needs of imperialism to attack the emerging socialist system in the Soviet Union. The Cold War also has a powerful economic effect in providing investment opportunities for capital, thereby serving as an important counterbalance to the tendency toward stagnation. This was recognized quite early by spokesmen for the capitalist system. In 1949, U.S. News and World Report enthused:

Government planners figure they have found the magic formula for almost endless good times. . . . Cold War is the catalyst. Cold War is an automatic pump primer. Turn a spigot, the public clamors for more arms spending. Turn another, the clamor ceases. . . . Cold War demands, if fully exploited, are almost limitless. (as quoted by Baran and Sweezy 1966:212)

In 1954, after the U.S. had exploded the first Hydrogen Bomb, this conservative magazine became even more enthusiastic:

What H-bomb means to business. A long period . . . of big orders. In the years ahead, the effects of the new bomb will keep on increasing. As one appraiser put it: "The H-bomb has blown depression-thinking out the window." (as quoted by Baran and Sweezy 1966:213)

Now, it is quite true that Cold War spending has maintained the U.S. economy on a high plane of economic prosperity and stability for a long time. But for a generation that grew up in fear of thermonuclear destruction, the world the H-bomb made is scarcely an unmixed blessing. As President Kennedy (who himself was willing to initiate a nuclear war during the Cuban Missile Crisis) remarked:

Every man, woman, and child lives under a nuclear sword of Damocles hanging by the slenderest of threads, capable of being cut at any moment by accident or miscalculation, or by madness. (as quoted by Galbraith 1967:325)

Can anyone imagine a more chilling confirmation of the Communist Manifesto's claim that the bourgeoisie can only overcome one crisis "by paving the way for more extensive and more destructive crises" (Marx and Engels 1848:13)?

The stagnation of the U.S. economy is considerable indeed, even with the counterbalance of the Cold War. In 1970, there were 8.1 million unemployed workers. But another 7.1 million were either in the U.S. armed forces (2.9), employed by the Defense Department (2.1), or employed making war material (3.0). In addition, another 7.1 million were employed as an indirect result of military expenditures, in producing goods and providing services to those employed by the military (Sweezy and Magdoff 1971). In short, a total of 22.3 million workers, or fully 25.1% of the total labor force, would be unemployed were it not for military spending. In addition, the existing productive plant was operating at only about three-quarters capacity in 1970. All of this is comparable to the unemployment and underutilization of productive plant that characterized the Great Depression of the 1930s. In short, were it not for military spending, the United States would be in the throes of a depression comparable to the worst days of the Great Depression.

7.III. Capitalism as a World System.

One aspect of the hegemony of bourgeois ideology is our tendency to view the nation state as the unit of social, economic, and political analysis. Capitalism is frequently seen as an economic system that exists within particular nation states and is more highly developed in some than others. Thus, we hear that British capitalism is more highly developed than German capitalism, etc., etc. This view is particularly effective in causing workers to identify with "their" nationality rather than their class. Whatever it's commonsense appeal, and whatever it's utility to the bourgeoisie, this view of the nation state as the basic unit of social analysis is misleading. Capitalism has always been an international system, and must be analyzed as such.

Figure 7.2. History of Monopoly Capitalism.

This chart shows the historical tendency of monopoly capitalism toward stagnation, represented by the rate of unemployment. Low rates of unemployment are seen during WWI, WWII, the Korean War, and the war in Vietnam, while high rates are seen in the Great Depression of the 1930s and the 1890s. Military spending is thus the primary force to offset the profound tendency toward stagnation in monopoly capitalism.

7.III.1. Modern Social Change: Unilineal or Multilineal?

The major defect of both the Marxist and the orthodox bourgeois views of modern social change is their unilineal character. All societies are seen as developing through essentially the same stages: from feudalism to capitalism, and then, in the Marxist view, to socialism. They do so at different rates, and the possibility of skipping stages has been discussed, as has the possibility of backward motion, from a more advanced to a less advanced stage.

Such unilinealism is a severe impediment to understanding the actual processes of change in the modern world. Important advances in our understanding of modern social change have been made by writers such as Amin (1974), Baran (1957), Frank (1967), and Wallerstein (1974). This newer view is multilineal rather than unilineal.

This newer multilineal world system view may be summed up as follows. Contemporary underdeveloped nations do not represent a stage of development through which Europe passed several centuries ago. These are not "premodern," "feudal, or "traditional" societies without a history of their own. Instead, they have had their own histories, histories of being plundered and colonized by the Euro-American nations. These histories have been linked with the histories of the imperialist nations, for it was precisely this colonial plundering that facilitated the development of capitalism in Europe and the United States, in what Marx called the "primitive accumulation of capital."

On the one hand, this process facilitated the decisive changes in economy and social structure that characterize the Euro-American nations. On the other hand, it led to what Frank called "the development of underdevelopment." Through colonialism, the social structures of the non-Western world were transformed to facilitate the extraction of economic surplus by the imperialist powers. Underdevelopment, in this newer view, is simply the other side of development, produced by the same modern socioeconomic forces.

Capitalism, then, is an international, rather than a national, system. As Lenin remarked in 1920:

Capitalism has grown into a world system of colonial oppression and of the financial strangulation of the overwhelming majority of the peoples of the world by a handful of the "advanced" nations. (as quoted by Huberman and Sweezy 1964)

Within this world imperialist system, then, there are not one but two types of modern society: Overdeveloping Capitalist Nations and Underdeveloping Capitalist Nations.

The Overdeveloping Capitalist Nations of Europe, North America, and Japan have, on the basis of their centuries of imperialist looting of the Third World, developed the forms of bourgeois affluence and irrationality criticized by Marxists and non-Marxists alike.

The Underdeveloping Capitalist Nations of Latin America, Africa, and Asia show the reverse side of world capitalism, the poverty and irrationality created by centuries of imperialist oppression. These are not products of backwardness as bourgeois development and modernization theorists would have us believe (and as some Marxists seem to agree), but products of modern capitalism.

Underdevelopment and overdevelopment are thus the twin forms of capitalism in the modern world. These are not stages in a unilineal sequence, but interdependent trajectories of change within the modern world capitalist system. Marx himself noted that capitalism takes a different form in Underdeveloping Capitalist Nations than in Overdeveloping Capitalist Nations:

The profound hypocrisy and inherent barbarism of bourgeois civilization lies unveiled before our eyes, turning from its home, where it assumes respectable forms, to the colonies, where it goes naked. (Marx 1853b:137)

in fact the veiled slavery of the wage-workers in Europe needed, for its pedestal, slavery pure and simple in the new world. (Marx 1867:759-760)

Now, as Frank has stressed, different policy recommendations flow from these different views (1967). In the unilineal view, the "backward" nations should follow the tutelage of the "advanced," borrow money to finance industrialization, and maintain strong military establishments to control irrational revolutionaries who are seduced by Communist Totalitarianism. In the multilineal view, by contrast, the Underdeveloping Capitalist Nations must break free from imperialist control and embark upon roads of independent national development. Revolutionary movements of national liberation are not only rational from the standpoint of this multilineal approach, they are essential.

Since 1917, as portions of the formerly colonial or semicolonial world have broken free from imperialist control, they have embarked on a third developmental trajectory. Under the leadership of Communist Parties associated with the Third International, the Soviet Union, China, Cuba, and other nations have embarked on independent courses of development which are no longer capitalist but not yet socialist. There are few more important questions for Marxists or for humanity in general than the understanding of these Protosocialist Nations, both their internal laws of motion and their place in the global transition to socialism. These questions will be discussed in the next chapter.

7.III.2. Underdeveloping Capitalist Nations

The Underdeveloping Capitalist Nations are the nations of Latin America, Africa, and Asia that have been subjected to centuries of imperial domination and looting. Each of these nations has their own culture and their own history, but Underdeveloping Capitalist Nations share a number of features in common: a history of colonial or semi-colonial conquest; a "dual economy," with a "traditional" sector made up of a largely agrarian population using essentially traditional productive techniques and a "modern" sector largely based in the cities and linked into, and dependent upon, the world economy; trade relations characterized by the import of finished goods and the export of raw materials; a class structure composed of a peasant majority, a smaller working class in the "modern" sector, the "traditional" ruling classes usually allowed to maintain a degree of power and privilege, but real power in the hands of the imperialists and the comprador classes who are tied to, and benefit from, imperialism; and finally, poverty. The populations of the Underdeveloping Capitalist Nations suffer from low per capita incomes, low standards of living, poor health conditions, with high rates of infant mortality and low life expectancies, restricted access to educational and social benefits and extremes of poverty, ignorance, and disease.

Within this common pattern, of course, there are significant differences. The history of Latin America, conquered by the Spanish and Portuguese in the sixteenth century, is quite different than that of Africa, which was devastated by the slave trade before colonization began. The history of India, conquered by England and made an integral part of the British Empire, is quite different from that of China, which remained a semi-colony, never losing its nominal political independence.

Although they are all oppressed by the imperialist nations and share a number of characteristics, they each have their own histories and particular conditions of oppression. They fall into four categories (World Bank 1983:148-201).

The Low Income Oppressed Nations in Africa and Asia (e.g. Chad, Bangladesh, Burma, Zaire, Uganda, India, Madagascar, Niger, Pakistan, and Sudan) account for over 26% of the world's population, but only 2.2% of world GNP. The average GNP per capita is $240. Rates of literacy are low (40%). Life expectancy is low (50 years). Rates of infant mortality are high (124 per thousand).

The Low Middle Income Oppressed Nations in Africa, Asia, and Latin America (e.g. Kenya, Indonesia, Egypt, El Salvador, Thailand, Philippines, New Guinea, Guatamala, Peru, Ecuador, and Turkey) account for about 14% of the world's population and 4.3% of world GNP. Rates of literacy are better (69%), as are life expectancy (57 years), and rates of infant mortality (95 per thousand)

The Upper Middle Income Oppressed Nations (e.g. Iran, Iraq, Malaysia, Panama, Mexico, Portugal, and Venezuela) account for nearly 10% of the world's population and nearly 8% of world GNP. Average GNP per capita is $2490. Rates of literacy average 87%, life expectancy is 63 years, and rates of infant mortality at birth average 97 per thousand.

The High Income Oil Exporting Oppressed Nations (Libya, Saudi Arabia, Kuwait, United Arab Emirates) have 0.5% of the world's population and 1.6% of the world's GNP. The average per capita GNP are among the highest in the world, averaging $13,460, but rates of literacy are low (averaging 32%), life expectancy is low (57 years), and infant mortality is high (96 per thousand).

In general, the oppressed nations are characterized by underdevelopment: dependence on exporting one or a few raw materials and importing finished goods. This is unequal trade which results in a transfer of wealth to the imperialist nations. Increasingly, the land and natural resources are owned by foreign corporations. The majority of the population lives in rural areas, but increasingly they are moving into urban slums, as the land is bought up by foreign corporations.

A small minority of the population enjoys the benefits of modern civilization, but for the vast majority:

100,000,000 people have no shelter whatsoever.
770,000,000 do not get enough food for an active working life.
500,000,000 suffer from iron-deficiency anemia.
1,300,000,000 do not have safe water to drink.
800,000,000 live in "absolute poverty," unable to meat minimal needs.
880,000,000 adults cannot read or write.
10,000,000 babies are born malnourished every year.
14,000,000 children die of hunger-related causes every year. (Sivard 1987:25)

The inequality and oppression of the oppressed nations is maintained by what has been called "Third World Fascism:" military dictatorships, state-sponsored torture, death squads, and other forms of repression. Most of this is financed and directed by the United States.

There are also differences in terms of levels of poverty and per capita income. We may distinguish between: the poorest Underdeveloping Capitalist Nations such as Bangladesh, India, Pakistan, Zaire, and Uganda; the middle Underdeveloping Capitalist Nations such as Egypt, Syria, the Philippines, Ecuador, and El Salvador; the better-off Underdeveloping Capitalist Nations, such as Mexico, Argentina, Brazil, Greece, and Singapore; and the oil-rich, high-income nations such as Kuwait and the United Arab Emirates.

Finally, it must be recognized that Underdeveloping and Overdeveloping Capitalist Nations are, in a sense, polar types. Just as their are differences within these categories, the categories themselves sometimes overlap. Thus, Tsarist Russia was an imperialist power in its relations with Central and East Asia, but was itself the object of French and British imperialism. Similarly, Portugal was an oppressor nation towards its own colonies, Mozambique and Angola, but was underdeveloped in its relations with Great Britain.

These complexities are important and must be understood in concrete detail in each instance. However, neither the gradations, differences within categories, or overlapping of categories negates the reality of the fundamental opposition between underdevelopment and overdevelopment as manifestations of capitalism.

7.III.3. Overdeveloping Capitalist Nations

These are the nations of Western Europe, North America, Japan, Australia, and New Zealand, which, on the basis of their plunder of Latin America, Africa, and Asia have built "modern" industrial systems which are threatening the very survival of our species.

As a group, they account for about 16% of the world's population but nearly 64% of world GNP. As of 1985, GNP per capita was $11,120, literacy rates are high (99%), life expectancy about 75 years, infant mortality 11 per thousand births (World Bank 1983:148-201).

The average (or "middle class") citizen of the imperialist nations enjoy life styles, with economic affluence and personal and political freedoms, which are the envy of the rest of the world. This life style, however, is characterized by consumerism, alienation, and irrationality, and is ecologically destructive.

The poorest fifth of the population of the imperialist nations, however, live in conditions that resemble those of the oppressed nations.

The ruling bourgeoisie (the Rockefeller, DuPont, Mellon, Ford, Rothschild, Krupp, Mitsui, Mitsubishi, and other bourgeois families) enjoy levels of wealth and power that can only be described as obscene.

The Overdeveloping Capitalist Nations are the seat of the tremendous power of the international bourgeoisie. This power is economic, technological, military, and ideological. In order to maintain secure in their power, the bourgeoisie must use some of their resources to bribe a portion of the working class within the Overdeveloping Capitalist Nations. This bribery takes the form of both material benefits and national chauvinism.

The Overdeveloping Capitalist Nations are those nations which, on the basis of centuries of imperialist exploitation, have developed high levels of affluence, high levels of productivity, and distinctive forms of bourgeois irrationality. These nations are usually called "advanced capitalist nations," "advanced industrial nations," or simply "advanced nations." Such terms presuppose a developmental framework which does not reflect the realities of the modern world. The opposite of "underdevelopment" is not "advanced," but "overdevelopment."

Overdevelopment is characteristic of the nations of Western Europe (England, France, Germany, Holland, Sweden) and of Western European peoples who have migrated elsewhere (the United States, Australia, New Zealand). Japan has the distinction of being the only non-Western nation to have successfully overdeveloped, and it did so on the basis of its own imperial exploits. As Lenin observed,

by their colonial looting of Asian countries the Europeans managed to harden one of them—Japan—for great military exploits that assured it of an independent national development. (as quoted by Baran 1957:161)

These Overdeveloping Capitalist Nations are, viewed from the perspective of the majority of their citizens, probably the most humane nations in the world. This is particularly the case with certain nations which are favorably situated within the total system of world imperialism. Nations such as Sweden, Switzerland, and New Zealand have well developed social welfare systems, are non-militaristic, and are, no doubt, decent places to live. Although they may thus appear to be models for other nations to emulate, the very nature of the capitalist system is such that other nations cannot emulate them. Clearly, the Underdeveloping Capitalist Nations cannot simply choose to become like the Overdeveloping Capitalist Nations without themselves becoming imperialist (following the example of Japan), a road which is impossible in the present world situation. And the leading imperialist nations, such as the United States, and to a lesser extent, England, France, Germany, and Japan, must maintain their military establishments to maintain their control over the underdeveloping world and keep the emerging socialist world at bay.

A characteristic feature of the Overdeveloping Capitalist Nations is that described by Lenin, that the national bourgeoisie of these nations can, on the basis of their centuries of imperialist exploitation, bribe a portion of the working class and thereby gain their support in their imperialist ventures. This scientific concept of an aristocracy of labor thus provides a more suitable framework for understanding the empirical data upon which the erroneous ideas of the "affluent worker" and "pension fund socialism" are based. The bribery of workers includes not only high wages, but also retirement benefits and pension plans, thus forcing the workers to "buy into" the capitalist system. It also includes such social benefits as unemployment insurance, social security, and health and welfare system. Such social reforms are frequently misunderstood as constituting socialism, especially when they are provided under a government run by a socialist or social democratic party. Since the underlying economic power of the capitalists has not been broken and the means of production continue to be privately owned, they are better regarded as socialistic frosting on a capitalist cake. Clearly, such socialistic reforms are better than a completely unreformed capitalism, but they should not be confused with socialism in the scientific sense of the term.

In evaluating these socialistic reforms, it is necessary to bear two points in mind. First, such reforms are only possible in the Overdeveloping Capitalist Nations; the Underdeveloping Capitalist Nations lack the material resources for such reformism. Second, these reforms provide the material base for the opportunism of the working classes in the imperialism nations, as Lenin argued in his theory of the aristocracy of labor.

There has been considerable debate over this notion, as will be discussed below. There can be no denying, however, the reality of the dramatic difference in living standards between the workers in the imperialist nations and workers and peasants in the oppressed nations.

Each of the Overdeveloping Capitalist Nations have their own distinctive national characteristics, but certain general characteristics may be noted. First, these are industrial nations, with highly developed productive plants. The Overdeveloping Capitalist Nations typically import raw materials from the underdeveloping world and export finished goods. The productive resources are developed, however, not with the aim of satisfying the human needs of society in an ecologically sound manner, but rather from the standpoint of maximizing profits for the giant corporations. The result is an environmentally and socially destructive productive system that cannot endure for the thousands of years that agrarian systems have endured, much less the millions of years of the hunting and gathering mode of production. Thus, overdeveloped industry concentrates on non-renewable and environmentally destructive resources such as coal, oil, and atomic energy rather than solar power. Dependence on the energy-expensive private automobile is fostered at the expense of energy-conserving public transportation, such as railroads and subways. The highly productive agricultural system is heavily dependent upon chemical fertilizers, pesticides, and the use of fossil fuels, with potentially disastrous consequences.

These features are not inevitable concomitants of the industrial mode of production, per se, but rather of the capitalist drive for profits.

Sociologically, the Overdeveloping Capitalist Nations are heavily urbanized, with upwards of 80 per cent of the population living in cities. The urban areas themselves far exceed anything in the earlier agrarian civilizations. The term megalopolis has been proposed for the huge urban complexes which may incorporate tens of millions of people, such as Boswash, the megalopolitan area stretching from Boston to Washington, D.C., Sansan, the Southern California complex running from San Diego to Santa Barbara, and Chipitt, stretching from Chicago to Pittsburgh.

The concept of overdevelopment has important implications both for understanding the modern world and for our own personal lives. I use the term in preference to "advanced capitalist nation" since it seems a more logical opposite of underdeveloping capitalist nation (Ruyle 1987). The term "advanced capitalist nation" implies that the Western nations, especially the United States, is in some ways the norm towards which all other societies are tending. Too frequently, even Marxists err in regarding the "advanced" capitalist nations as the norm by which "primitive," "backward," and even the emerging socialist societies are judged, the sun around which they revolve. We need, as Clastres suggests, a Copernican revolution in social science:

ethnology until now has let primitive cultures revolve around Western civilization in a centripetal motion, so to speak. . . . It is time to change suns, time to move on. (Clastres 1977:17)

It is beyond the scope of this discussion to explore fully what this moving on must entail, but it may be noted that the concept of overdevelopment provides a framework for the incorporation of the Green and Third World critiques into the corpus of historical materialism. As Bodner remarks:

In a world economic context, living responsibly can be part of an approach to curing a worldwide combination of overdevelopment and underdevelopment that can be called "mal-development." The symptoms of overdevelopment—dependence of complex bureaucratic technologies and institutions, overconsumption, industrial pollution, and interpersonal alienation—are most apparent in countries like our own. The outward signs of underdevelopment are most apparent in poor countries. However, both aspects of mal-development can be found in most nations of the world. Mexico City is often smoggier than Los Angeles, and underdevelopment can be found in several neighborhoods of every major city in the United States. (Bodner 1984:4-6)

In short, the imperialist nations, on the basis of their centuries of past and present exploitation of Latin America, Africa, and Asia have built systems of bourgeois affluence and irrationality which, however, attractive, cannot endure.

7.III.4. Phases of World Imperialism

The development of the world imperialist system over the past five hundred years may be divided into four distinct, but overlapping, phases: 1. a phase of mercantilist imperialism, of colonial looting and plunder, through the eighteenth century, 2. a phase of "competitive" capitalism, during the nineteenth century, 3. an early phase of monopoly capitalist imperialism, in the late nineteenth and early twentieth centuries, to WWII, 4. a late phase of monopoly capitalist imperialism, or neocolonialism, since WWII ( cf. Szymanski 1981:95-121).

During the earliest phase, of mercantilist imperialism, Europe was primarily interested in luxury goods: precious metals, spices, quality textiles, tea, coffee, tobacco, and sugar. These were obtained through plunder, forced labor, or, when necessary, trade. During this period, the imperialist nations granted private trading companies monopoly rights to exploit given territories, such as the Hudson Bay Company and the Dutch East Indies Company. This was the period of the Spanish conquest of the Native American empires, the plundering and destruction of the East African kingdoms, the establishment of Dutch rule over the East Indies, and the beginning of the slave trade in Africa. The Europeans were at this period unable to militarily dominate the established Asiatic empires, but established trading centers in India (the Portuguese in Goa, the British in Calcutta), China (the Portuguese in Macau and the British in Hong Kong), and Japan (the Dutch in Nagasaki). It was not until after the battle of Plassy in 1756 that India came under British control, and China remained independent until the Opium Wars of the 1840s reduced her to semi-colonial status. Japan was not "opened" to foreign trade until the 1850s. This was the period of the primitive accumulation of capital, when the West was obtaining the wealth necessary to finance the industrial revolution by plundering the rest of the world.

The Industrial Revolution marked the beginning of the second phase, that of "competitive" capitalism. In this period, Europe had gained a clear technological superiority over the Asiatic empires, in both military and productive technology, and began to export cheap commodities, chiefly textiles, and import raw materials—cotton, sugar, cattle, wheat. It was during this period that clear differences appear in standards of living between European nations and the rest of the world. By the middle of the nineteenth century, living standards were about 50% higher in Europe than in the rest of the world.

The early phase of monopoly capitalist imperialism began in the late nineteenth century. This is the phase of imperialism analyzed by Lenin in Imperialism, the Highest Phase of Capitalism. In Lenin's analysis, this phase of imperialism was marked by five essential features:

1) The concentration of production and capital developed to such a high stage that it created monopolies which play a decisive role in economic life.
2) The merging of bank capital with industrial capital, and the creation, on the basis of this "finance capital'" of a "financial oligarchy."
3) The export of capital, which has become extremely important, as distinguished from the export of commodities.
4) The formation of international capitalist monopolies which share the world among themselves.
5) The territorial division of the whole world among the greatest capitalist powers is completed. (Lenin 1916:89)

This period marks a new phase in the development of the imperialist system, for the territorial division of the world among the leading imperialist powers is completed. This means that late developing imperialist power can develop only at the expense of existing empires, leading to wars of imperialist redivision: World War I and World War II. Imperialist wars were by no means lacking in the earlier periods, but such wars reached new levels in the twentieth century, sometimes called the century of total war.

The period after WWII is the late phase of monopoly capitalist imperialism. The leading characteristics of this period are, first the overthrow of the older empires and the establishment of neocolonialism, under the domination of the United States. Second, the emergence and consolidation of socialism has challenged the capitalist system, which responds by the threat of nuclear destruction and the Cold War. Third, the integration of the world economy under the domination of the multinational corporations continues to an unprecedented degree and leads to an unprecedented degree of inequality between the Overdeveloping Capitalist Nations and the Underdeveloping Capitalist Nations and incredible suffering for the overwhelming majority of our species.

In the last decade or so, imperialism appears to have entered a new phase. The contours of this new phase are not yet entirely clear, but certain features may be noted. First of all, the dominance of U.S. imperialism has been challenged by the resurging economic powers of Japan and Germany. Secondly, the "new way of thinking" in foreign affairs on the part of the Soviet Union, has transformed the global system of power into a unipolar rather than a bipolar system. The outcome of these transformations is still uncertain, particularly in light of the impending war in the Middle East. The outcome, as of January 8, 1991, is anybody's guess.

7.III.5. Development of United States Imperialism.

The United States has a long history of imperialism. As the establishment historian Henry Steele Commager wrote in 1967:

We should remember that in the eyes of the 19th century is was the United States that was pre-eminently an expansionist and aggressive nation. In the first half of the century, this new nation—with an ideology as pernicious in the eyes of legitimist governments as Communism is in our eyes—expanded from the Mississippi to the Pacific. We bought Louisiana, forced Spain out of West Florida, and maneuvered her out of East Florida. We ousted the British from the Pacific Northwest. Thus, in half a century, we trebled our territory at the expense of France, Spain, Mexico, and Britain. In the same period, our Presidents announced the Monroe Doctrine and the Polk Doctrine, proclaiming in effect American hegemony in the Western hemisphere. If China today should put on a show of this kind, we might be alarmed. (as quoted in Greene 1970:103-104)

Our "pernicious" ideology was openly set forth by boosters of imperialism such as Senator J. Beveridge of Indiana, who said in 1898:

American factories are making more than the American people can use. American soil is producing more than they can consume. Fate has written our policy for us: the trade of the world must and shall be ours. And we shall get it as our mother, England, has told us how. We will establish trading posts throughout the world as distributing posts for our products. We will cover the ocean with our merchant marine. We will build a navy to the measure of our greatness. Great colonies, governing themselves, flying our flag and trading with us, will grow up about our posts of trade. Our institutions will follow our trade on the wings of our commerce. And American law, American order, American civilization, and the American flag will plant themselves on shores hitherto bloody and benighted, by those agencies God henceforth made beautiful and bright. (as quoted by Greene 1970:105)

Historically, U.S. imperialism has taken two forms: territorial aggrandizement and neocolonialism. The colonies were settled as outposts of European imperialism for the purpose of extracting the labor and resources of the Native Americans. But as the colonial ruling classes matured, they could not be content merely to be the outposts of European imperialism, they demanded their own "manifest destiny" long before the term was coined by John O'Sullivan in 1845. The American Revolution of 1776-83, the Louisiana Purchase of 1803, the annexation of Texas and the southwest from Mexico in the 1840s, and the successful claim on the Oregon Territory were but stages in the expropriation of the Native American population and the territorial aggrandizement of the Euro-American imperialists.

The distinctive form that U.S. imperialism has taken is neocolonialism. This began as early as 1823, with the promulgation of the Monroe Doctrine. Latin American nations had, by this time, nearly all won their independence from Spain and Portugal. With the Monroe Doctrine, the U.S. proclaimed itself the protector of these new nations, and protection has its price. In essence, the Monroe Doctrine claimed the newly independent Latin American nations as part of the sphere of operations for American business. Of course, the full impact of the Monroe Doctrine was not felt until the "Roosevelt Corollary," that the U.S. would play the role of "an international police force" in keeping Latin America open to U.S. capital. Roosevelt engineered the Spanish-American War which gave the United States control over Cuba, Puerto Rico, and the Philippines.

The case of the Philippines is particularly instructive in understanding how U.S. imperialism operates. The Philippine people had themselves already embarked upon a revolutionary war against Spain when the United States intervened and established established, by military force, a puppet government acceptable to U.S. business interests. As Parenti described the reasoning of the President William McKinley:

McKinley decided he "could not leave [the Filipinos] to themselves—they were unfit for self-government." McKinley tells how, after praying to "Almighty God for light and guidance," he was visited with the revelation that it would be "cowardly and dishonest" to give the Philippines back to Spain and "bad business" to turn them over to France and Germany, "our commercial rivals in the Orient," so "… there was nothing left for us to do but take them all, and to educate the Filipinos, and uplift and civilize and Christianize them, and by God's grace do the very best we could by them, as our fellowmen for whom Christ also died." Perhaps because they had already been Christianized for several centuries by the Spaniards, the Filipinos themselves were not put to rest by McKinley's divine inspiration. Instead, … they valiantly resisted the US invasion at great costs to themselves. (Parenti 1989:86)

An American weekly magazine, the San Francisco Argonaut, defended the atrocities of American troops in the Philippines in 1902 by exhulting over the enormous riches and fertility of the islands, then noted: "But unfortunately they are infested by Filipinos. There are many millions of them there, and it is to be feared that their extinction will be slow.… Let us all be frank. WE DO NOT WANT THE FILIPINOS. WE WANT THE PHILIPPINES." (Parenti 1989:85)

The reality of U.S. imperialism, and how U.S. military power was used to maintain governments acceptable to U.S. business, is perhaps best stated by a former agent of U.S. imperialism, Major General Smedly Butler of the U.S. Marine Corps:

I spent thirty-three years and four months in active military service … And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street and for the bankers. In short I was a racketeer, a gangster for capitalism.
I suspected I was just part of a racket at the time. Now I am sure of it. Like all members of the military profession I never had an original thought until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of the higher-ups. This is typical with everyone in the military service.
Thus I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1902-12. I brought light to the Dominican Republic for the American sugar interests in 1916. In China in 1927 I helped see to it that the Standard Oil went its way unmolested.
During those years, I had as the boys in the back room would say, a swell racket. I was rewarded with honors, medals and promotion. Looking back on it, I feel I might have given Al Capone a few hints. The best he could do was to operate his racket in three city districts. I operated on three continents. (as quoted by Greene 1970:106-107)

7.III.6. Postwar United States Imperialism

The years since the Second World War have been years of American dominance, that much is clear. Bourgeois ideology allows us to conceptualize this dominance in any of a variety of ways, from the right wing view that the U.S. is the main protector of "freedom" from the threat of a totalitarian "Evil Empire," to the more liberal view that there are two superpowers, both intent on pursuing their interests at the expense of the rest of the world. What bourgeois ideology does not permit us to do is view the U.S. as the center of world imperialism, intent on destroying whatever forces of freedom and democracy that may challenge its rule.

Bourgeois apologetics for the Pax Americana will not bear up under serious scrutiny. The simple fact is that it is the United States that has waged an aggressive war on the world's peoples in general and on the Soviet Union in particular. This statement may seem extreme, but it is very definitely indicated by the facts.

To begin, we must keep in mind that U.S. foreign policy is not made by the people, nor by the Senate or President. It is made by the U.S. bourgeoisie, the ruling class of America that, in effect, tells Presidents and Senators what to do and the American people what to think. The U.S. bourgeoisie consistently pursues policies designed to make the world a profitable place in which to do business. Of course, it rarely says this up front. The code words instead are democratic freedoms, free institutions,

American presidents have really good speech writers, capable of dazzling the world with fancy phrases about freedom, democracy, and the like. But as Marx warns us, just as we must judge individuals by what they do rather than what they say , so we cannot judge social systems their actions rather than by the ideology they design to conceal those actions.

The hostility of U.S. business interests to communism, of course, predates the October Revolution of 1917, but it took newer and more virulent forms after the establishment of the Soviet Union. The U.S. was one of fourteen nations to send troops to the Soviet Union to protect business interests during the revolution. The rise of Nazism was welcomed by U.S. business circles because, whatever his faults, Hitler was definitely anti-communist. As Marzani notes:

The unremitting hostility of the Western countries toward the Soviet Union is the key to the world history of the 1930's. The basis of this hostility was a class basis, the hatred of the employers' governments for a workers' government. This is admitted by a conservative diplomat. Writes Summer Welles: "In those pre-war years, great financial and commercial interests of the Western democracies, including many in the United States, were firm in the belief that war between the Soviet Union and Hitlerite Germany could only be favorable to their own interests. They maintained that Russia would necessarily be defeated, and with this defeat Communist would be destroyed." (Marzani 1952:120-121)

During the war, the fundamental hostility of U.S. ruling circles to the Soviet Union abated somewhat in the interests of winning the war. Nonetheless, it must be noted that the U.S. allowed the Soviet Union to bear the brunt of the fighting, even to the extent of delaying the promised second front in Europe for two years.

The United States emerged from WWII as indisputably the world's strongest power. Fully three quarters of the world's invested capital and two-thirds of the world's industry were concentrated within the United States (Smith 1950:88). As Smith observes:

America truly possesses the whip-hand over the world. It is as easy as rolling off a log for America to become an imperialist country. With preponderance of power, and most of the rest of the world in a crisis of scarcity, there need be no crude conquests; they can be carried out gently, invisibly, by the almost surreptitious means of wealth, by investments that bring silent control and by aid-grants accompanied by polite hints regarding the direction of the receiving nation's policy.
When Russia extends her security zone abroad, it almost inevitably requires and overthrow of the status quo, for the status quo of the world is Capitalist; which means a lot of noise and ugly scenes. If America extends her zone of influence abroad, for the same reason—that the rest of the world is Capitalist—it involves only supporting the status quo : no scenes, no noise. (Smith 1950:89)

The manner in which the U.S. was able to extend its hegemony after WWII is well illustrated by three cases: Iran, Greece, and Italy.

Iran was occupied by all three Allies, Great Britain, the U.S., and the Soviet Union during WWII in order to assure supplies of oil to the Soviet Union. It was agreed that all three would withdraw simultaneously, but the Soviet Union did not do so. Instead, it fomented a rebellion in northern Iran against the central government and set up an autonomous regional government, thereby pressuring the Iranian government to grant the Soviet Union oil exploitation rights in northern Iran. Under pressure from the United Nations, the Soviet Union withdrew, the Iranian government broke up the puppet government in the north, and denounced the oil agreement. Thus ended an early attempt at Soviet expansionism. But this was not the end of the story, as Smith observes.

What is not widely known about the sequel is that as Russia moved out—America moved in. Not with troops and noisy revolution, but silently with dollars in support of the status quo. The Persian government received American funds and a set of American—including military—advisers. Persia is in effect to-day an American satellite. If America does not already have military bases in Persia, she can have them any time she wishes.
There is no use discussing rights and wrongs in the Persian issue. But it is germane to consider the effect of the incident on Russian mentality. America had accomplished exactly the nefarious end Russia sought, and there was no way to make a case of it before the Security Council as there had been when Russia had sought to dominate Persia. Russia was patently at an extreme disadvantage. Moreover, this 'defence' base that America had for the taking was 6,000 miles from her shores, but on Russia's most sensitive border. (Smith 1950:93-94)

The Leninists of the Soviet Union, of course, did not need to be reminded of the mechanics of imperialism. But if a reminder were needed, the Iranian example certainly served this purpose. The Soviet Union, having been rebuffed in the Middle East, certainly would do all in its power to close the East European nations, recently liberated from Nazi imperialism, to the "Persian method" of U.S. imperialism.

The second example is Greece. When WWII ended, the Greek National Liberation Front, or EAM, was in virtual control of entire nation. EAM was a coalition of liberals, socialists, and communists, with the communists clearly dominant. EAM had about two million members, out of a population of over seven million, was superior to all rivals in organization and enthusiasm. Left to itself, Greece would have developed an autonomous communism, similar to that later built in Yugoslavia. But Greece was not to be left to itself. As the Germans left, the British entered and established a coalition government which initially included the EAM. The EAM resigned from the government when the British commander ordered all resistance movements, most pointedly the EAM, to disarm. The "civil war" was precipitated when police fired on a pro-EAM demonstration, in which women and children predominated, killing several demonstrators. Using tanks, planes, and two divisions from North Africa, the British were victorious, and the beaten EAM surrendered their arms in February 1946. The British proceeded to establish a right wing government (which included large numbers of former Nazi collaborators) under King George, and unleashed a reign of terror against the left. As Smith notes,

With the left in a state of debility, the British sent troops through the country to 'pacify' it. Following close in their path and within call of British protection, the Greek national Guard—whose pro-Nazi make-up we have already noted—entered each town, raided and searched every house, beat up young men suspected of being former members of ELAS and turned over any arms found to free-lance rightist gangs in the neighborhood. the rightist gangs blossomed all over Greece. The "X" Monarchist bands … had numbers only around 500 members when they were being supplied by the Nazis. Now, in the aftermath of EAM's defeat, their numbers rose to 200,000, according to the American observer, William Hardy McNeill. In the western part of Greece the EDES bands of General Napoleon Servas had returned and now proceeded on their own account to settle scores with the disarmed left. Thousands of young men fled to the mountains, others fled into Yugoslavia for protection. Revulsion abroad to the right-wing excesses was such that Mr. Attlee felt constrained to issue a public protest against what, oddly enough, might have been stopped by his own foreign secretary. (Smith 1950:230)

The resulting government did virtually nothing to improve the situation of the people. In Smith's view,

There are few modern parallels for government as bad as this. Even Hitler and Mussolini kept their workers employed and brightened their life with circuses. Whatever may be said of the Communist governments north of Greece, they have instituted constructive economic programmes and brought considerable benefits to the poorest members of society. The post-war governments of Greece have ignored both worker and peasant to a point that amounts to downright economic persecution. (Smith 1950:232)

It was this government that Truman pledged to support in the Truman Doctrine. When the civil war resumed in late 1946, the British realized they simply could not afford the expense of fighting another civil war. This was the background for Truman Doctrine which proclaimed that it would be U.S. policy "to support free peoples who are resisting subjugation by armed minorities or outside pressure" (as quoted by Smith 1950:86). That there was outside aid is undeniable, but it is equally undeniable that the real roots of the Greek "civil war" lay, not in "Communist infiltration" but in the poverty and oppression of the masses of Greek people.

In Greece, the forces of revolution were thus forestalled in two "civil wars," one led by the British and one by the Americans.

In Italy, the power of international capitalism was consolidated in the elections of 18 April 1948. This was one of the major events of the international Cold War and illustrates nicely the contending forces at work.

This was the first general election held under Italy's postwar constitution, and the outcome was by no means certain. As late as three months before the election, there was a real possibility of a communist victory. The Italian resistance, led by communists and socialists and regarded by many as "the best and bravest partisan movement in all Western Europe" (Smith 1950:213), had played a key role in the liberation from fascism. After the war, the Communists and Socialist shared power the the Christian Democrats in a popularly elected coalition government. The Italian Communist Party was the largest Communist Party outside the Soviet Union, larger even than the Chinese Communist Party. The Communists and Socialists were clearly dominant in the industrial working class and gained widespread support among the peasantry. The Communist leadership was able to organize over a million farm laborers for a strike in the winter of 1947-48. The possibility of an electoral victory for the working class, however, was forestalled by a combination of internal and external forces.

The role of the United States was perhaps most decisive. The American position was expressed by Time magazine in quoting the "sense-making talk" of an anonymous "sagacious Frenchman:"

Suppose the Italians vote Communist? Suppose they freely choose Communism? . . . The correct thing to do is to tell the Italians that they can choose almost any party they like, but not Communism. The U.S. should make it clear that it will use force, if necessary, to prevent Italy from going Communist. (as quoted by Smith 1950: 202)

The U.S. used its full economic, military, and diplomatic power in what Smith calls "some highly dubious political manœuvring" to prevent an electoral victory for the communists (1950:204). Marshall Plan aid was disbursed with great ceremony. The State Department announced that Italians who voted Communist would be denied emigr