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Social Scientist

Capital Accumulation and the Exploitation of the 'Unequal' World: Insights from a Debate within Marxism Author(s): Irfan Habib Reviewed work(s): Source: Social Scientist, Vol. 31, No. 3/4 (Mar. - Apr., 2003), pp. 3-26 Published by: Social Scientist Stable URL: . Accessed: 07/07/2012 09:20
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CapitalAccumulationand the Exploitation of the 'Unequal' World- Insightsfrom a Debate within Marxism

By way of payingmy homageto one of the most respectedfiguresof the Indian Communist movement, and an intellectual guide and I attempt HirenMukerjee, resolutefighteroverthe years,likeProfessor in this essay to look anew at the recurringdebate within Marxism over how capitalismgrows and extends its exploitativedominance. Marx's theory of capitalist productionand circulationwas mainly set forth in Capital,in the first volumepublishedin 1867, and in the two posthumous volumes edited by Engels. This largely fixed the Accumulationof Capital(1913). frameworkfor Rosa Luxemburg's Yet her work acquiredsomething of a landmarkstatus, since she tried to look at Marx'sanalysiscritically,while fully remainingloyal of Luxemburg's to his methodand his cause.The politicalsignificance as be critiquewas that capitalismcould now seen exploitingnot only the working class in the capitalistcountries,but also peoples living outside the capitalistorder.Her criticseven saw her,for this reason, as diluting the revolutionaryimportanceof the industrialworking class. Her writing, though, should have had a greater appeal instinctivelyfor people whose countries have had colonial pasts or have otherwise suffered from the inequitiesof imperialism.Today, one also needs to go to it and the debate it provoked, for possible clues as to how capitalismhas withstood the impactboth of socialist revolutions in Russia, EasternEurope and China, and of its own wars and crises duringthe ninety years since Luxemburgpublished her book.

* Formerlyprofessorof historyat the AligarhMuslimUniversity, Aligarh. Social Scientist, Vol. 31, Nos. 3-4, March-April2003


The essay is in three parts: in Part I, I follow Rosa Luxemburg in her examination of the possibilities (or impossibility) of capital accumulation in a 'pure' capitalist economy; in Part II, I explore the relationship between the capitalist and non-capitalist economies as seen by Luxemburg and her critics; and in Part III, I examine the structure of today's world, with metropolitan countries retaining their dominance over the less developed economies (our 'unequal' world), and try to see how a modified version of Luxemburg's thesis can help us to understand better the present stage of Imperialism.

Let me first state in my own words what may be called the Luxemburg Puzzle.' Like Marx in Capital, we begin by assuming that we deal with an isolated, pure capitalist economy, that is, one where there are only two classes, namely, capitalists and the workers they employ, and within which there is perfect mobility of capital and labour.2It follows that there is in such an imaginary economy no property other than capital and no income other than capitalists' profits (which constitute the sole title to the 'surplus') and wages (which the capitalists pay for the use of labour-power). When production takes place under such conditions, there can be two situations setting the extremes. In the first case, the capitalists may consume the entire surplus, to meet their personal wants. In such a case (analogous to Marx's 'simple reproduction'), only consumer goods will be produced, and these will be divisible into two parts: (1) those purchased by workers out of their wages (wage-goods), representing the realization of what Marx called the 'necessary' part of value; and (2) those purchased by the capitalists (luxuries, etc.) representing the realization of 'surplus value.' No capital goods are produced at all, and so there is no capital accumulation. In the second case, we take the other extreme, where the entire surplus is sought to be converted by the capitalists into additional capital, and they do not seek consumer goods to meet their personal wants. In terms of material products, capital is divisible into two parts: capital goods, which form 'constant' capital (in Marx's terminology); and wage-goods, which constitute 'variable' capital. (It may be remembered that while 'raw materials' may constitute an element of constant capital for an individual firm, this would not hold true for the capitalistic economy as a whole if the materials are produced within it: their value too can be broken down into the


costs of capitalgoods, wages, and surplus;and thus they replacement cannotbe whollytreatedas a separate componentof constantcapital.)3 The surplusconvertibleinto capital will thus compriseboth capital goods and wage goods, in order to provideadditionalconstant and variablecapital, new wage-workersbeingemployedout of the latter. Such use of the surplus enables production to be expanded in the next cycle. Suchproductionaccordinglybelongs, in the terminology of Marx, to the categoryof 'extendedreproduction'. The puzzlethat RosaLuxemburg essentially poses is whethersuch extendedreproductionis possible if the economy is confined only to To explain the puzzle it may be convenient capitalistsand workers.4 to consider the two components of the total product separately. Capitalistswho produce the means of productionor capital goods processes I') can only sell these for undertaking (Marx's'Department of manufacture to other capitalists.Sincethe purposeof production of capital goods is to produceconsumergoods at the end of the line, capitalgoods must finallyreachthe handsof capitalistswho produce consumer goods (Marx's 'Department II'). When capitalists of DepartmentII buy from those of DepartmentI, the total amount of value which they must pay the lattermust be equal to the amount of wages paid in DepartmentI, plus the surplusvalue that falls to the share of capitalists of DepartmentI. In order to be able to provide this value, capitalists of DepartmentII must sell enough consumer goods to yield them an amount which includesnot only what they I, but also, naturallyenough,the pay to the capitalistsof Department out to theirworkers,as well as their themselves have wages they paid own shareof the surplus.This meansthat the total amount at which the consumergoods are to be sold shouldcomprise(a) wages paid to workersin DepartmentsI and II, constitutingfor the capitaliststheir 'variablecapital',and (b) the surplusvalue createdby the workersin both Departments.We have seen that in our extreme'model' where the entire surplusvalue is to be convertedinto capital, workerscan be the only buyersof consumergoods. But the amount they can pay is limited to the wages they have receivedfrom the capitalists.Thus they cannot pay anythingmore than will replacethe wage-costs in DepartmentsI and II. At best, the additional variable capital (or of capital)can be paid for, additionalinvestmentin wage-component since it is immediatelytranslatedinto wages paid. Yet this is merely variablecapital theoretical,sincewithoutcapitalgoods this additional Therewould would be of no use, as Marxhimselfin effectrecognises.5 thus be no way in which the surplusvalue can be extracted out of


wages paid out by the capitalists in DepartmentI, which produces goods for use as constant, not variable,capital. And if the surplus value remainsunrealized,there can be no conversionof the surplus into constant capital, and, therefore,no capital accumulation. The essentialswill not change,if we modifyour extremeexample, by supposing that the capitalistsconvert not the whole, but only a part of the surplusinto capital. In that case the surplusvalue will be 'realized'only to the extent that capitalists spend their income on consumer goods and services. But to the degree that capitalists consumetheirincome,thereis no accumulationof capital.As for the remainderof the surplus,its conversioninto capital will stay stalled since constant capital cannot be paid for by workers out of their wages, and any additionalvariablecapitalcannot be employedunless this constant capital is available. The essentialconditionswould not also changeif our modelwere thatoccurs in productivity to takeinto accountthecontinuousincrease undercapitalism,Workerscannot buy more than they get in wages. An increase in the total product will not breachthis basic barrier: workersmay then have more goods to buy,but the amountthey will pay will still be no more than what they have receivedin wages.6An would increasein populationenablingmoreworkersto be employed,7 still not have any effect, since, as we have seen, additionalvariable capital employed out of the surplus,cannot be operativeunless the correspondingcapital goods (constantcapital) are available. Thereis possiblyone way in which capitalaccumulationmay yet of the working class.8 If take place: growth in the impoverishment after the wages are paid, the pricesof consumergoods (Department II) are increased (e.g. through inflation), while through higher in Department I, the pricesof capitalgoods fall, or remain productivity it be would stable, possiblefor a part of the former"wagesfund"to be used to pay for capitalgoods. Butthe paceof such impoverishment is seldom rapid enough to correspond to the pace of capital accumulation,though impoverishmentmay definitely be seen as a tendency within capitalism to resolve the problem created by the difficulty in convertingsurplusvalue into capital. At this point we shouldpauseto considerhow Rosa Luxemburg's critics met her fundamentalargumentthat capitalaccumulationwas not possible in a pure, closed capitalist economy. When her book The Accumulation of Capitalwas publishedin Germanin 1913, there was perhapsa considerable degreeof genuineindignationin the ranks of Germanand AustrianSocial Democracythat she should in this


mannerhave venturedto criticiseMarx and questionedthe viability

of his theory of capital accumulation. Criticisms, therefore, flowed almost in flood; but beyond the assertion that Marx had already explained everything, there seems to have been little close scrutiny of her puzzle. To judge from Rosa Luxemburg's own responses to this criticism, it emerges that the main thrust was that while additional variable capital came from additional population (this especially in Bauer), the constant part of capital was enlarged by the capital goods produced as part of the surplus product, though the capitalists remained their buyers. In other words, the capitalists provided their own market.9 In these arguments, the critics tended to shift the discussion from Luxemburg's model of the capitalist economy as a whole to hypothetical cases of individual capitalists.10 If we keep to the entire economy as a single unit, what the critics' position meant was that capitalists buy capital goods in order to go on accumulating capital, without bothering either to replace the value of investment or to realize profits which could necessarily come ultimately only out of sales of consumer goods (Department II). It is as if capital accumulation gets entirely lost in the "roundabout production" that the Austrian economist Bohm-Bawerk had spoken of. Faced with such an argument, it was natural for Luxemburg to ask: "So... gross social capital continually realizes an aggregate profit in money-form, which must continually grow for gross accumulation to take place. Now, how can the amount grow if its component parts are always circulating from one pocket to another [i.e. merely from one capitalist to another]"?11Clearly, no surplus value could accrue on the original investment for the capitalist class as a whole if capitalists just went on paying each other in Department I (capital goods sector).'2 If after a long period of such continuous circulation, the ultimate product was sold to Department II (consumer goods sector), it would encounter the same problem we began with, namely how it could be paid for when workers who buy consumer goods do so only out of the wages they receive from the capitalists while the other buyers of consumer goods are the capitalists themselves. In other words, we have again to conceive of capitalist profits as coming out of the resources of the capitalists themselves! If, there could, then, be no addition to the surplus merely by the capitalists' selling to each other, why should capitalists at all divert their surplus from consumption to capital investment? This is surely, again, a fair question, and Rosa Luxemburg asked it in her criticism of the Russian economist Tugan Baranovski: Could the capitalists be


interestedin just "productionfor production's sake" and not profit, which, after all, is what the extraction of the surplus value is all

Whenin 1924 Nikolai Bukharin, then a majortheoreticianof the Soviet CommunistParty,took up his pen to refuteRosa Luxemburg, this was roughlythe state of the debate on what we have called the Puzzle.In his pamphlet and the Accumulation Luxemburg Imperialism Bukharin strikes a stridentlypolemical tone with much of Capital, use of sarcasm,which does not quite square up with his claims to holding Rosa Luxemburgin high respectas a revolutionarythinker and fighter.14 Todaythis would appearto be a minorblemish,if it did not divert one's attention constantly away from the main theme towards merelyminor and inconsequential skirmishes. Withoutmakingany reference to Bauerand otherpreviouscritics of Rosa Luxemburg, Bukharin firstseeminglyendorsestheirposition that accumulation can occurif capitalistssimplygo on sellingto each other. He showers much ridiculeon Rosa Luxemburgfor confusing "the subjective aim" for profit of individual capitalists with the objectiveprocessof capitalaccumulation.However,when he himself appeals to Marx for support, we find the latter quite explicitly speaking of the subjective aim of the individual capitalist for accumulation."5 What Bukharin seems to forget is that an individual however cannot have accumulation without capitalist, miserly, and the class as a whole, however much realizing profit; capitalist weddedit may be to capitalaccumulation, cannot haveaccumulation without realizingsurplusvalue. Bukharin does not pursuehis premiseto what shouldbe its logical implication:the capitalistscreate surplus by themselvesin order to generate capital accumulation.He must surely have realized that such a conclusioncould hardlybe sustainedwithin the frameworkof Marxisttheory.He, therefore, offersus what is, at firstsight,a variant of Bauer'spopulation thesis. A part of the surplus, in the form of consumergoods, becomesavailablefor meetingthe effectivedemand generatedby a correspondingadditionof variablecapital in moneyform (wages), and this amount receivedby other capitalistshelps to find a marketfor constantcapital.16If, to use Bukharin's phrase,there was possibly a vast "accumulation of errorsand contradictions"in Luxemburg,his own simple solution too is replete with them. In physical form the surplus could either be capital goods and so a possible materialformof constantcapital;or consumergoods and so a possible source of variable capital. Once it had taken the latter


form, the circuit was completedwnen the additionalworkers hired by capitalists of Department I purchased consumer goods by of Department the wagestheyhad received fromcapitalists exhausting I. No constantcapital (in the form of capitalgoods) could be created by the sole use of the additional wage-labour by capitalists of DepartmentI unless additionalconstantcapital was also alreadyor simultaneouslycreated.As we have noted, Marx was fully aware of and speaksas if this; but Bukharin ignoresthis essentialprerequisite, workers can createconstantcapital (machinery, fuel, electricpower, etc.) with their bare hands. If such were indeed the case, we should expect that all that the capitalists need do is to use up the surplus (i.e. convertthe surplus they wish to re-investin hiringlabour-power value into variablecapital);and the constant capital (capitalgoods) would thereupon be produced by the application of such variable capital alone. The only troubleis that we will, then, have to assume that suchconstantcapitalis producedoutsidethe capitalisteconomy, since the existenceof constantcapital, along with the variable,is an essentialelementof all capitalistproduction.It may be that Bukharin has thus inadvertantly admitted, for the wrong reason, that accumulationof capitalcannottake placewithin an economystrictly confined to the capitalistmode of production! herefor one findsPaulSweezy One can, however, excuseBukharin in his majorwork The Theoryof CapitalistDevelopment,employing the same argument to dismiss the LuxemburgPuzzle: "Actually accumulationtypicallyinvolvesaddingto variablecapital,and when this additionalvariablecapital is spent by workers it realizesa part of the surplus value which has the physical form of consumption Here he stops:pray,what aboutconstantcapital?And how goods."17 does accumulationtake place if additionalworkersmerelyconsume It is no wonder a partof the surplusto "realize" theirmoney-wages? that "Rosa Luxemburgdid not understandthis;" his position is, indeed, less easy to understand than even Bukharin'sattempted solution, for Bukharin,at least, tried to show that constant capital would also be createdalongsidethe variable. Finally,we have Joan Robinson'streatmentof the Luxemburg puzzle. It is interestingin that she triesto set her argumentwithin the frameworkof conventionaleconomictheory.To her,therefore,what Luxemburgis saying amounts essentially to this: "Investmentcan take place in an ever-accumulatingstock of capital only if the capitalists are assured of an ever-expandingmarket for the goods which the capital will produce.""8 So worded, this bare summary



seems to take the heart out of Luxemburg's main thesis which was not rooted in a concern for investment but in hostility to the exploitativenatureof capital. However,Robinsondoes see the great merit of Rosa Luxemburgin showing that the growth of capitalism of ('capitalaccumulation')restson its exploitationand undermining the non-capitalisteconomies amidst which it has grown and which turninto the victimsof Imperialism.19 It is time, therefore,to consider what Luxemburg's own solution to her puzzle is, and how far this can be accepted. cannot be explainedby Having arguedthat capitalaccumulation model which the treats any capitalist economy in isolation, solution the to Luxemburg's puzzle consists essentially in rejecting such isolation. Since the surplus-value set aside for providing additional capital cannot be realized through the sale of the correspondingsurplus-producteither to capitalists or to workers within the limits of the capitalist economy, it must involve factors outside the capitalisteconomy.The realizationof the surplusvalue, then,
"requiresas its prime condition- ignoring, for simplicity'ssake, the fundof consumption - that thereshouldbe strata capitalists' altogether of buyers outside capitalistsociety. Buyers,it should be noted, not sincethe material formof the surplus valueis quiteirrelevant consumers, to its realization.The decisivefact is that the surplusvalue cannot be realizedby sale eitherto workersor to capitalists,but only if it is sold to such social organisations or strata,whose own mode of production is not capitalistic."20 that the external "buyers" of the surplus necessarily belong only to foreign countries, nor is she thinking in terms of normal exports. To attribute an assumption of this kind to her, and, then, to argue that no fundamental alteration in the basic puzzle accrues because value cannot be enlarged or realized by foreign trade (which supposedly involves exchange of goods of equal value) is to misunderstand Luxemburg's argument altogether.21 Given Luxemburg's basic statement and her own elaboration of we can see that the non-capitalist sectors can be both within the it, country whose capitalist economy we are studying, as well as abroad. World-wide, we can consider a single capitalist economy and a single non-capitalist environment existing side by side.22Proceeding from

It would be noticed that nowhere does Rosa Luxemburgimply



Luxemburg's statement we have quoted, we can see that the relationshipbetween the capitalist and non-capitalistsectors may, II.Insteadof all the wagefirstly,involveonly productsof Department consumer which are goods (i.e. purchasedby workers from goods theirwages) beingfurnishedby Department IIof the capitalistsector, a large portion of it may be importedfrom the non-capitalistsector, where such are producedunder"the petty mode of production"(i.e. In return,the non-capitalistsector may by peasantsand artisans).23 receive consumergoods producedby DepartmentII. We may thus consider the supply of wheat by peasants to meet the demand of industrial workers as consumers in return for industrially France.What such manufacturedcloth in, say, nineteenth-century of the workers does is the subsistence-costs to exchange merely keep workers out of at a lower level (the alternativeof feeding French wheat producedby Britishcapitalistagriculture mightnot be adopted because the latter would be more simply expensive) This may be importantfor capitalistaccumulationby reducingthe relativesize of variable capital and so enabling a shift to constant capital to take place, much in the manner that a further impoverishmentof the workingclass mightotherwisemakepossible(for which see PartI of this essay). It has no direct role to play in the realization of the surplus. It is such capitalist products as represent the surplus earmarkedfor investmentwhich alone can complete the circuit of Thismeans sector. accumulation throughtheirsalein the non-capitalist that in the exchangeswith the non-capitalisteconomies or sectors it is only a portion of capitalist 'exports'that would help achieve the realizationof surplus-value.24 Such would be that part of the capitalist economy's'exports' as exchanges for raw materialsor semi-processedgoods, usable as machinesin Englandmightneed constantcapital.Nineteenth-century seed-oils from India in order to work, just as the English textile industrydrew on Indiancotton and indigo.Thus 'imports'from noncapitalistsectorsor economiescould add to constantcapital in both DepartmentsI and II. (We may note that while within an isolated capitalist economy there could be no raw-materialcomponent of constant capital, as noted in Part I of this essay, the case would be sector otherwisewhena raw-material is imported froma non-capitalist or economy.) It is, of course,not possibleto identifywhichparticular commodity exported from the capitalist economy falls to the realm of the "realized" surplus.The valueof eachcommoditywould havea wage-



but when we are replacement as well as a surplus component;25 of the as we can legitimately capitalist economy a whole, speaking assumethatonly a partof the proceeds of the saleof capitalist'exports' in the aggregatewould representthe surplusvalue that is converted into capital. The argumentthat both Bukharin and Sweezyhaveurgedagainst sucha processof realization of surplusvaluemustnow be confronted. Bukharin,as we have seen, assumes the exchanges to be those of foreign trade, but this does not for that reason invalidate his objection.26 Sweezyputs the same objectionsuccinctlywhen he says: "It is not possible to sell to non-capitalistconsumerswithout also buyingfromthem.... Who is to buy the commodities'imported'from the non-capitalistenvironment? If therecould have been, as a matter of principle,no demandfor the 'exported'commodities,therecan be just as little a demandfor the 'imported'commodities."27 This objection would be insurmountable if on both sides of the there were economies of exchanges capitalist equal degreesof purity (i.e. capital intensity);but with one side consistingof a non-capitalist sector, the exchanges assume a different form. This is essentially because while productivitycontinuously advances in the capitalist one. From economy,it remainsrelatively stagnantin the non-capitalist this an inequalityin exchangeresults,which Marx duly noted in two In such exchanges"in so far as the labourof the seminal passages.28 more advancedcountryis hererealizedas labourof a higherspecific weight, the rate of profit rises, because labour which has not been He puts it slightly paid as beingof a higherqualityis sold as such."29 in the andgain within second he where "Loss differently says: passage, a singlecountrycanceleach otherout. Butnot so with tradebetween different countries. And even according to Ricardo'stheory, three daysof labourof one countrycan be exchanged againstone of another country a point not noted by Say.Here the law of value undergoes essential modification....In this case, the richercountryexploits the poorer one, even when the latter [too] gains by the exchange.... 30 What Marx says about trade between an advanced or richer country (that is, one with a higherdegreeof capitalistdevelopment) and a backwardor poorerone (with a strongernon-capitalistsector) must applygenerally,and with equal force, to all exchangesbetween the capitalist and non-capitalistsectors. The products of capitalist sectors embody a progressivelylower amount of labour time than those of the non-capitalistsectorswith which these exchangeat par. This happenswithin the samecountrybecausethe mobilityof labour



between the two sectors (capitalist and non-capitalist) is always imperfect(peasantsand artisansdo not immediatelyjoin the ranks of labourersdespite lower returnsfrom their own products)so that productivityin the capitalistsectorcontinuesto grow at a pace much more rapidthan in the non-capitalistsector. The role of higher productivitycan be best seen when certain products of the two sectors (capitalistand non-capitalist)compete with each other.The classichistoricalexampleis textiles.The modern - the leadingsectorin the English Revolution Industrial cotton industry - first producedyarn which put handspunyarn out of the market, and then cloth which threw weavers into the streets. If this was accomplished in England largely by 1800, the same process was extended to India in the nineteenthcentury,with Englishmill-cloth largely replacing Indian home-made cloth.31 In exchange for its products, both those that compete with those of non-capitalist sectorcannotproduce, economiesand otherswhichthe non-capitalist the capitalist industry itself requires in return products that for technical reasons it cannot produce at all, or can only produce at very high costs. This happens because peasant agriculture often succeeds in producingfood crops (wage-goods) and raw materials (componentsof variablecapital) at lower costs since it can sustain itself with very low returns.32 Or, again, becauseclimaticallycertain food crops and raw materialsmay be producedonly where peasant agricultureprevails,as was the case in the nineteenthcenturywith rice, sugar,cotton (outside of the slave plantations of West Indies andthe UnitedStates),oilseeds,jute,etc. In all suchcasesthe exchange continues to bear the characternoted by Marx: goods embodying smaller and smaller inputs of labour from the capitalist countries secure in exchange goods embodying larger and larger labour component. Capitalism thus continually secured from the noncapitalist sector, out of the same expenditureof variablecapital, a thatconstituted, growingsupplyof both food cropsandraw materials in turn, an influx of both variablecapital(wagegoods beingsupplied to it over and above the variablecapitalpreviouslyexistingwithin it) and constant capital, typically in the form of raw materials, oils, etc.33 The exchange between capitalist and non-capitalisteconomies thus appearsonly formallyto be an exchangeof values at par;there could be a steady extra extraction of goods that have the potential material form of additional variable and constant capital, thereby enablingaccumulationin the capitalisteconomy to take place at an



increasingtempo. Suchextractionmightoccur even when, owing to a relative decline in prices of industrialgoods, the terms of trade moved in favour of agriculture(as in the late nineteenthcentury), volumeof industrial sinceowingto the larger goods sold, the quantities of goods received from the non-capitalisteconomies continued to
increase. 34

If we go still earlierand turnto the actualhistoryof capitalismin stillmoreclearlythataccumulation its initialphase,we can see perhaps could not have taken place except by exploiting the non-capitalist market. Let us imagine Western Europe before 1800, when the capitalist sector barely comprisedthe iron and steel industry,coal mines and textile industry. Could any capital accumulation have occurred,had the capitalistsand workers(howeverbroadlythe two classesmaybe defined)formedthe sole marketforcapitalistproducts? Laterin the nineteenthcentury,the expandingcolonies of England, the westwardexpansionof farmingin the UnitedStates,the internal peasant economies in Germany,Franceand Russia, all constituted large 'external'marketsfor capitalism, Rosa Luxemburgdescribed in her Accumulationof Capital how this essentially non-capitalist marketwas made to serve as the means by which the surplusvalue produced by workers in the capitalist economies was realized and could be convertedinto capital. criticshave not deniedthe existenceof such a nonLuxemburg's this market capitalistmarket,but to most of them, such as Bukharin, (termed 'third persons', being formed by neither capitalists nor workers) served quite a different purpose. As Bukharin puts it: "Capitalismcould veryeasily exist without 'thirdpersons'.But once 'thirdpersons'are there,capitalstrivesnecessarilyto eat them up, as The obvious contradiction such a meal bringsin a surplusprofit."35 between "could"and "necessarily" (both with Bukharin's emphasis) is quite clear:Colonies the thrust his statement of notwithstanding, and the peasantryare only incidentalto the growthof capitalismand capital accumulation,which could "every easily" have progressed without them. As for the word "surplusprofit", used by Bukharin,it is a term used by Marx, for what extra gain capitalistsobtain out of colonial In Marx'sview, its functionin tradeor tradewith poorercountries.36 capital accumulation,is that of providingcapitalismwith one of the escape routes from the falling rate of profit, itself a consequenceof accumulation(which increasesthe size of capital) and competition (which reducesthe profit per unit of product).Thereare clearlytwo



ways in which the escape from decliningprofitscan be securedfrom "foreigntrade."One is that,with the rateof profitfallingin a capitalsaturatedcountry,capitalmovesto anothercountrywherethe supply of capital being still inadequate,a higherrate of profit is obtainable. Such a transferof capital is at par with inter-sectoralmobility of capitalwithin the capitalistcountryand is an obvious explanationof why capital moves from one heavily industrializedcountry to one less industrialized.The second lies in the nature of exchanges that Marx describesin the passagesalreadyquoted:capitalist products, with lower labourinputs,exchangewith productsof largerinputsof labour.37 Surely,both Bukharinand Sweezy should have ponderedas to how when in such foreign trade goods exchange at par under conditions of competition, extra profits can still be earned (and so additions made to surplusvalue), the same transactionscannot, in their opinion, lead to the realizationof surplusvalue in the manner suggested by Rosa Luxemburg. We have tried to show that the exchangecan indeedlead to such a consequencebecausethe relative increase in productivityin the capitalist economy is a continuous process,so that the extractionof resourcesfrom the non-capitalistor less developedeconomies is a processas inevitablein the long-term as that of the falling rate of profit, and links up with the concept of UnequalExchange,which manyeconomistswere so concernedwith till the other day and, some, perhaps,still are.38 saw the exploitationof the non-capitalisteconomies Luxemburg for the purposes of accumulationas bearing a dual by capitalism character:on the one hand, the marketthat these economiesoffered on the other, to capitalismsustained continuouscapitalaccumulation; these economies were themselvesunderminedand prized open for Marx had noted that capital could move to capitalist intrusion.39 colonies and secure an extra profit by use of precapitalistforms of control over labour:"capitalsinvestedin colonies... mayyield higher rates of profit for the simple reason that the rate of profit is higher theredue to backwarddevelopment,and likewisethe exploitationof labour, because of the use of slaves, coolies, etc."40Luxemburg describedthe combination of capitalist penetrationwith repressive methodsof all kinds,includingmilitaryaction andcolonialconquest, market all seekingto bringaboutthe subjugation of the non-capitalist the and of the ("introduction implantation commodity economy") of capitalist production.41 To Luxemburg,the duality had its own contradictionfor capitalism:as the capitalisteconomy extends, the



non-capitalistenvironmentbecomessmallerand smaller,so that the problem of capital accumulationbecomes all the time more acute. This was reflectedin the rise of Imperialism, which Luxemburg saw as "the of the accumulation of essentially politicalexpression capital in its competitive struggle for what remains still open of the nonHowever, Imperialismcould not sweep capitalist environment."42 the inherent contradictions of the situation,how muchviolence away and misery it might cause. The ultimate prospect was "a string of political and social disasters and convulsions, and under these or crises, conditions,punctuated by periodicaleconomiccatastrophes
accumulation can go on no longer."43

No words of Rosa Luxemburg's have been hurledmore against her than these last six italicised by us. Hers, it has been said again and again, is a theory of an ultimate automatic breakdown of dismissesit as "thetheoryof capitalistcollapse", capitalism.Bukharin which is an exercise in "economic determinism",and is "simply false."44 Her words on the breakdowntowardswhich capitalismwas overshadowed for her critics her own hope expressedin the moving very next passage, that "even before this naturaleconomic impasse of capital'sown creatingis properlyreached,it becomes a necessity for the international working class to revolt against the rule of capital."4sThat she laid down her own life in 1919, fighting for Socialism,and becameone of Communism's great martyrs,is proof that she herself had no intention of enough waiting for the inevitable can go on no longer."But this too does not day that "accumulation mean that she was right in her predictionof an ultimate capitalist breakdownby the workingof its own spontaneousprocesses.

It is legitimate to ask,now thatwe havethe advantage of hindsight, with ninety years having passed since Luxemburg wrote her Accumulation,whether the prospect of collapse she laid out for a hypotheticallyunhindered capitalismnecessarilyfollowed from even her own basic thesis. This is, perhaps, because not having set her conception of the realizationof surplusvalue in terms of the varied ratesof the growth of productivity in the capitalistand non-capitalist she omits to consider the impact of the uneven economies, developmentof capitalismon the processof capital accumulation. That all thingschange,butchangeunevenly, is a self-evident truth, often called the law of uneven developmentin Marxist discourse.46 But it is not necessarilya law of miscellaneousness. Any unevenness



in change also tends to form patterns,linking every particularform the capitalist of varianceto a moregeneralmovement.47 Accordingly, mode of production, from the contradictions it generates or encounters,assumesparticularforms of unevenness.One of these is in respect of the degrees of what Marx called "concentrationof capital" - which means,essentially,the continuousexpansion of the share of means of production(constantcapital) in the total amount of capital at the expense of the labour-poweremployed (variable capital);this is a directconsequenceof the increasingproductivityof labour in modernindustry.48 As capitalisminitiallydevelopsit tends to take over those sectors on the fringes of the capitalist industry, where production is not mechanized, and where, therefore, the productivity is still low. Marx showed how in such "domestic industries",the exploitation of labourreachedextremeforms. Such exploitation would go on until at last owing to its low productivity the expandingdemandof the marketcould not be met and the hour would strike for the advent of machineryin one such sector after another.Yet at the same time a new domestic industryor another In a manner would be createdby some new gap in mechanization.49 this also typifies the relationshipbetween different sectors of the and,therefore, capitalisteconomy,wherethe degreeof mechanization the concentrationof capitalvariesfromone another.The same kinds of difference in productivitywould extend to countries owing to differentdegreesof capitalconcentration amongthem.The prevailing most advanced capitalist country would be the one where the concentrationis highestand labourproductivitythe greatest,and so a hierarchyof capitalisteconomies is established.The lowest ranks in such hierarchyare occupied in what in yesteryearwas called the ThirdWorld,and now, quiteoften in journalistic parlance,the South, the immense ex-colonial sphere containing the bulk of the world's population - shall we now call it the 'Unequal'World?With every stride in technological innovation, growing labour productivityin the distancefurther countries with highcapital-concentration increases and furtherbetween the 'metropolitan'countries,on the one hand, and the so-called 'developing' countries (that is, countries with 50 developingbut more primitivecapitalisteconomies),on the other. Gunder Frankin an acute phrase defined the entire process as the Development of Underdevelopment. Others have designated it UnequalDevelopment.51 environment One can see thatthe penetration of the non-capitalist by capitalismhas proceededmuch in the way that Rosa Luxemburg



had predicted.There has been a continuousgrowth in the export of countries.A recentglobalestimateputs foreign capitalto 'developing' capital stock in termsof developingcountries'GDP at 4.4 percentin 1973 and 21.7 in 1998.52 And therehas been, at the sametime much indigenousgenerationof capital as well within the previouslynoncapitalist world. Yet, despite many crises of severemagnitudethere has been no end to capital accumulation. In many ways, as A. Emmanuel in its laterstages has pointedout, the capitalistpenetration has taken forms very differentfrom those of the nineteenthcentury. The ex-colonialcountriesareno longerjustsimpleproducers of food and raw been there several have established industries materials; crops or evenseemingly transferred to themfromthe metropolitan countries. BritainandJapan,whose earlyindustrialization was centredon textile have abandoned the to countrieslike India textile production, industry and China. Petroleumextraction and refining takes place in West Asian countries often with a state-of-the-art technology. The countriesthemselves metropolitan appearto shiftto still morecapitalintensiveindustries, I where moreand morebelongingto Department labourproductivity is still higher, while leavingthe branches requiring lowercapitalintensityandlowerproductivity to lower-grade capitalist countries. (The contracting-outof low-capital intensity sectors of electronic and computerindustriesto Third-World countries offers an instructiveexample.)Sucha divisionmay also happenwithin each capitalistcountryamong differentsectors, as is very apparentin the case of many Third-Worldpetroleum producing countries, which industriesco-existingwith the highly generallyhave labour-intensive capital-intensive petroleumcomplexes. The resultingsituationis that any industrywhich shifts from the metropolitancountriesto the ThirdWorldimmediatelyencountersa fall in prices, while those new ones that are developed in the metropolitancountriesset very high pricesfor their productswhich the ThirdWorldhas to pay.Thusthe termsof tradenow move all the time against productsof the ThirdWorld.53 Sincetheir productivity is very high in terms of prices of products of the metropolitan countries, the wages the workers of the latter countriesreceive are also very high in relation to wages in the ThirdWorldcountries. It has seemed, therefore, even to so perceptive an economist as A. Emmanuelthat it is the wage differentialswhich sustain the high pricesof the metropolitan productsandso causethe exchangebetween the two worlds to be unequal.He arguesthat wages "constitutethe But it is surelythe converse: independentvariablesof the system."54



enableshigherwages to be paid, especiallywhen, higherproductivity despite the high wages, the variablecapital continuallycontractsin relation to the constantpart of capital. One may,then, refineRosa Luxemburg's thesis to incorporatean essentialmodification. As capitalism expands,its unevendevelopment allows the more capital-intensivesectors (and countries) to realise their surplus-valuesfor conversion into capital by exchanges with sectors or economies of lower capital-intensityand thus of lower andinternational, As a result,we see a hierarchy, internal productivity. of levels at which the processof capitalistexploitationproceeds.The division between the more advancedcapitalist countries (the First World) and the backwardones (the Third World) is obviously the most marked; but within both the worlds there, again, exists a hierarchywith divisions betweensectorsand countries. Here one sees again the remarkableperspicacityof Karl Marx, when he obviously includedcapitalisteconomies at a lower stage of developmentas those from which surplusprofits might be drawn. We may recall that he had spoken of a "higherrate of profit" being drawn through foreign trade, when "there is competition with commodities produced in other countrieswith inferior production facilities, so that the more advancedcountry sells its goods above their value..."55 The words are so framedthat the propercompetitor could also be a capitalist country,but with "inferior",that is less capital-intensive production.The advantagegained by the advanced would applyto exchangeswith the countryfrom higherproductivity and countries at a lower of both countries products non-capitalist of such In all cases,the unequalexchange stage capitalistdevelopment. arisesout of a constantlyintensifying monopolysituationin the world market, where "centralised"capital of the First World exercises complete domination over the smaller,dispersedproducersof the Third. The strikingway in which the unequalexchangemanifestsitself in the monetary sphere is to be seen in the overvaluation of the currenciesof the advancedcapitalistcountries,like the dollar,Euro, etc., in relation to the Third-worldcurrencies,such as the yuan or rupee, in world currency markets, when set against the actual The GDPof a numberof Asian purchasing powerof thesecurrencies. raised countries,notablyChinaand India,has had to be substantially in official internationalestimatesonce these estimates shifted from PowerParity)as the basis currentexchangeratesto PPP(Purchasing into those in US Dollars. of convertingfiguresin domesticcurrencies



nations must lose in realtermsin international Clearly,Third-World commercial transactions so long as the market currency rates influencedby the heavy demandfor, say, Dollar or Euro, to pay for high-pricedgoods from the FirstWorld, divergesubstantiallyfrom the real (i.e. purchasing-power parity)rates. We have here simply a monetaryreflectionof the unequalexchangethat Marxhad presented of value. in terms of the labour-theory One can now returnto Rosa Luxemburg. Obviouslyby ignoring the unevendegreesof developmentwithin capitalism,just as we did in Parts I and II of this essay (though for the sake of simplicity of environment as the non-capitalist she ignoreda possibility: treatment), on went too was subjugatedand undermined, alteringits capitalism inner structureby intensifyingthe concentrationof capital in the with comparatively countriesand shiftingthe industries metropolitan Sucha processby to the outer areas lower productivity ('periphery'). no means dispenses with imperialism,but rather places its source more and more strongly in the countries that attain the highest capitalisticdevelopment.Amongthese the UnitedStatesis today in a pre-eminentposition both by size and by the high degreeof capital accumulation. It is, therefore, also today the principal imperialist highwages,to which Emmanuel power.At the sametimethe relatively draws our attention,are a majorsourceof economismand trendsof political passivitywithin the workingclass movementsof the major metropolitancountries. How far the economic structurehas been affected by political processes (class struggles), such as the socialist revolutions and nationalliberationmovementsof the twentiethcentury,need also to be studied. There are no economic laws independentof the class After World War II it struggle, as Samir Amin says somewhere.56 becameimpossiblefor Imperialism to controlcolonies and dependent countries through direct political rule, and some of the industrial developmentof the Third World took place despite the wishes of (e.g. the WesternPowers'attitudetowardsIndia'seffort Imperialism to industrialisethrough building the Public Sector and erecting a with some industriesshifting systemof protection).The adjustments to the Third World were partly necessitatedby the new reality of economicdevelopmentin largepartsof the ThirdWorld independent - a factor reinforced by the existence of the socialist world. The demolition of socialism in the USSR and eastern Europe has and we undoubtedlybeen one of the great triumphsof Imperialism, structureof capitalism are in a situationwheregiven the hierarchical



on the world-scale,the USA and its metropolitanallies, formingthe apex, are both economically and politically dominant in an What this essay has aimedat showing is that manner. unprecedented such dominance,wherebythe ThirdWorldis confinedto the labourintensive industries, is essential for the continuing prosperity of metropolitan capitalism. During the 1990's the US celebrated its position as the sole superpowerby runningup a deficit of foreign assets from about nil in 1988 to $1.5 trillion, or 20 per cent. of its GDP,by 1998, so that the outside world was made to sustain such This dependenceon elements of boom as existed in its economy.57 the outside world may also explain its extreme sensitivity to any challenge to its political and economic dominance.The US-British invasionof Iraq (2003) probablyheraldsthe inaugurationof a fresh aggressivephase of imperialismthat the ThirdWorldwill now have to confront.58It may also mark the beginningof inter-imperialist tensions at the apex as well. 59 There is all the reason, therefore,for us to try to understandthe natureof capitalaccumulation today,andto assesshow contradictions within capitalism can develop given the hierarchy that has been established,with conflicts of interestarising between the more and There the structure. the lessadvanced sectorsandcountries throughout also remainsthe majorcontradictionbetweenImperialism (basedon the of the interests and working class metropolitan capitalism) of capitalism breakdown throughoutthe world. Therewill not be any by its own weight;but thereis no economiclaw to tell us that people will neverawakenenoughto returnto the fight nationalfor freedom and socialism.

NOTES 1. Rosa Luxemburg herself summarises her statement of the problem in The Accumulation of Capital, English translation by A. Schwarzschild, London, 1951 (hereafter cited as Accumulation), pp.351-53, and in The Accumulation of Capital - an Anti-critique, ed. K.J. Tarbuck, English transl. by R. Wichmann, New York, 1972 (hereafter cited as Anti-critique), pp.48-61. I state in my text the substance of her argument, but with a certain amount of reformulation. This needs to be specifically stated since, contrary to Joan Robinson's supposition in her Introduction to Accumulation, pp.16-17, it is immaterial for Luxemburg's argument whether there is or is not full capital mobility between the capital-goods and consumer-goods sectors, since she is dealing not with money-transfers, but with material forms of capital.




3. One sees here a complication that arises when proper distinction is not maintainedbetweenthe individualfirm and the entire capitalisteconomy. What is raw materialto one firm may be finished product to another.So we aredealingwith an isolatedcapitalist economy, long as, by our assumption, we must assume that raw materialsare producedwithin it entirely by the capitalistmode, and thus includein their value both variableand constant capital. and the Accumulation 4. It is ratherunfairof Nikolai Bukharin,Imperialism New York,1972 (hereafter, transl.R. Wichmann, of Capital,ed. K.J.Tarbuck, excludes and Accumulation), p.166, to saythat RosaLuxemburg Imperialism extendedreproductionby her very premisesand thus commits "the simple assumes On the contrary, of a simplelogicalerror." Luxemburg reproduction the existence of extended reproduction and then asks whether capital to just the two classes can take place if the marketis restricted accumulation of capitalistsand workers. 5. SeeMarx'sstatementin Capital,Vol.I,Moore-Aveling transl.,ed. Dona Torr, London, 1938, p.594: "It is only necessaryfor capital to incorporatethis additionallabour-power annuallysuppliedby the workingclassin the shape of labourersof all ages, with the surplusmeansof productioncomprisedin the annual produce, and the conversion of surplus value into capital is complete"(ouremphasis).(Thisquotationwill be found also in Luxemburg, Accumulation,pp.360-61). By unitingthe additionalvariablecapital with the former Marxpredicates of production"), additional capitalgoods ("means elementin does not seemto note this particular upon the latter.Luxemburg in his critiqueof Rosa Luxemburg Marx'sexposition;and Nikolai Bukharin on this point (Imperialismand Accumulation, pp.176-7) also misses it altogether.See furtheron, below. 6. One has also to considerhere anotherobjection to this: Is it possible that increasein mustlargelydependon a corresponding "capitalistaccumulation the workers' standardsof living?" (SayeraI. Habib, 'Rosa Luxemburg's to the MarxistTheoryof Imperialism', Contribution Politics,Delhi, Teaching XIII (3-4), p.25.) 7. This factorwas suggestedby Otto Bauer,the AustrianMarxisttheoretician, in his critique of Rosa Luxemburg; since I have no access to Bauer'sown original contribution to Neue Zeit, the journal of the German Social of his DemocraticParty,No.24 (1913), I relyon Luxemburg's recapitulation 'population theory' (Anti-Critique,pp.81-2, 107-35). Bauer was not as hereticalin his proposition as Luxemburgholds him to be. Luxemburg herself (Accumulation,p.360 n.) quotesfromMarx a passagethat contains the sameproposition in an embryonic form:it will be foundin Marx, Theories Publishers, Moscow, 1972, of SurplusValue,II,Englishtranslation. Progress populationappearsto be the basisof p.477. HereMarx says: "an increasing accumulationas a continuousprocess."The context makesit clearthat he is thinkingof variablecapital alone, sincehe goes on to considerthe question of accumulationof constantcapitalseparately, but at the level of individual capitalistsonly. the lot of the 8. "Itfollows thereforethat in proportionas capitalaccumulates, labourer,be his paymenthigh or low, must grow worse" (Marx, Capital,I, p.661).



9. 10.

See Anti-Critique, pp.65-74. This is noted by Luxemburg, Anti-critique, p.74. Her critics, she says, "simply look from the point of view of individual capitalists, which .... is totally insufficient where the circulation and reproduction of capital are concerned." 11. Anti-critique, p.73. 12. As Marx notes in Theories of Surplus Value, I (transl. Emile Burns), Progress Publishers, Moscow, 1975, p.272, capitalists "make no profit by selling 'to one another"' (Marx's emphasis). Or earlier: "surplus value cannot be created by circulation" (Capital, I, p.143). 13. Accumulation, pp.334-5. 14. For these remarks of appreciation, see Imperialismand Accumulation, pp.2656. 15. The quotation Bukharin gives'is to be found in Theories of Surplus Value, I, p.382. From where Bukharin ends the quotation, Marx goes on to say of the individual capitalist: "he is always enjoying wealth [when profligate] with a guilty conscience, with frugality and thrift at the back of his mind." One cannot get more "subjective" than this! Bukharin's own remarks are to be found in Imperialism and Accumulation, pp.162-69. 16. Imperialism and Accumulation, pp.174-6. 17. Paul M. Sweezy, The Theory of Capitalist Development: Principles of Marxian Political Economy, London, 1946, p.204. 18. Introduction to Accumulation, p.21. 19. See especially ibid., p.28, where Robinson concludes her Introduction with the words: "For all its confusion and exaggerations, this book shows more prescience than any orthodox contemporary could claim." 20. Accumulation, pp.351-2. 21. This is what Bukharin does in Imperialism and Accumulation, p.181. Sweezy follows Bukharin's line of argument, but avoids this pitfall and speaks simply of 'non-capitalist consumers' as the buyers (Theory of Capitalist Development, p.205). 22. Such an assumption has, however, its own dangers, since there is generally little mobility of labour between different capitalist countries, and even the mobility of capital is sometimes limited. We take up in Part III of this essay the problem of uneven development of capitalism, which must seriously modify the concept of a single world-wide capitalist economy. 23. For the "petty mode of production", see Marx, Capital, I, p.786-7. 24. This point is not explicitly made by Luxemburg, but is implicit in her analysis in Accumulation, pp.353-55. 25. Cf. Accumulation, p.353. 26. Imperialism and Accumulation, p.181. 27. Theory of Capitalist Development, p.205. 28. One remains beholden to Bukharin for locating both these passages and quoting them in Imperialism and Accumulation, pp.244-45. 29. Capital, III, English transl., Foreign Languages Publishing House, Moscow, 1959, p.232. 30. Theories of Surplus Value, III, English transl., Progress Publishers, Moscow, 1975, pp.105-6. 31. On this the material is extensive. I have commented on the discussion in I. Habib, Essays in Indian History - Towards a Marxist Perception, New Delhi, 1995, pp.45-48, 283-4, 319-22, 342-46.




There is much weight in A. Chayanov's thesis that peasant families tend to pursue labour until equilibrium is reached between drudergy and earning for consumption (cf. Basil Kerblay, 'Chayanov and the Theory of Peasantry as a Specific Type of Economy', in: Peasants and Peasant Societies, ed. Teodor

Shanin,Harmondsworth,1971, pp.150-60, esp. the quotation on pp.1523). If so, the peasant household would tend to meet rising rents or increasingly unfavourable returns from sale of produce by an intensification of labour, though this cannot naturally go beyond a point. These mainly constitute "the cheap elements of constant capital (that) are essential to the individual capitalist who strives to increase his rate of profit" (Accumulation, p.357). Cf. Sayera I. Habib, 'Rosa Luxemburg's Contribution to the Marxist theory of Imperialism' in Teaching Politics, XIII (3-4), 1987, p.24. According to a table in Michael Barratt Brown, Economics of Imperialism, Harmondsworth, 1974, p.251, while the unit value of the developed countries' manufacturing products rose between 1876-80 and 1913, in the ratio of only 98 to 100, the unit value of the primary products of underdeveloped countries rose in the ratio of 69 to 100, though there was a dip to 52 in 1896-1900. See, e.g., Bukharin, Imperialism and Accumulation, p.262. Capital, III, p.233. Capital, III, pp.232-3. In this passage, the transfer of capital for obtaining higher profit is given a secondary place. Arghiri Emmanuel, Unequal Exchange, New York, 1972 (being the English transl. of the original work published, 1969) presented the theory of Unequal Exchange outside the labour-theory-of-value framework; but his work undoubtedly represented a remarkable break-through. For a summary of his main propositions, see Andre Gunder Frank, Dependent Accumulation and Underdevelopment, New York, 1979, pp.103-09. One cannot think of a more comprehensive work on this relationship, especially with Asian countries included in the study, than Amiya Kumar Bagchi, The Political Economy of Underdevelopment, Cambridge, 1982. Capital, III, p.233. Accumulation, pp.348-418. Ibid., p.446. This is perhaps too narrow a definition of Imperialism, and is in line with the one given by Karl Kautsky, who saw Imperialism as "the striving of every industrial nation to bring under its control and annex increasingly big agrarian regions", a definition which Lenin condemned (Imperialism, the Highest Stage of Capitalism, Progress Publishers, Moscow, 1982, pp.85-89). Lenin argued that Imperialism also aimed at weakening or destroying rival capitalist powers and seizing capitalist countries. But see Sayera I. Habib, 'Rosa Luxemburg's Contribution to the Theory of Imperialism', op.cit., pp.26-7. Accumulation, p.467 (our emphasis). Imperialism and Accumulation, pp.258-61. Accumulation, p.467. For its implications see Louis Althusser, For Marx, English transl., Harmondsworth, 1969, pp.200-01 et seq. It is, I believe, in this sense that one can say with Mao Zedong that "the universality as well as the particularity of contradiction is inherent in



35. 36. 37. 38.


40. 41. 42.

43. 44. 45. 46. 47.




49. 50.

51. 52. 53.

54. 55. 56. 57.


everything"('On Contradiction',Selected Worksof Mao Tse-tung,Vol.1, Peking, 1967, p.329). See especially,Capital, I, p.641. The process of "concentration"is to be of capital (whichmost fromwhat Marx calls "centralization" distinguished economists today would call "concentration"), namely the absorption of smallerunits of capital into largerones (ibid., p.640). Capital,I, pp.469-480. hasrisenin termsof USDollarsat international The GDPperpersonemployed prices of 1990, from $11,551 in 1950 to $32,108 in 1998 in twelve West Europeancountries,and $23,615 in 1950 to $55,618 in 1998 in the United States. In India the increasehas been from $1,377 to $4,510 in the same but its GDPperpersonemployed better, period.Chinahas done substantially in was still from 1950 $ 1,297 just $6,181 in 1998. In otherwords the rising betweenUSAand Indiahas increasedfrom$22,238 per employed difference personin 1950 to $51,108 in 1998; in the case of China, the increasein the differenceis from $22,318 to $49,437! The distance in productivitythus (ThefiguresaretakenfromAngusMaddison,The World goes on lengthening. Paris,2001, pp.349-50.) Economy:a MillennialPerspective, Eg., SamirAmin, UnequalDevelopment,New York, 1976. Maddison, WorldEconomy,op.cit., p.128. The unit value of manufactured productsof developedcountries,set at 100 in 1913, was 275 in 1953 and 285 in 1967-68; that of primaryproductsof developingcountriesmovedfrom 100 in 1913, to just 163 in 1953 and 153 in 1967-68. The estimatedfiguresfor 1973 were respectively380 and 260. Brown,Economicsof Imperialism, (M. Barrat op.cit.,p.251). The continuous in termsof tradefor manufactures of the developingcountries improvement has enabled WesternEurope, USA, Canada, Australia and New Zealand Off-shoots")to maintaintheir share in World exports at above ("Western 60 per cent. (62.4 per cent. in 1950, 60.8 per cent. in 1973 and 61.2 per cent. in 1998), despitethe enormousexpansionin exports of manufactures from East Asia during the period (A. Maddison, WorldEconomy, op.cit., p.127.) and UnequalExchange,p.118. Cf. GunderFrank,DependentAccumulation Underdevelopment, pp.103-05, also pp.109-10, for criticismof this position and ChristianPalloix. by CharlesBethetheim Capital,III,p.232. I regretI have mislaid the reference,but see SamirAmin'sremarksin The Law of Valueand HistoricalMaterialism, New York, 1978, pp.11-12. By 1988 the United States' previouslyconsiderablenet foreign assets had dwindledto zero; thereafterits net foreign assets came down to a minus $ 1.5 trillion,by 1998 (AngusMaddison,The WorldEconomy,op.cit., p.135). The nature of this flow of wealth into the US needs to be examined:Is it because the amount of capital concentrationrequiredby US keeps all its capitalat home, and drawsin capital from outside, as well; or is it largelya fromthe restof the world,financing the largeconstant kindof tributepayment US tradedeficitarisingout of a heavyexcess of importsover exports?Either way the US is heavily dependent on the world outside, and this may particularlyexplain its shift to very aggressivepostures despite the end of the 'Cold War'. It is symptomaticof the brutalityof this new phase that membersof the




House of Commons in British Parliament should loudly cheer when on 4 April the British Defence Secretary Hoon affirmed US and British determination to go on using cluster-bombs against the resisting Iraqi army and population. The language that US President W. Bush and British Prime Minister Tony Blair have used would have undoubtedly been held to be rather unusual even in the great jingoistic age of colonialism a hundred years ago. The opposition of France, Germany and Russia to the US-British invasion is not entirely from pangs of conscience (though the popular sense of outrage must be allowed due weight); it also stems from important reservations about the US and Britain getting all the gains out of Iraq's immense oil resources. Such conflicts of interest are unlikely to disappear through mere acts of diplomacy.

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