Labor and other Aristocracies

Jose G. Perez jgperez at
Mon Feb 10 00:02:44 MST 2003

>>Some of the things I've read seem to point to the
relatively small role played by the colonies.<<

>> I think Lenin missed the mark, by a country,
or imperial, mile. <<

Leonard seems to be reducing the question of imperialist economic domination
and exploitation to direct investment and operations by corporations.

I do not believe this is correct. It leaves out of the equation some of the
main mechanisms through which Third World countries are looted for the
benefit of the Imperialist ruling classes. These include a) the terms of
trade; b) tariff, quota and similar policies and c) financial operations and
the sovereign and other debts of Third World countries; d) emigration.

The terms of trade and tariffs go together. Basically, third world countries
have to export ever-increasing amounts of raw materials and agricultural
commodities to pay for a given amount of products from the imperialist

At the time of the Cuban Revolution in 1959, for example, the world price of
sugar was about $.06/lb.  Today, 44 years later, it is about $.09/lb,
whereas the dollar today is worth something like 1/5th or less of what it
was worth then.

This low world market price is way below the cost of production anywhere and
everywhere in the world. Now you may look at that figure and say, why am I
paying so much at the supermarket? The answer is, it is illegal, a federal
offence, to import sugar at that price into the United States. The United
States, like Europe, like Russia and many others, protects its domestic
producers. In the U.S. market, as of the mid-80s when I did a detailed study
on this, the internal price for sugar (or equivalent sweetening from high
fructose corn syrup, if I remember the English terms right) was about 20
cents a lb. Strict quotas prohibited efficient sugar producers, especially
central american and caribbean countries, from exporting more than a set
amount to the United States.

Similar policies applied in the EU, except there prices were even higher.
The internal EU cost of production for sugar ranged from 40 to 60 cents a
pound. Worse, the ultra-subsidized EU sugar producers *dumped* their
surpluses on the "world market" with ruinous effect.

Now if México or Korea or someplace like that were selling
heavily-subsidized domestic steel production at 1/10th its cost of
production into the world market, this would immediately trigger economic
sanctions under "anti dumping" laws. Basically these laws try to prohibit
third world countries from liquidating excess inventories in the major
markets. Their effect is to gravely accentuate any crisis of overproduction
in a sector like steel in third world countries, by cutting them off from
the markets they normally sell to.

But monstrously subsidized sugar was being dumped into the world market by
the boatload by the Europeans.

The effect was to ruin the sugar industry in the most efficient producers,
notably the countries of central america and the caribbean, to protect the
ultra-inefficient producers in the imperialist countries.

This, BTW, is the *real* story behind soviet "subsidies" to Cuba. The main
subsidy was that the Soviets traded oil for sugar with Cuba at an implicit
price in the neighborhood of 50 cents a pound. This may sound very generous,
until you consider that every pound bought from Cuba was a pound the USSR
did not have to produce at an estimated cost of a dollar or more per pound.
The truth is it was an excellent deal -- for both sides. It may not seem
that way because it would seem the Soviets could buy that sugar on the
"world market" for less. But putting that demand into the world market would
have made the price of sugar increase, quite possibly to levels much higher
than the USSR was paying Cuba. The world market was very tiny, it did not
have the volume to readily absorb the demand, it would have been relatively
easy to manipulate, corner the market and so on. And of course the USSR has
political reasons for handling its trade the way it did.

But the sugar the USSR and other Comecon countries could not absorb Cuba was
forced to sell on the world market at a significant loss. And a certain
amount Cuba had to sell on that market at any rate, for it needed certain
imports from the dollar area of the world economy and it was basically one
of the few ways it could obtain dollars. And the price distortions in the
world sugar market are so extreme precisely because it was Cuba's major
export. The U.S. consciously worked to create a world market that was
basically a dumping ground for surpluses to harm Cuba.

Taken as a whole, if you average all the transactions, implicit prices in
trades, and so on, you'd come up with some sort of price for sugar on a
world scale, which would fluctuate around its value in the world market as a
whole. Let's say that value was 30 cents/lb. The difference between the real
value of sugar, 30 cents, and the price Cuba was forced to accept on the
world market, let's day 10 cents though it was less, represents a net
transfer of value from Cuba to the world imperialist system of 20 cents/lb.
Despite having their own state, Cuban workers were still being exploited by
the capitalists through the mechanisms of unequal exchange in the world

In addition to tariff and quotas, the imperialist countries use all sorts of
other mechanisms to place obstacles in the way of goods being exported to
the United States. For example, autos have to meet certain standards to be
imported. The windshield glass has to be a certain thickness, which, of
course, is just a silly millimeter thicker or thinner than required by the
EU or Japan, and so on.

The net result is that, when Germany was building Volkswagen beetles (the
original models), they could be imported to the U.S. But after 1970 or
whenever it was that VW abandoned that product line, U.S. standards were
tightened and the car was no longer importable. For a long time, beetles
continued to be manufactured in Mexico -- but those Mexican models couldn't
be imported into the U.S. without undergoing a whole series of costly
modifications (known as "federalization"). At the same time, for sales in
México and other countries, those modifications were unnecessary and would
have increased the cost of the car. There are also issues about the
particular tools and equipment needed to make the U.S.-spec parts, loss of
efficiency from having, in effect, two different models, etc. So even while
a market for used beetles flourished across the border, México couldn't sell
into that market with essentially a superior product: new beetles.

Various countries accuse imperialist countries of using many health and
safety standards as non-tariff barriers to trade. Certain livestock
diseases, for example, could be easily contained or eradicated with the use
of vaccines. But they are not, because trade regulations require that the
livestock from which imported meat or byproducts come not have antibodies to
the disease (supposedly to show they have not been infected). The lack of
vaccination, of course, leads to periodic outbreaks of the diseases,
effectively cutting off the U.S. and Europe as markets. There are extensive
requirements for documentation of certain sanitary and other conditions in
the case of imported produce and foodstuffs, requirements domestic producers
aren't required to meet or have much greater facility in fulfilling. For
agricultural producers in third world countries, the requirement cuts off
their commodities from markets where they could realize their value,
accentuating any local crisis of overproduction. At the same time, export
subsidies, intrernal price supports, marketing incentives and so on of the
major imperialist countries have the effect of concentrating the impact of
crisis of overproduction in the colonial and semicolonial countries. And if
these countries try to protect at leas their own narrow internal markets
from this dumping, the whole weight of imperialist sanctions and WTO rules
comes crashing down on them.

So the deteriorating terms of trade between the imperialist countries and
the third world countries aren't just a result of the operation of free
markets and other neo-liberal pieties, but also the calculated and intended
result of a whole series of state interventions to prevent markets from
operating as they would normally.

That is why it may seem like imperialism is investing less and less in the
colonial and semicolonial world in many branches of production, especially
raw materials and agricultural commodities. Having stacked the deck against
third world producers, the imperialist concerns are much more likely to step
into the market at the point at which the third world producer is forced to
dump the product at a price below its real value in the world market.

Normally, this would simply lead to people abandoning the production of that
commodity and turning to something else. But in many cases, there is nothing
else to turn to, especially where the peasantry is concerned. The result is
the ever-increasing pauperization of rural toilers throughout the third
world, and the vast migrations from the countryside into the major urban
centers of these countries that have characterized the last 50 years or so.

In addition, finance capital loots these countries quite thoroughly and
systematically through usury. These countries as a whole are put into
conditions of being debt slaves to the banks. Venal and corrupt banks make
loans to venal and corrupt politicians. Sometimes, these funds don't even
pass through the recipient country, going directly from the bank's ledgers
of its own assets into the amount on deposit with the self same bank of some
third-world dictator. When the country has difficulty making payments on the
loans, more loans are offered, with a snowball effect.

In ALL the advanced capitalist countries, it is well known and fully taken
into account in the laws that it is counterproductive to follow these
practices. Laws like the U.S. Chapter 11 allow enterprises that are over
their heads in debt to consolidate them and write them down based on their
ability to pay and continue to function, since outright liquidation would
offer the creditors even less on each dollar that has been loaned. But also,
a string of bankrptcies and liquidations, which would eventually break the
banks, too, are likely to lead to social revolution.

But for Third World countries, there is no Chapter 11. The debts keep
balooning until they produce a crisis. Then the IMF and World Bank step in
to see how much lower they can drive the standard of living of working
people in the victim countries. Even some capitalist financiers have started
to question how much longer what is essentially a ponzi scheme can be
expected to hold up: the banks are holding trillions of dollars in debts
that are getting serviced essentially by creating new debt. A sharp
contraction in the world economy may well put several important countries in
default, at which point the whole house of cards would collapse, they argue,
and quite cogently, too. In the meantime, the social and political
structures of some countries have begun to collapse and in a couple of cases
have done so altogether. The details vary; but the *essence* of the matter
is that so little social surplus is being allowed to remain in country that
it is insufficient to maintain the relatively more complex and expensive
structures of a capitalist state; instead, there is a return to pre-nation
phenomena like warlordism.

Sure, no imperialist company wants to invest in a region in such a
situation, or heading towards it. But it doesn't mean the toilers there
haven't been or aren't being exploited by imperialism through the mechanism
of the world market.

Finally, something should be said about emigration from the third world to
the imperialist countries. This represents a net transfer of value from the
third world to the metropolis, economically. The case that is most often
mentioned is that of the "brain drain," scientists, engineers, doctors,
nurses and other professionals, mostly raised and educated, if not
completely so, at the expense of some Third world nation.

But what is true of the rocket scientist like Costa Rican Franklin Chang
Diaz is also true of the also Costa Rican lady who holds the most menial job
at some NASA office, or anywhere else.

It is *expensive*, economically, to produce labor power in the United
States -- I've seen a figure of an average of $100,000/child to the age of
18. If anything, the figure seems low, for just the per-capita expenditures
in k-12 education are likely to be $70,000 or more, and if you add the cost
of capital, i.e., you just spent, say, $6,000 on kindergarten for Johnny but
Johnny isn't going to start "paying back" for 12 years, at least, the cost
has to be way MORE than $100,000 (at a 6% interest rate compounded, that
$6,000 kindergarten is going to be $12,000 when Johnny reaches the age of

The United States ruling class plays a charade on immigration. They
*pretend* they don't want so many immigrants, but in fact do little to stop
the flow. As of a few years ago, I don't know current figures, the border
with Mexico had 1500 border patrol officers. What the ruling class wants
isn't to get rid of the "illegals"  but precisely to keep them illegal. Not
content with getting ready-to-exploit labor power from Mexico and other
countries without the expense of having that labor power produced locally in
the United States, they want to make sure they can pay these workers even
less than other workers, thereby putting a downward pressure on the standard
of living of working people as a whole.

So to look at a more complete picture: through unequal terms of trade,
manipulation of markets, tariff and non-tariff barriers, they prevent third
world countries from realizing the full value of the goods they produce; and
on the contrary, often keep economic sectors in those countries from
expanding, or ruin them altogether. This means, of course, that these
countries have relatively less possibilities to accumulate capital than they
otherwise would have, and that the capital that they would have accumulated
instead winds up being accumulated in the imperialist centers. This leads to
"underdevelopment," and not enough jobs for the native population. Part of
that population is then forced to emigrate to imperialist countries. The
source country looses the investment it had made in raising and educating
that worker; it becomes yet another subsidy to the imperialist countries
from the third world countries.

It may be true that the forms and mechanisms of imperialist exploitation
have evolved and shifted since Lenin's time, but I think it is undeniable
that the basic reality, looting and pillaging of third world countries for
the benefit of the imperialist ruling classes, has remained the same.


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