Habib, Capitalism in History

dms dmschanoes at earthlink.net
Thu Jul 3 19:09:17 MDT 2003

If I read the article right, (which I've been able to print out thanks to
the efforts of LS), Habib is really describing how the internal
dispossession of the English peasantry allowed for the critical impact of
the appropriated, extracted, looted wealth from the new world on the
development of English capitalism, a development further hastened by the
captured, tributary trade with India.

I don't have much argument with that analysis.  His argument betrays some
weaknes when he says that "Eric William is undoubtedly right in perceiving a
connection between this simple fact [exploitation of slavery in the
colonies] and the rise of the capitalist textile industry...."

I don't think I argued that Dr. Williams was wrong in perceiving a
connection.  I don't know that anyone on Marxmail would argue against such a
connection.  It is the nature of the that connection.  In the period Habib
refers to 1785-1794, the social relations of capital were on solid ground in
in the countryside and in the cities.

But more important I think is Habib's keeping of one eye on the present and
one eye on the past when he describes how imperialism  has always been a
feature of capitalist production, of the system of capitalist exchange,
during periods of competition, free trade, industrial monopoly, mercantilist
monopoly.  When he says "It is interesting to speculate on the view of
imperialism that would have been developed by its Marxist critics, if they
had started with Marx an not with Hobson," we should all experience a "shock
of recognition."

Several interesting discussions of the nature of imperialism have been
conducted here.   With an eye to the past and the present I offer the
following for your consideration:

Imperialism Reconsidered

Donde Estan Las Super Ganancias?

1. The problem with death is that it makes it hard to develop a position.
Others do that for you, and generally do a poor job, since they are adapting
a work cut-short rather than developing a work in progress. The body gets
put in a crypt, or a mausoleum, or an urn, and the words get carved into
stone. In both cases, the breathing has stopped. The metabolic process ends.
Ambiguity, critical, essential contradiction, is replaced by canon.

Lenin's theoretical positions are infused with exactly this sort of
ambiguity, vital imprecision, that manifests itself in programmatically
awkward formulations. While such imprecision and awkwardness appears in
remarkable contrast to Lenin's tactical clarity, his political decisiveness,
the ambiguity is essential to the tactical decisions as it allows Lenin to
"catch up with history," once history, that is to say the class struggle,
has taken matters into its own hands and out of arms of theory. So we get
Lenin's position that 'class consciousness' can only be brought to the
workers from 'outside,' a position overwhelmed by the revolution of 1905,
demolished in the organization and functioning of the soviets, and
transformed by Lenin himself in the demand for "All Power to the Soviets."

We get Lenin's characterization of the anticipated Russian revolution as
"democratic dictatorship of the proletariat and peasantry," a construction
of such internal contradiction, such compressed disorder that it can barely
be uttered without stumbling over the words. Still, the very awkwardness of
the construction facilitates its own abandonment when the Russian revolution
manifests itself as the task, the necessity of the Russian working class.
And just as revolution poses, resolves, reposes the links of class and
history, production and power, the same demand, "All Power to the Soviets"
resolves the ambiguity in Lenin's formulation and transforms the workers'
struggle into part of the permanent revolution.

Written in 1916, Lenin's Imperialism: The Highest Stage of Capitalism sought
to develop a general picture of capitalism at the start of the 20th century
for both political and polemical reasons. Almost everything Lenin wrote was
written for and as the fusion of the political and polemical. In this case,
the political reason was to assess the mechanisms for capital's
accumulation, expansion, and concentration which drove the system as a whole
into world war. The polemical reason was the refutation of Kautsky's
writings on imperialism. Lenin had correctly assessed Kautsky's formulations
as an index of and to the Second International's accommodation to
capitalism, and the socialists' surrender to capital's first world war.

Something, some things, had obviously changed during the life of the Second
International. These things prefigured the war and the International's
capitulation to the war. Lenin knew that the actions of the particular
national capitalism's so furiously engaged in executing their own and each
other's soldiers, were in fact actions required by the needs of
international capital as a system, maintaining itself as a whole only
through the sums of the destruction of its parts.

Where Lenin clearly identified the changes in the manifestations of
accumulation and reproduction, he ambiguously identified these changes in
the mechanisms for appropriation with the requirements of appropriation
itself. Lenin imprecisely records the manifestation of capital's development
and maturation as fundamental shifts in capital's accumulation process

The resolutions of Lenin's ambiguity regarding party and class and the
social content of the Russian Revolution benefited from a revolution
ascendant. The ambiguities, imprecisions, and contradictions in his
Imperialism: The Highest Stage of Capitalism, had no such luck. Despite the
victory in Russia, the revolution as the overthrow and replacement for the
totality of capitalism is contained, rolled-back, and defeated, beginning
with its very triumph in isolation. Then the imprecise characterizations
Lenin makes during this ebb and flow become, on his death, a living part of
the retreat of the revolution itself. The very notions of "super profits,"
"bribery of the working class," in part or whole, the distinction between
the export of capital and the export of commodities, imprecise, confused,
awkward and mistaken, are taken over and substituted for the analyses of the
social relations of production. These notions reflect the failure of the
revolution to apprehend capital as a whole, misidentifying changes in the
technical composition of capital as changes in capitalist appropriation, and
therefore, as changes in the relations of classes. With the death of Lenin,
the polemic becomes gospel, the imprecision becomes dogma, the ambiguity is
replaced with ideology.

2. When Lenin traces the concentration and accumulation of capital in the
metropolitan centers of capital, he is looking back to the emergence of
capital from its "long recession" of 1872-1892. Lenin links the
concentration of capital in cartels, trusts, and banks, into the emergence
of finance capital, a "liquid" form of property, requiring export to
colonies to find successful employment as self-expanding value. Lenin then
identifies this export of capital to "backward" countries as the "typical,"
signal, characteristic of modern capitalism. It is the export of capital
replacing the export of commodities that distinguishes mature imperial
capitalism from emerging market capitalism. The truly typical features of
Lenin's assertion regarding the export of capital are imprecision,
confusion, and ambiguity. While Lenin notes the growth in capital invested
abroad by metropolitan Europe, he fails to compare that capital value to the
value of commodity exports. He distinguishes between the capital exported to
America and the capital exported to Asia, Africa, and Australia, but he does
not distinguish Canada, or the US, or Australia from Jamaica or Argentina.
He misexplains the reason for the export of capital, stating: "The necessity
for exporting capital arises from the fact that in a few countries
capitalism has become 'over-ripe' and (owing to the backward state of
agriculture and the impoverished state of the masses) capital cannot find
'profitable' investment." Developed capitalism by nature and definition has
to develop agriculture to the degree where it can sustain industrial
production in order to separate the population from the means of subsistence
and to sustain the entire population. The expansion of commerce, the
production of commodities, requires a coincident capitalization of
agriculture. The metropolitan capitalist countries exporting capital are the
countries with a developed agriculture. And finally, Lenin contradicts
himself in his ninth chapter when he provides a table of the increased
export trade of Germany coincident with its increased exports if capital.

The distinction between the export of capital and the export of commodities
is at one and the same time valuable and inconsequential. It represents
capital's attempt to escape its earthly chains as actual articles of
production and use, and ascend to heaven as pure, ethereal, detached value.
And the export of capital proves the impossibility of this afterlife as
capital is forced to reproduce its earthly self in these Edens by repeating
the purchase and exchange of the means of production and wage-labor. The
distinction between the export of capital and the export of commodities is a
temporal distinction, indicative of a phase in capital's metamorphosis from
value to expanded value. The distinction is not a change in that
metamorphosis of capital itself. The only purpose for the export of capital
is to increase profit and increased profit can only be realized in the
increased circulation of commodities.

3. So what of the current conditions of capital, the current valuations of
the export of capital and the valuations of the export of commodities? If
Lenin found the study of capital at the close of the 19th and opening of the
20th centuries valuable, a similar review of US capital exports at the close
of the 20th and opening of the 21st centuries might be helpful. Between 1992
and 2001, the US direct investment abroad (USDIA, also known as FDI) grew
from 502 billion dollars to 1,382 billion dollars on a historical-cost basis
(US Bureau of Economic Analysis, July 2002). This growth was coincident with
rates of internal US capital investment and rate of profit higher than that
of any period after 1969. The increase in FDI was part and parcel of capital
finding profitable investment in a mature capitalism, with a highly
capitalized and efficient agricultural sector.

The export of capital also coincided with increased US exports. Between 1992
and 1997, US FDI expanded 75 percent while exports of goods and services
grew 50 percent. Between 1998 and 2001, exports grew only 6.8 percent while
FDI grew 38 percent. This discrepancy is exactly the expected result of the
overproduction, the overinvestment in the means of production, depressing
the rate of profit and reducing profitable exchange. Indeed, the market
value of US FDI declined 11 percent between 2000 and 2001. The actual
amounts of capital exported as FDI fell from 120.3 billion dollars in 2000
to 88.2 billion in 2001.

Equally important is the destination of these FDI capital exports. On an
historical cost basis, 52.5 percent of US FDI is based in the advanced
countries of Europe, 10 percent in Canada, 19.5 percent in Latin America,
and 15.6 percent in Asia and Pacific (including Japan and Australia).

In all these areas, US FDI, US capital exports, have accompanied increased
exports of goods and services. In fact, the largest trading partners of the
US are also the focus for the greatest capital exports and precisely because
of the increased trade capital exports have been able to find profitable

4. The enduring characteristic of capital is the conflict between its
compulsion for self-expansion and its need to preserve the dominance of
private property. Conflict, compulsion and need, are masked in the income
capital derives from its processes of production and circulation, The mask
itself is dropped when the relation of income to property, the rate of
return of investment falls. Capital is driven to offset this declining rate
by any and all means.

Common to some investigations into capital's methods for offset,
investigations as apparently different as Lenin's from Rosa Luxemburg's, is
a notion of external sources of wealth yielding an almost pure profit
without expense. In Lenin's analysis this external source, the export of
capital to "backward" areas, is absorbed into capital and appears as a super
rate of profit. . For Lenin, super profits rescue capital from the
overproduction of capital. For Luxemburg, the aggrandizement of
non-capitalist wealth sustains capitalist accumulation. For capital itself
however, there is no such thing as super profits, and non-capitalist wealth,
by definition, cannot augment the expansion of capital values unless it
enters into an exchange with wage-labor.

In 2001, the ratio of direct income receipts to US FDI (the rate of return
on direct investment) measured 8.04 percent. The rate of return for
investment in Canada was 8.46 percent; for Western Europe 7.67 percent; for
Latin America 6.94 percent; for Asia and Pacific 9.79 percent. Does this
sound like super profits?

Calculating the average rates of return for the period 1997-2001 produces
the following: for all US FDI 9.5 percent; for Canada 9.9 percent; for
Western Europe as a whole 9.4 percent; for the UK 6.9 percent; for South
America 6.3 percent; for Brazil in particular 5.8 percent; for Mexico 12.0
percent; for Central America as a whole 8.7 percent; for Japan 9.3 percent;
for Australia 8.1 percent; for China 11.7 percent; for Korea 11.4 percent.
Does any of this sound like super profits?

In Mexico, where US FDI achieved a rate of return 30 percent above the total
average, the rate of return has declined every year between 1997 and 2001,
falling from 15.8 percent in 1997 to 8.45 percent in 2001. Does this sound
like super profits?

5. For the period 1994 to 2001 "indirect income," income generated from
stocks, bonds (portfolio income), and other financial instruments exceeded
US direct investment income. If, for the capitalist, the commodity's
transfiguration from an article, and a cost, of production, into an expanded
value, is a religious experience, a miracle, then portfolio income is the
Assumption. Portfolio income is value shedding all its earthly imperfect
forms, dispensing with its messy intermediate states, and springing forth
full grown from its own forehead as value begetting value.

In 2001 US holdings of foreign securities measured $2.39 trillion. Where
Lenin saw the decline in the importance of the stock market as indicative of
the rise of finance capital, US investment capital itself has raised the
importance of foreign stock markets. Stocks accounted from $1.83 trillion of
the total. Sixty percent of that stock portfolio is concentrated in Western
Europe, ten percent in Japan, 6 percent in Canada. Argentina, Brazil, and
Mexico together account for less than 4 percent of the stock portfolio. Bond
holdings are distributed somewhat more evenly with Western Europe, Canada,
Japan, and Australia accounting for sixty percent of the portfolio.
Argentina, Brazil, and Mexico account for fifteen percent of the bond

For that year, the entire portfolio of stocks and bonds generated income of
$67.4 billion or approximately 2.5 percent. Bond income returned 7.8 percent
on the portfolio value. Western Europe accounts for approximately half of
the total income. Latin America and other Western Hemisphere areas yield
approximately 15 percent of the portfolio income, but this yield is skewed
by the overweighted presence in the portfolio of securities from the
Caribbean banking centers and Panama. None of this amount in yield, nor the
total return, amounts to super-profits, particularly when the total return
on 10 year US treasury bills was 11.5 percent for the same period.

Indirect income is also generated by interest claims against unaffiliated
foreign companies on money loaned, or loans guaranteed, by US banks and
other entities (usually non-bank financial corporations). In 2001, US banks
earned approximately $43 billion in this category. The total amount of the
bank claims measured $1.07 trillion with 85 percent concentrated in the
industrial countries and the Caribbean banking centers. In truth, these
figures conceal as much as they reveal as a portion of the US claims are
centered in London, where the funds are subsequently re-loaned to developing
countries through European financial centers. While this process shifts risk
to the other metropolitan countries (particularly Japan and Germany), it
does not affect the total income derived.

Non-bank claims generated an additional $46 billion in income. The total
amount outstanding was $860 billion, 75 percent of which is concentrated in
the industrial countries and the Caribbean banking centers.

As a whole then, this "indirect income," the direct income of finance
capital, generated a rate of return of 3.5 percent, a rate of return
significantly less that the rate of return on direct investment in total or
in the specific areas of petroleum, manufacturing, wholesale trade.

6. After the Asian and Russian financial collapses of 1997-98, US banks
reduced their overall exposure to "emerging market" debt. This "risk
revaluation" process had in fact begun at the beginning of that 90s. Ten
years of economic depression in Latin America had brought several US banks,
most notably Citibank, to the edge of collapse.

In 1999 US banks reduced their claims on Africa by 5 percent; on Asia by 21
percent; on Eastern Europe by 42 percent. US bank claims on Latin America
increased by 12 percent during the same period, with the increased exposure
concentrated in Mexico and Argentina. Latin America and the Caribbean
account for 60 percent of all US claims on emerging market countries. Claims
on emerging markets however represent only 5 percent of US bank assets,
while US claims on developed and banking center countries are approximately
12 percent of assets. Indeed, US banks' exposures were so minimal that
losses from the 1997-1998 crises were charged against ordinary income rather
than capital reserves.

Between 1997 and 1999, Japan's share of claims against Asian counterparties
declined from 30 to 23 percent. European banks increased their share to 50
percent, while US claims remained at a mere 7 percent. In Latin America, the
US share of claims, 25 percent, was only half that of the European banks.

In 2002, the Bank for International Settlements (BIS) reported claims
against emerging market countries represented only 18 percent of all bank
claims on foreign counterparts.

The export of capital is clearly not an export of capital simply to the
emerging market countries. Rather the export of capital to these countries
is a manifestation of the export of capital on a world scale, an activity of
capital that reproduces in detail, scale, convergence and divergence, the
patterns of trade, production, and profit that have defined capital as an
international system for three centuries.

The issue is not the significance or insignificance of the volume of claims,
nor the income generated from the claims against the emerging market
countries. The significance is in the "integration" of the emerging market
countries into the international organization of capital, as internal
components of the mechanism for accumulation. Then profits, high or low, are
generated exactly as profits are generated everywhere and anywhere. Then
wage rates, high or low, are established in any single manifestation of the
totality, by the same logic, the same conflict, the same contradiction, as
wage-rates are established everywhere. Then the social struggles generated
in any single market, any single country, are part and whole of the
struggles generated throughout the markets as a whole.

Just as capital integrates all forms of exchange, gives value to local,
individual exchange by establishing the measure of value in its own
products, then all the conflicts, needs, requirements for the welfare of the
entire population, the growth of industry, the sustained development of
agriculture become the tasks of the antithesis to capital, the overthrow of

7. It is in Lenin's introduction, written in 1920, and the chapter "The
Parasitism and Decay of Capitalism," where he makes his often quoted remarks
about the bribing of a sector of the working classes of the metropolitan
countries, those "clipping coupons," and the rentier state. Lenin's
analysis, unsupported and self-contradictory, has been used to rationalize
the failure of the workers' revolution to advance beyond Russia and into the
advanced countries; to proclaim the migration of revolutionary focus to
developing countries; to announce the replacement of workers by peasants,
guerrillas, youth, students, information managers, national
self-determination, etc. in the revolutionary process.

Super profits don't exist. Neither does the rentier state. The source of
profits for the developed and developing markets alike is in the production
and circulation of commodities. If US equity ownership in foreign companies
is combined with its direct foreign investment, the combined value is
approximately $3 trillion, exceeding the value of all debt claims, and
generating profits approximately 50 percent greater than the income from
bonds and bank claims. In 2001, 67 percent of the US's $1 trillion in
exports was concentrated in capital goods and industrial supplies. Half of
US imports were in these categories. Capital goods are neither imported nor
exported for purposes of coupon clipping.

The individual capitalist rushes to market, intent on realizing his or her
individual profit, and when the money materializes, claims it as his own or
her own. But Marx knew better and the markets recognize no individual.
Instead, the markets ration, distribute, the total profit. And what the
capitalist holds in his or her hand, is a part of the universe of values.
Whether the capitalist is large or small, whether the capitalism developed
or developing, the distribution of profit by the market, by which a general
rate of profit is established and through which more technically developed,
more "capital intensive" industries are sustained, is the process by which
capital makes whole the sum of its parts. When profit materializes it is
through the appropriation of surplus value as a whole, not from the
individual wage rates in the individual enterprise. The establishment of a
general rate of profit, and we have seen exactly that in the examination of
the returns on US foreign direct investment and indirect investment,
abolishes the notion of super profits, and with that, demolishes the claims
of the "bribing" of layers or sections of the working class.

The disparities in wage rates, which preceded finance capital, are
historical developments. Every industrial capital formation appropriates its
surplus value on the basis of different wage-rates within the entire process
of production and circulation. Does this mean that workers receiving a
higher wages benefit from workers receiving lower wage rates? Do railroad
locomotive engineers benefit from the lower wage rates of track workers and
mechanics? To pose the question in those terms is a failure to grasp that
the realization of profits is a function of the system as a whole, and that
nothing in profits high or low, wages high or low, transcends the
fundamental social relation of production that defines capital.

The significance of the emerging markets, the profits derived through direct
investment and financial claims is not in their mass and rate, superior or
inferior, not in their existence as "external" suppliers of wealth outside
the arena of capitalist reproduction, not in their role as "safety valves"
for capitalist overproduction, nor as a mythical source of bribes and
subsidies to layers of the working classes in metropolitan countries..
Rather, the significance exists, and exists entirely, in capital's
integration of the emerging markets into the network of exchange, capital's
introduction of its fundamental social relation into every locality, capital
's creation of the most advanced production and class of producers alongside
the backward agricultural systems, where the universal problem of capital,
overproduction beyond the capacity of private property to sustain itself, is
made more acute by the overall lack of development.

More information about the Marxism mailing list