An important contribution to our grasp of the world

Alex Callinicos on imperialism, two reviews

Review by Barry Healy

Imperialism and Global Political Economy
By Alex Callinicos
Polity, 2009
227 pages

October 2, 2010 -- The topic of “imperialism” greatly occupied the minds of late-19th and early-20th century socialists. Some of the tradition’s greatest minds toiled mightily to discern the fundamental changes in capitalism that were occurring before their eyes.

Capitalism, as analysed by Karl Marx, had grown fat in its European heartland through the ruthless exploitation of colonies and the brutal factory system in its coal dark cities. But suddenly new phenomena started to appear in the late 1800s.

Banking capital moved from being a support for industrial capital, first merging into and then dominating manufacturing. This agglomeration of money power created massive industrial complexes, like Germany’s famous Krupps steelworks.

The colossal scale of these industrial works dwarfed human beings.

Quickly, the avenues for profitable investment on this scale became choked in the capitalist centres, so the export of capital arose. The relationship with the colonies and neo-colonies, and other capitalist countries changed as capital sought this escape valve from its own contradictions, continually dividing and redividing the wealth plundered from the downtrodden.

Argentina (for example) became a happy hunting ground for British capital in search of an easy profit. And terrifying war preparations, in which the full potentialities of industrial civilisation were turned towards weaponry, were obvious to all. World War I was the bitter fruit.

Lenin’s legacy

Lenin, whose Imperialism, the Highest Form of Capitalism is still the touchstone for socialist analysis, applied himself to examining the problem in 1915. He tried to make sense of the betrayal by the leadership of the European socialist movement at the outbreak of World War I.

Rudolf Hilferding, Rosa Luxemburg and Nikolai Bukharin were others who delved into imperialism.

Lenin’s achievement was not just to explain imperialist machinations internationally; he detailed the effects in the imperialist homelands, with the creation of well-paid layers of workers who identified their interests with their bosses, not with other workers.

But before him, Karl Kautsky in Germany produced a theory of ultra-imperialism, predicting that imperialist capitalism was capable of transcending national borders and so form a global capitalist state. Lenin demolished that argument.

With imperialism, the world entered into an epoch of wars and revolutions, Lenin said. Obviously, imperialism is still with us as the Iraq and Afghan adventures painfully drag on towards their inevitable defeats for the US superpower.

In Imperialism and Global Political Economy Alex Callinicos, a leader of the Socialist Workers Party in Britain, has set about critically surveying the full gamut of the historical literature and more recent thinkers in order to bring socialist theory up to date, and expound what he regards as his own theory of imperialism, which he believes is an advance on most previous writers.

Callinicos' aim is to distinguish imperialism's current stage. He believes that previous Marxists have relied too much on the notion of finance capital as the bedrock of imperialism and that has led to distortions in understanding imperialism since 1945.

In his view, Callinicos emphasises that imperialism is not just an economic structure. It has both economic and geopolitical drivers, and the state and ideology are essential in its operation.

Thus, some wars and interventions may not have an immediate economic pay-off for the plunderers but may be part of a large, international chess game in which rivals manoeuvre. The invasion of Iraq, he says, was not just a “war for oil” for the USA; it was a strategic intervention to dominate oil supplies to imperialist rivals.

Classical and contemporary Marxists

Imperialism and Global Political Economy is divided into two parts. The first is devoted to lengthy and heavily academic appraisals of a huge body of literature. If nothing else, Callinicos is a voluminous reader and summarises others’ ideas honestly, if in a difficult style for the general reader.

The second part is a more accessible history of the stages of imperialism.

Callicincos is at pains to discern useful nuggets within even failed attempts to analyse imperialism. So, for example, he praises Rosa Luxemburg’s The Accumulation of Capital, while criticising her failure to understand some crucial aspects of Marx’s Capital.

Luxemburg, he says, affirmed “in a particularly extreme and sometimes sophistically argued way” the notion that imperialism is inescapable once capitalism reaches maturity. But, she also developed a thread of argument, which Callinicos calls “at once quite brilliant and thoroughly wrong-headed”, against the sections of Capital that deal with the reproduction of capital.

She believed that Marx had failed to explain how, in the case of extended reproduction, that slice of surplus value which is invested in buying additional means of production and labour can be converted back into profit.

As Callinicos gently puts it: “No other major Marxist economist has accepted her critique of Marx’s reproduction schemes.”

Oddly, Callinicos himself goes out of his way to criticise Lenin, effectively accusing him of schematism, while counterposing Bukharin’s Imperialism and World Economy. However, Lenin wrote the foreword for Bukharin's work and didn't detect any differences with his own thinking in it.

`Aristocracy of labour'

Callinicos specifically distances himself from Lenin’s understanding of how imperialism affects workers’ consciousness in the metropolitan countries.

Under imperialism, Lenin believed, some crumbs are dropped from the bosses' table to convince a section of the working class that its interests lie with the bosses, not with its own class. Such bribery is an essential part of the construction of racism, xenophobia and nationalism.

Drawing upon Freidrich Engels, Lenin used the term “aristocracy of labour” to describe this social construction.

Lenin’s observation was essential to understand how workers' parties could politically collapse. In August/September 1914 European socialist parties and led their constituency to the slaughter after having pledged to do the exact opposite in international socialist congresses for years previously.

However, Callinicos says points out that it was the skilled, higher-paid metalworkers throughout Europe who rallied to Lenin’s call for opposition to the Socialist International's WWI betrayal. He says that Lenin failed to show a mechanism through which imperialist superprofits are distributed to sections of workers.

This is an astonishing charge.

In innumerable factories and offices the bosses’ favourites get better wages and conditions than troublesome workers. If you suck up to the boss, you can get crumbs! Capital happily extends this to sectors of workers to lower working-class consciousness and hobble our organisations.

Relative privileges are systematically granted to (usually) skilled, white, males while institutionalising worse conditions for (generally) women, non-white and young workers.

This construction is always contingent and provisional because sudden changes in the needs of capital (for example, technological advances) can suddenly make previously privileged workers redundant. Even loyal lickspittles can be cast into the fire at the convenience of profit accumulation -- and privileged workers can find their way to class consciousness and turn on their masters under the whip of crisis and tumult.

The combination of privilege with the paltry allowance of democracy that we are allowed under capitalism creates the machine are reformist parties, like the Australian Labor Party (ALP).

Full-time officekeepers of mass workers' organisations are induced to become bureaucrats doing deals on behalf of workers, not organising and leading struggles to raise workers’ consciousness. Of course, in order to have cards to deal at the bosses' table bureaucrats have to occasionally organise to squeeze out of the boss some higher than average wages and more secure conditions.

But leading such “money militancy” is not the same as advancing working-class consciousness.

Union faction bosses keep a weather eye out for talented young activists, especially those emerging from within the socialist movement who are methodically groomed and encouraged to switch to the bureaucratic worldview. These corrupted individuals have to demonstrate their loyalty to their new masters by exemplary acts of bastardry towards their former comrades -- such as handing over lists of activists in factories and rank and file groups ready for the bosses to target.

The ALP is peppered with such people who are often the most determined to use the police and other forces to crush progressive struggles -– their background makes them the most valuable to capitalism in spotting dangerous mass movements on the rise.

Even the labour attaché at the US embassy plays a role by approaching bright up and comers in the labour movement to attend US ideological formation schools for free, where they are inculcated in neoliberalism.

The smartest bureaucrats parlay their union power into preselection for safe Labor seats and from there the golden road to serving big business is guaranteed. After leaving parliament, cosy sinecures await in directorships of the companies they served while in government.

These mechanisms are so brazen in Australia it is inconceivable that Callinicos cannot see similar ones operating in Britain.

Such a social construction is only possible if the bosses’ saddlebags are filled with wealth plundered from throughout the globe.

Praise for Harvey and Meiksins Woods

While somewhat taking his distance from Lenin, Callinicos is at pains to demonstrate his basic agreement with David Harvey’s 1995 book The New Imperialism, which similarly points to the combined economic and geopolitical nature of imperialism. Callinicos combines his appreciation of Harvey with praise of Ellen Meiksins Wood’s Empire of Capital and sets out to bolster both books against criticisms that they use insufficient empirical data.

Callinicos outlays an array of such data in the second part of Imperialism and Global Political Economy, about the history of imperialism, and wields the information to argue that imperialism is a conflict between wealthy countries over command of the global loot.

Callinicos is at his strongest where he demolishes the ideas of such people as Michael Hardt and Antonio Negri (famous for their trilogy Empire, Multitude and Commonwealth), who believe that international competition has been superseded. Everything has been melted into a transnational capitalism, they say, similar to Kautsky’s thinking.

As an academic, Callinicos spends a lot of time debating such luminaries and so has a sharp appreciation for these intellectual controversies. But he appears a bit too clever by half with his readings of his Marxist forebears and overestimates the uniqueness of his own thinking.

Lenin, for one, never thought that imperialist wars were simply mechanical extensions of pure economic rivalry of finance capital; he always recognised their geopolitical content. Did any Marxist ever suggest that Germany invaded Belgium in World War I for any economic purpose? It was merely the shortest route to Paris!

The strengths of Imperialism and Global Political Economy are in its delving into many historical and contemporary disputes, delivering an important contribution to our grasp of the world. Callinicos wants to grapple with imperialism as it really is, not just for abstract philosophical clarification, even though he happily strays into that territory.

Its major weakness appears to be that, as a leader of the SWP, Callinicos needs to prove the independent value of its particular political tradition on the left.

Return of the state?

Bonfire of Illusions: the Twin Crises of the Liberal World
By Alex Callinicos
Polity, 2010, 179 pages

Review by Barry Healy

October 3, 2010 -- Alex Callinicos, central leader of the Socialist Workers Party in Britain is a prolific writer. In 2009 he wrote a major theoretical work on history of imperialism, Imperialism and the Global Political Economy, and with 2010's Bonfire of Illusions: the Twin Crises of the Liberal World he has produced what is effectively its companion volume, examining the economic and geopolitical specifics of the current capitalist crisis.

The very title evokes conjunctural images with its reference to Tom Wolf's novel Bonfire of the Vanities, which dealt with racism, class and greed in 1980s Wall Street, and the “twin crises” suggesting the Twin Towers, the fiery destruction of which is the leit-motif of the "war on terror".

But Callinicos is attacking deeper myths of contemporary capitalist ideology: that exemplified by Francis Fukuyama’s 1989 End of History, summarised by Callinicos as holding that “liberal capitalism offered the only basis on which humankind could hope to enjoy peace, prosperity and freedom” and that we now live in a unipolar world governed by US imperialism.

Callinicos uses as his launch pad what he believes are two cardinal events revealing the end of this illusory period: the 2008 geopolitical setback suffered by the US in the war between Russia and Georgia and the near collapse of the world banking system unleashed by the collapse of Lehman Brothers on September 15, 2008.

He presents these events as part of the same historical process, the ruination of US supremacy and its ideological support, "small government".

In the main, the book effectively offers the general reader an introduction to the complexities surrounding these events, which stretch over decades. It is divided into two basic sections titled "Finance Humbled" and "Empire Confined", which telegraph their contents.

Financialisation as a new stage of imperialism

Callinicos is very good at summarising and explaining the growth of what is commonly referred to as "financialisation", the latest form of imperialist capital, which has dominated our world for the last few decades and which created the subprime loans-instigated global disaster.

Finance capital, in Lenin’s famous reading of it, amalgamated with industrial capital in the late 1800s and from 1900 became the world dominant socioeconomic and political-military construct known as imperialism. But by the mid-1980s, finance and industrial capital in the imperialist heartlands began to relatively separate again, or at least mark out distinctive arenas of operations, because the major corporations effectively did not need to borrow.

In the USA, where wages have been effectively frozen since 1970, productivity and profitability have soared, allowing major companies like General Motors to finance their operations through retained revenue. They not only did not have to go to the banks, their finance arms became banks.

Losing the fees and interest from industrial loans as a bedrock source of profit, finance capital sought new happy hunting grounds in personal lending (credit cards for the workers whose wages no longer stretched to cover living expenses) and financial market mediation (the creation of ever more complex “financial instruments” for “hedging” risk and speculation).

The astronomical rise of fictitious capital created by all these derivatives and other trading summonsed up a “shadow” banking system of banks and strange financial actors like hedge funds, private equity firms and "structured investment vehicles". Each carved out different parts of the growing pie of speculative wealth.

For example, private equity firms were the pirates targeting companies with high cash flows, buying them to “restructure” the balance sheet (selling off or closing down low-cashflow parts) producing an image of profitability -- and then flogging them off quickly before the image soured.

Even traditional banks have taken to “proprietary trading”, which is financial speculation on their own account, not as agents of their clients. At least these banks have some semblance of state regulation, whereas hedge funds operate within the pores of society, roaming the globe like locusts, exploiting whatever opportunity comes their way no matter the social cost.

Of course, bonuses have become the norm for the elite in this financial universe that floats free of connection with real production.

Financialisation of everyday life

While scarcely connected to real production, this financialised capital has preyed upon the working class nonetheless. Working-class households have been drawn into the insecure world of speculation.

While capitalists will shamelessly declare bankruptcy to escape debt, workers are not so footloose or fancy free. We are tied to our jobs, families and communities, we do not have an army of high-priced lawyers at our figure tips -- so we are prime candidates for milking by the finance sector.

The key was to open up areas of private life to financialisation through the deliberate creation of insecurity. Millions of families in the advanced countries can only survive through credit card debt. And people have been encouraged to “remortgage” their homes, that is: take out loans based on the rising value of their house -– which can only work if values always rise!

This mirror-world logic was the background of the now infamous subprime loans. The loans, foisted on the poorest of the poor, were profitable only because they were the raw material for the construction of "collateralised debt obligations" –- the fraudulent speculative commodities marketed by the biggest banking firms in the world.

To explain the inherent instability of financialised capitalism, Callinicos demonstrates his notable capacity to read and summarise theory by digging into ideas from the Marxist David Harvey, the Keynesian Hyman Minsky and the godfather of neoliberalism F.A. von Hayek.

Callinicos looks at von Hayek’s first, 1931 book Prices and Production, from which he digs up the nugget that credit-driven capitalist economic expansion becomes unsustainable over time, producing destabilising booms. Of course, von Hayek was revolted by the thought that the state should do anything to stop crashes; that should be left to his beloved price signals!

Minsky was an acute reader of the instability of financial markets, providing many useful insights. Callinicos shows, however, that his ideas stopped short of linking finance and the broader capitalist economy (perhaps that would have been a step too far for the child of Menshevik refugees).

Minsky and von Hayek both saw financial crises as dysfunctions of markets. Not so, says Callinicos, “the contradictions that have been at work in the entire process of capital accumulation” are responsible.

Thus, in agreement with Harvey (and Marx), Callinicos argues that our current economic crises are not unusual or extreme events, but are built into how capitalism is constructed and operates. Crisis is as natural to capitalism as crushing the savannah grass is to a herd of elephants.

Callinicos discerns three corresponding processes behind the present disaster: a fundamental crisis of capital overaccumulation, with its consequent tendency for the rate of profit to decline; an insanely unstable financial system; and a conscious policy by bourgeois states to build credit bubbles as drivers of economic expansion.

Capitalism, state capitalism and the return of the state

Callinicos weaves a couple of threads into his argument that are dear to the heart of the International Socialist Tendency of which he is a leader, such as Mike Kidron’s permanent arms economy theory to explain the operation of post-WWII capitalism. This is a controversial proposition that has been argued over for decades without effective resolution.

Another emblematic theory is that of "state capitalism", which originally was a term used to explain the economic basis of the Stalinised Soviet Union. But here the term has leaked into describing every capitalist state; all instances of where a capitalist state makes decisions affecting the market warrants its use and of course all capitalist states do just that, always.

So, US President Franklin Delano Roosevelt’s New Deal is referred to as state capitalist, as is Nasserite Egypt and post-Stalinist Russia.

Such a casual sweeping together is unsustainable. Every capitalist economy from the rise of the bourgeoisie has involved state interventions, from the granting of a monopoly to the East India Company through to today’s massive bank bailouts.

Even Margaret Thatcher's Britain and Ronald Reagan's USA used state intervention in the interests of capital. The capitalist state exists to "organise capital and disorganise labour"; every state intervention is ultimately designed to maintain and expand capital.

If state intervention creates state capitalism – albeit along a spectrum from neoliberal, state capitalism lite to full-blown Stalinist state capitalism classic – then we have to ask if capitalism, as Marx spoke of it, has ever existed.

This annoying state capitalist categorisation shows up again in the book’s second section where Callinicos develops an argument that the Georgia-Russia war was a critical change in international relations. It marked “a shift in the balance of power between the state and capital”, he says. In fact, it demonstrated “the return of the state” after years of neoliberal ideology about the state’s diminished role.

What Callinicos is referring to is the return of the individual state as opposed to the role of international bodies such as the European Union, the G8 or G20 and the World Trade Organization.

This return of the state contrasts, Callinicos says, with the undermined authority of international organisations, such as the EU, in the financial crisis when nations pursued their own interests -- all the while mouthing platitudes about free trade.

He argues further that the Georgia-Russia scrap was the fight back by Russian state capitalism.

But if all forms of capitalism in the world are just varieties of state capitalism, why is the Russian variety's fight back a fundamental game changer? Would it not just be a variation of the "game" established by US state capitalism in Iraq and Afghanistan?

To posit all this as a return of the state as a player in capitalist dynamics simply flies in the face of the history unrolled in the first section of the book. The state never went away, it has been central to the bubble economy of modern capitalism all along, constructing bubbles in individual nations as part of a globalised system.

It has changed its role now that it is propping up the banks and transferring the cost of the bubble onto the shoulders of the workers, again on a global scale and in individual countries. In fact, European austerity has been decreed by the European Central Bank and enacted by the individual states.

Since this book was published the British Tories have unfurled the banner of neoliberal austerity again, which in Callinicos’ line of argument must mark a re-withdrawal of the state. Perhaps he rushed into print too early with this argument?

He has certainly stamped out a distinctive IST worldview on the crisis, but it appears to be standing on thin ice.

Imperialist geopolitics

Callinicos is on firmer territory when he points out the Russian war on Georgia was a geopolitical response to US efforts to expand NATO influence into eastern and central Europe.

However, coming from the author, who in Imperialism and the Global Economy hammered away at the dual economic/geopolitical nature of modern imperialism, asserting that this was a vital insight that had been missed by most other Marxists, it is strange that he spends only about 10 pages on what is a central tenet of this book.

Callinicos spends more time looking (usefully) at the contradictions and inherent confrontations in the China-US relationship and draws no connection between that and the supposedly epochal Georgia-Russia matter.

Perhaps the Georgia-Russia war loomed large on the European horizon in a manner that it does not in the rest of the world, which would be unfortunate for an internationalist commentator like Callinicos.

That Callinicos with this book makes ham-fisted use of his own 2009 argument about the nature of imperialism inadvertently reduces its stature, which is unfortunate. Leninists have always observed the multifaceted nature of imperialism and delving into the entrails of the beast is valuable -- and there is much useful information in this book.

Callinicos appears to want to prove that he and the IST have something new or unique to offer regarding the analysis of imperialism. If he toned that down, this contribution would be more useful.

[Barry Healy is a member of the Socialist Alliance in Perth, Western Australia.]