Image by Nathaniel St. Clair
Karl Marx studied capitalism and the Industrial Revolution in Europe. He explored the conflict between workers and employers. In her book Capital and Imperialism (Monthly Review Press, 2021), authors Utsa Patnaik and Prabhat Patnaik emphasize that Marx’s followers believed that with the advent of capitalism, “accumulation has taken place only on the basis of the generation of surplus value.” (Surplus value refers to the part of the commercial return of a product that labor generates and employers keep.)
The Patnaiks recall that Marxists mention another type of wealth accumulation that “occurred only in the prehistory of capitalism.” However, according to the authors’ assessment, in addition to surplus value, there was also the so-called “primitive accumulation” throughout the history of capitalism. The term “primitive accumulation” refers to expropriation, looting or theft.
Many political activists in the United States oppose the wars and overseas interventions that their government uses to maintain its global political and economic dominance. Quite a few know that capitalism steals from the world’s peripheries. They are aware of US imperialism.
The goods stolen include: land, bodies, raw materials, food crops, forests, water, extractable minerals, exorbitant interest on debts and subsistence monies owed to the world’s poor. Failure to pay for social reproduction is a form of theft.
The more these activists learn that capitalism has been a catalyst for the oppression of the world’s underdeveloped regions from the beginning, the more inclined they might be to build an anti-capitalist international solidarity movement. The Patnaiks’ book contributes to this goal by documenting that colonialism, and by implication imperialism, were essential to the development of capitalism.
Her book – by no means discussed in its entirety here – describes India’s colonial experience and provides a Marxian explanation of why capitalism needed colonialism. It describes in detail how capitalist-inspired colonialism worked in India.
The Patnaiks explain that “capitalism has historically not only always been anchored in a pre-capitalist environment from which it emerged, interacted with, and modified for its own purposes, but its very existence and spread is dependent on such interaction.” Under colonialism, capitalists sought “the appropriation of surplus value by the metropolises.” (“Metropolises” is defined as “the city or state from which a colony originates.”)
They explain that “Marx’s basic concept of capitalism (as expressed) in Capital city it is an isolated capitalist sector… consisting only of workers and capitalists,” and also that an isolated sector implies a capitalism “that is forever stuck in a stationary state or a state of simple reproduction… (and) exhibits no growth.” They insist that “a closed, self-contained capitalism in the metropolis is a logical impossibility.”
There is nothing within the system to pull it out of this state.” The economy “will absolutelyreach this state when no external stimuli are present.”
The Patnaiks envision three types of external stimuli: “pre-capitalist markets, government spending, and innovation.” The first of these represents colonialism, which was essential to capitalists in building the economies of Europe’s industrial centers.
Inflation is a cause for concern
The authors describe how British capitalism dealt with colonial India, emphasizing that money was a means of storing and transferring wealth. The goal was to preserve its value. The system had the following characteristics:
+ Officials in London used the surpluses from Indian raw material exports to finance capital exports to other capitalist countries.
+ British officials taxed the land of small producers in India and used the revenue to pay the colony’s administrative costs and to purchase goods for export to Britain. Some were re-exported to other countries.
+ Great Britain exported manufactured goods. The flood of these goods arriving in India led to the “deindustrialization of the colonial economy.” Displaced artisans became “small producers” of goods.
+ British officials, struggling with “rising supply prices” for goods exported from the colonies, were faced with “increases in money wages or profit margins in the metropolises.” In their efforts to “stabilize the value of money,” they implemented “income deflation… on (Indian) suppliers of wage goods and inputs to the capitalist sector.”
+ The demands of the highly taxed agricultural producers in India are “compressible”, especially because they are “in the midst of huge labour reserves”.
Colonialism offered British capitalists the opportunity to cut wages or jobs in India in order to make the currency exchanges required by the system and to enable “increases in nominal wages” in Britain – “without endangering the value of money”.
World economy
The book outlines post-colonial developments. Colonial regulations remained in place in the 19th century.th Century and collapsed after World War I, which the authors say was partly due to a worldwide agricultural crisis that peaked in 1926. These circumstances led to the Great Depression. World War II spending led to recovery, especially in the United States.
These were “boom years” for capitalism. The United States, faced with rising military spending, resorted to deficit financing. Western European countries adopted social democracy and the welfare state. Some former colonies, now independent states, promoted agricultural and industrial initiatives to reduce economic inequalities.
At this point, the centers could no longer impose income deflation on working people in the periphery to avert the loss of money’s value. Bank deposits rose and credit pressures increased. In 1973, “the Bretton Woods system collapsed due to the onset of inflation.” “The capitalist world of the stable storage medium of wealth… (through) the gold-dollar link” suffered a blow.
Next came the world takeover by global finance capital and neoliberalism. The Patnaiks explain that with the removal of “barriers to capital flows,” “state intervention in demand management becomes impossible.” “A regime of income deflation for the working people of the periphery” returned to “bring inflation under control and stabilize the value of money.”
Diploma
This story is full of continuities. One is capitalism’s confrontation with colonialism in its early days. Another is capitalism’s use of colonialism to maintain the value of money in cross-border trade and financial transactions. Another is the oppression and impoverishment of the world’s working population to prevent inflation.
Karl Marx may have found little data and other information on colonialism in his studies of capitalism. Moreover, his life as a researcher and political activist may have been so full that he did not bother to study the colonial context. Nevertheless, he advocated international worker solidarity.
He and Engels supported India‘S Struggle for independence. Marx defended “heroic Poland” is under pressure from Tsarist Russia. He writes to Engels: “In my opinion, the most significant thing happening in the world today is, on the one hand, the movement among the slaves in America, which was set in motion by the death of (John) Brown, and, on the other hand, the movement of the serfs in Russia.”
In his speech to the International Workingmen’s Association – the First International – in 1864, Marx reported that events “have taught the working class that it is its duty to indoctrinate itself into the mysteries of international politics and to observe the diplomatic activities of its respective governments.”
The destruction of human life by capitalism is now far reaching. The reach of capitalism is inherently global. Political support for workers and their political formations in the global South goes to the core of capitalist power. The promise of fundamental change lies in this direction, and this also applies to alternatives to the capitalist system.
The struggles for social justice and equality, confined to the industrial centres of the world, target aspects of capitalism but do not promise far-reaching goals. The overall effort is to push for reforms that reduce the burden on working people, build mass opposition and, crucially, advance the international solidarity movement.
