W. T. Whitney
Studying capitalism, Karl Marx examined the Industrial Revolution in Europe. He explored conflict between worker and employer. In their book Capital and Imperialism (Monthly Review Press, 2021), authors Utsa Patnaik and Prabhat Patnaik emphasize that Marx’s followers believed that, with the onset of capitalism, “accumulation [has] occurred only on the basis of the generation of surplus value.” (Surplus value signifies that part of a product’s commercial yield which labor generates and employers keep.)
The Patnaiks recall that Marxists mention another kind of accumulation of wealth, one that “occurred only in the prehistory of capitalism.” According to the authors’ reckoning, however, so-called “primitive accumulation occurred throughout the history of capitalism,” along with surplus value. The term primitive accumulation refers to expropriation, plunder, or stealing.
Many U.S. political activists oppose the overseas wars and interventions their government uses to maintain worldwide political and economic domination. More than a few know about stealing in the peripheral regions of the world at the hands of capitalism. They are aware of U.S. imperialism.
The stolen goods include: land, bodies, raw materials, food crops, forests, water, extractable underground resources, exorbitant interest on debt, and funding owed the world’s poor for subsistence. Non-payment for social reproduction is a kind of stealing.
The more these activists learn that capitalism from its start did call for oppression in the undeveloped regions of the world, the more likely might be their inclination to build an anti-capitalist international solidarity movement. The book authored by the Patnaiks contributes to this end by documenting that colonialism and, implicitly, imperialism have been essential to the development of capitalism.
In describing India’s colonial experience, their book – by no means reviewed here in its entirety – provides an explanation taken from Marx as to why capitalism needed colonialism. It details the workings of capitalist-inspired colonialism in India.
The Patnaiks declare that, “not only has capitalism always been historically ensconced within a pre-capitalist setting from which it emerged, with which it interacted, and which it modified for its own purposes, but additionally that its very existence and expansion is conditioned upon such interaction.” Capitalists sought “appropriation of surplus by the metropolis, under colonialism.” (“Metropolis” is defined as “the city or state of origin of a colony.”)
They explain that “Marx’s basic concept of capitalism [as expressed] in Capital is of an isolated capitalist sector … consisting only of workers and capitalists,” also that an isolated sector implies a capitalism “stuck forever in a stationary state or a state of simple reproduction … [and] with zero 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 that state.” The economy “will necessarilyget to that state in the absence of exogenous stimuli.” The Patnaiks envision three kinds of exogenous stimuli: “pre-capitalist markets, state expenditure, and innovations.” The first of these represents the colonialism that would be essential to capitalists as they built the economies of European industrial centers.
Outlining how British capitalism dealt with colonial India, the authors highlight money as a device for holding and transferring wealth. The object has been to preserve its value. The system had these features:
Officials in London used the surplus derived from Indian exports of primary commodities to finance the export of capital to other capitalist countries. British officials taxed the land of small producers in India, using the revenue to pay the colony’s administrative expenses and purchase commodities for export to Britain; some were re-exported to other countries. Britain exported manufactured goods. The flood of them arriving in India led to “deindustrialization of the colonial economy.” Displaced artisan manufacturers became “petty producers” of commodities.
British officials dealing with “increasing supply prices” for commodities exported from the colonies, faced “metropolitan money-wage or profit margin increases.” Seeking to “stabilize the value of money,” they imposed “income deflation … [on Indian] suppliers of wage goods and inputs to the capitalist sector.” The claims of heavily-taxed agricultural producers in India were “compressible” especially because they were located “in the midst of vast labor reserves.”
Colonialism provided British capitalists the option of cutting pay or jobs in India so as to carry out the currency exchanges the system required and to “accommodate increases in money wages” in Britain, both “without jeopardizing the value of money.”
The book outlines post-colonial developments. Colonial arrangements persisted throughout the 19th century and collapsed after World War I, due in part, say the authors, to a worldwide agricultural crisis that peaked in 1926.
The circumstances gave rise to the Great Depression. Spending for World War II led to recovery, mostly in the United States.
These were “boom years” for capitalism. The United States, confronted with increasing military expenses, turned to deficit financing. Western European countries took up social democracy and the welfare state. Some former colonies, now independent nations, sponsored agricultural and industrial initiatives aimed at relieving economic inequalities.
At that point, the centers could no longer impose income deflation on working people in the periphery to ward off loss of monetary value. Bank holdings increased and lending pressures mounted. In 1973 “the Bretton Woods system collapsed because of the emergence of inflation.” “The capitalist world of the stable medium of holding wealth …[through] the gold-dollar link” took a hit.
Next came worldwide take-over by global finance capital and neoliberalism. The Patnaiks explain that, with “barriers to capital flows” down, “state intervention in demand management becomes impossible.” “[A] regime of income deflation on the working people of the periphery” returned in order to “control inflation and stabilize the value of money.”
This story is of continuities. One is capitalism at its start taking up with colonialism. Another is capitalism using colonialism to preserve the value of money in cross-border commercial and financial dealings. One more is the oppression and beggaring of the world’s working people to prevent inflation.
W.T. Whitney Jr. is a retired pediatrician and political journalist living in Maine.
