Partial content of late 1990s issue of Direct Action focussing on global issues, globalisation, imperialism etc. Includes an interview Sam Mbah of the Awareness League in Nigeria.
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Poverty does not lurk in corners - it is running rampage across the so-called ‘Third World’ - most of Africa, South America, South and Southeast Asia and the South Pacific. This is no secret. But why? - the roots of this poverty is not dinner table conversation. Even less so is the scale and sorts of global bullying still going on in 1999.
The poverty and general lack of ‘development’ in the ‘Third World’ is typically thought to be closely related to the fact that it was colonised and controlled by a few countries in Western Europe (and now the US) for so long. But what is this link and how important is it?
All underdeveloped countries have, of course, felt the curse of colonialism, the robbery of the rest of the world for the benefit of European capitalism. But it would be over-simplistic to say that underdevelopment directly follows from colonialism. For sure, colonialism has produced some of the conditions that characterise underdeveloped countries, but these play a more or less indirect role in relation to their present plight. However, it is international capitalism itself which has led directly to lack of development. The basic role that colonialism played was to introduce the capitalist form of production, and all that comes with it, such as the modern nation state and the class system, to new parts of the world.
First of all, it would be useful to look at what "development" means. What it actually refers to is economic development within the international capitalist system, as measured by such bodies as the IMF and OECD. Given that something must have a period of time over which to develop, and that capitalism did not develop in all places at the same time, it would be unreal to expect equal development throughout the world. At the beginning of the colonial period just over a century ago, European capitalism had already been going for two centuries, while it was unknown in Africa. So, to find that Africa hasn’t yet caught up should cause no surprise. Moreover, given capitalism’s inclinations towards massive inequality within even one state, that such inequalities are reflected on a global level is somewhat inevitable.
That Africa is the least developed region of the world cannot be disputed. Former colonial states in Asia and Latin America have developed economically over the last few decades, in some cases dramatically so - that is, until the troubles of the last couple of years. While the role of capitalism in unequal development is considered elsewhere in this issue, here some effects of colonialism in Kenya and Tanzania are outlined to highlight some of the different forms and methods used in different places at different times.
Although the colonial period only lasted around three quarters of a century, contacts between Europe and sub-Saharan Africa are much older. European involvement with Arab slave traders is well known and goes back at least to the 16th Century. The Portuguese, meanwhile, were at the forefront of establishing trading posts around the African coast. Arab influence, on the other hand, goes back as far as the 8th Century and, by the beginning of the colonial period, a wealthy sultanate had long been established on Zanzibar and adjacent parts of the Tanzanian coast.
Arab economic influence was carried along trading routes into the interior of Africa, and Zanzibar was the hub of this network. Influenced by Arabs, the Africans of Zanzibar, nearby islands and coastal areas were also traders, and their language, Swahili, became the language of long-distance trade within east and central Africa. However, the establishment of colonial empires had a profound disruptive effect on these economic relations.
When Belgium seized Zaïre and overthrew Zanzibari commercial domination, trade from eastern Zaïre turned away from the routes to the Indian Ocean towards the mouth of the River Congo, the Atlantic and ultimately Europe. This set in motion a chain of economic events which contributed to the eventual imposition of German rule in Tanzania. The Zanzibaris, facing bankruptcy, called in debts built up in the boom times by African chiefs, who in turn demanded huge tributes from their subjects, driving them in increasing numbers into christian mission stations and out of the reach of tax-gatherers. On the east African coast, meanwhile, Arab and Swahili traders, in increasing competition and conflict with the German East Africa Company, rebelled. This gave an excuse for armed German intervention and, with social and economic order breaking down, Germany took formal control in 1890.
Thus, European intervention in Africa destroyed already established economic relations. This is not to speculate about how African economies might have developed free from such overt interference. Nor is it to say that Arab influence in Africa was somehow benign. It wasn’t, as their role in the slave trade makes abundantly clear. However, what took place was that European capitalism, in the form of colonialism, brought in a whole new set of economic relations.
The reasons for European interest often varied from one part of Africa to another. In Tanzania’s case, Germany wanted supplies of raw materials - such as rubber, sisal fibre, cotton, gold and mica - that were beyond British and American control. To this end, German settlers were encouraged to establish plantations on the best land which was forcibly confiscated from Africans.
By contrast, the Imperial British East Africa Company’s interest in Kenya was as a route into the ivory trade of Uganda. This coincided with Britain’s strategic preoccupation with controlling the Nile’s headwaters. Only after completion of the railway to Uganda in 1901 was Kenya’s potential realised. In fact, it was more a question of how best to make the railway earn back what it had cost to build.
So a policy of European settlement was implemented, with the best land being simply annexed through force, diplomacy, or a mixture of both. To increase the colonial administration’s legitimacy among Africans various measures were adopted - seed for marketable crops was issued; collaborators were rewarded with minor administrative jobs; markets in the Empire were opened up for African household goods and Indian traders. Meanwhile, a hut tax on the African population was imposed and chiefs were required to build roads using unpaid labour.
However, the Kenyan economy came to be dominated by estate production of coffee and maize, relying upon cheap African labour. This was the true economic policy of the administration, and African production was only really encouraged insofar as it had a pacifying effect. In fact African agriculture was held back, notably through the forced recruitment of cheap labour for the estates, and through state economic management which protected the settlers’ monopolies, by banning Africans from growing coffee, for instance.
Likewise, in Tanzania the German plantations needed cheap labour, but efforts to secure it were less successful than in Kenya. Forced labour, land dispossession, hut taxes, and duties on certain goods, all designed to increase African reliance on money, never persuaded enough Africans to leave the security, stability and degree of control afforded by traditional subsistence society for the harsh, unsanitary, and exploitative world of waged work on the plantations. The plantation system never came to dominate Tanzania’s economy as the white estates did in Kenya.
With Germany’s defeat in 1918, Tanzania, as a League of Nations mandate, came under the British Empire. However, uncertainty over its future within the Empire meant the new administration never developed a settlement policy such as Kenya’s, nor indeed invested in infrastructure in any meaningful way. Although European plantations did remain, the basis of export production, in contrast with Kenya, was peasant smallholding.
Thus, by independence in 1963, Kenya’s emphasis on settler estate production had left it in a more developed state in terms of investment and infrastructure than Tanzania. This was reflected in the East African Community, which both countries participated in, along with Uganda, from 1963 until 1977, and which was based on a common colonial history, currency, transport and tax systems. Kenya, especially its industrialising capital, Nairobi, where multinational companies tended to be based, quickly came to dominate the EAC, despite mechanisms to regulate such differences.
It also meant that with much more formerly white-owned land up for grabs in Kenya, there is now a much larger class of large-scale farmers than in Tanzania. While much of this land was given over to the Kenyan peasantry, a large part ended up in the hands of the so-called "telephone farmers", black bourgeoisie working in the state bureaucracy or industrial management in Nairobi and organising their farming requirements by telephone.
The Kikuyu people, Kenya’s largest ethnic group (around 20%), had lost by far the most land to white settlers. Beginning in the 1920’s and carrying on into the 1940’s, land agitation had brought few results. By the end of the 1940’s, enough Kikuyu were convinced that violence was the only way, and a campaign of intimidation through crop burning and ham-stringing of cattle got underway. This was the beginnings of the Mau Mau. By the end of 1952, the violence had escalated into killings of settlers. There were reprisals by the settlers; mass evictions of farm labourers from the estates; and half the Kikuyu population of Nairobi was detained in concentration camps. The gruesome nature of many Mau Mau killings quickly lost them support even among the majority of Kikuyu and, confined to a few heavily forested areas, they were rounded up by October 1956, ending 7 years of war in which over 13,500 were killed, less than 100 of them white.
Well after independence, and even today, the Mau Mau period has affected the economic, political and social life. It is complicated by the fact that the Kikuyu were split regarding their support for the Mau Mau. Thus, Mau Mau supporters, rather than "loyalists" within the Kikuyu were favoured when it came to the distribution of land and development projects. And likewise it tended to be Kikuyu areas, and those of their allies, that were favoured overall, leading to regional imbalances and inter-ethnic rivalry.
In Tanzania by contrast, no such dominant ethnic group ever emerged. As early as the Maji Maji rising of 1905-7 against the German authorities, there was a high degree of unity among the Africans throughout the whole territory, which has since remained a feature of Tanzanian political and social life. Thus, the independence movement which grew out of African agricultural co-operatives, first established in the 1920’s, was not the exclusive preserve of just one, or a few, ethnic groups.
Africa today is characterised by "modern" states cobbled together through a series of lines drawn on a map in far off Europe. This process has often thrown together mutually hostile peoples, which was certainly the case in Kenya, although the country has been relatively stable since the early years of independence. Nevertheless, it is a stability which is maintained through a one-party state system, with state-run trade unions and no room for independent working class expression. Likewise, Tanzania, despite its enviable record of minimal inter-ethnic rivalry, is dominated by a one-party system and state-controlled unions.
After independence, the conditions for development did exist and some progress was being made. The direct legacy of colonialism lies in the economic and political relations imported from Europe. The result has been new nation states; the capitalist class system, accompanied by corruption and abuse of power; and economies based on the production for export of a handful of cash crops and raw materials. But, in themselves, these have not caused underdevelopment.
For this we don’t have to look beyond the crises of international capitalism in the 1970’s, which crippled the economies of both Kenya and Tanzania, among many others, a blow from which they have never recovered. Now both countries are characterised by huge foreign debts, massive foreign trade deficits, the export of wealth by multinationals, and IMF restructuring measures which attack the living standards of the poor.
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Sorry mate, you can’t buck the market. Old clichés die hard, especially when they still have some use in them. The current line is that we cannot do anything about the ‘poor, unfortunate’ Brazilians, Indonesians, Thais, etc., etc., it’s just the whim of the market. Back in the middle-ages, some Godlike being was supposed to be looking over us and dealing out lessons wherever ‘he’ (sic) willed. More recently, it was Imperialism that was to blame. Now it’s Mr. Global Market that steals from the poor and gives to the rich. Just how many outfits have these filthy rich emperors really got?
Imperialism is based on inequality, on capitalists using their economic power, backed by state military power if necessary, to exploit the weaker countries. Reduced to basic economics, it is the transfer of wealth from the poor to the rich. For every dollar capitalists invest in the Third World, more than a dollar returns in the form of repatriated profits, royalties, debt repayments, interest and so on.
In recent years, however, this notion of imperialism has become clichéed and outdated. Capitalism is portrayed as a liberating force which, having defeated communism, will go on to free the world. The social and economic model for poor nations to follow is the advanced capitalist free market coupled to social democracy.
Behind this free-market hype, we find nothing more than a smokescreen designed to obscure the fact that the rich still get richer and the poor still get poorer.
One of the key concepts of this post-communist new world order is the global market, which has literally changed the way we view the world. It has negated the concept of imperialism. Rich states no longer exploit the poor, for it is argued that the global market has made the nation state redundant. Instead, there is a new world of individual firms competing on equal terms in one vast market. It is self-regulating market forces that drive the global economy, not governments - who are increasingly portrayed as powerless.
The global market is crucial to capitalism’s rehabilitation ensuring that poor countries can now compete on equal terms with the rich ones. Furthermore, being poor in this new era has its advantage. It provides the competitive edge of cheaper labour costs. Free of human control, footloose capitalism can flood into underdeveloped countries drawn by the prospects of higher returns, and in so doing it begins to eliminate world poverty.
As capital flows into the underdeveloped world, wages will rise and the labour market will tighten. This capitalist relocation will continue until labour costs are equal throughout the world. Only then will the incentive to relocate disappear. This is in line with the basic tenets of free market theory. Competition drives companies to produce goods at the lowest possible cost. They will therefore take advantage of cheaper labour costs in the underdeveloped world. The free market claim that capitalism can make the most efficient use of the world’s scarce resources depends on this principle that it will always produce at the lowest possible cost.
The IMF and the World Bank operate in line with this free market orthodoxy. For the global market to be efficient, barriers that prevent the movement of capitalism must be swept aside. Accordingly, they have imposed restructuring programmes across Africa, Latin America and, in recent years, Asia. This has involved privatisation, cuts in state spending, liberalisation of finance and trade, and the opening up of domestic industry to foreign competition, all in return for aid.
But will this new world order work? Are we heading for a social democratic utopia where market forces eradicate the gap between rich and poor nations? Not quite. The truth is that free market theory bears little resemblance to reality. Crucially, it omits the human factor, reducing the market to mathematical formulae which take no account of human behaviour. In reality, the economy is political; it does not operate according to economic laws but by human decisions. As such, who makes the decision, and to what end, matters far more than the laws of supply and demand, as we shall see.
Before looking at how human behaviour shapes economic activity, we can also challenge the global market thesis on purely economic grounds. The argument that the prospect of lower costs due to cheaper labour will force industry to relocate is flawed. It assumes that labour cost is the most important factor in determining overall costs. However, in an advanced economy, the level of technology is far more important.
This is easily proved. US wage levels are far higher than in Latin America. Yet, Latin American productivity levels are only 30% of those in the USA. The 70% difference is a reflection of the technology gap. When the technology factor is added in, the idea that poor countries have a competitive edge in the global market soon falls apart. Since technology levels are so crucial in determining profit, companies will locate where there is the best hope of technological advance. The global market thesis expects us to believe that multinationals will abandon the massive scientific base of rich countries in favour of the scientific underdevelopment of the poorer nations.
We can take the arguments surrounding relocation much further. Multinational companies do not operate according to free market theory. In the modern world, they are state-subsidised and state-protected private power centres. The idea that they are about to abandon the protection and privileges offered by the advanced states in favour of those on offer in the Third World is nothing short of ludicrous.
Having established the fact that productivity is the main factor in determining cost, let us now consider another global market myth - that poor nations can compete on equal terms. In reality, a free trade system has only one outcome. Goods produced much cheaper in the developed world flood into underdeveloped countries, consequently holding back the domestic economy and making poor countries dependent on these imports.
There are a number of major flaws in the global market idea. The notion that it can ever close the gap between rich and poor is simply untrue. For a start, such a notion fails to take any account of human decision making. Poverty exists across the world because it suits the interests of the rich and powerful.
After World War II, the economic victors, the USA, took responsibility for the welfare of world capitalism in the face of the growing communist threat. To help ensure capitalism’s long term survival underdeveloped nations were assigned "major functions", primarily to provide the industrial world with raw materials and help absorb the massive surpluses of capitalist overproduction. There was no ambiguity in this. Third World raw materials were described as "ours" by the first world planners. The thought that they might be used by the indigenous populations to meet their own needs was not even entertained.
Implicit in this was the idea that the underdeveloped world would remain so and would not develop its own industry. Since World War II, capitalism has done its best to halt Third World development by attempting to restrict underdeveloped nations’ access to technology. With their near-monopoly on technology, developed countries can put all sorts of barriers in the way of development in the poorer nations.
With the increasing importance of advanced technology came greater restrictions. For all the talk of free trade, protectionism regarding technology has actually increased in the last twenty years. Nowhere is this more apparent than in the role of multinational companies. Under the global market, underdeveloped countries are supposed to gain access to new technology. Here again, free market theory couldn’t be further from reality. Even when multinationals do relocate to underdeveloped parts of the world, that relocation is limited and strictly controlled.
Multinationals tend to create economic enclaves that are almost entirely independent of the domestic economy. These enclaves use cheap labour to assemble components imported from the developed countries. Attempts by Third World governments to impose quotas for finished goods including domestically produced components have totally failed. The result is virtually no linkage to the domestic economy and therefore no technology transfer, except between companies where it can be tightly controlled, preventing dispersal into the wider domestic economy.
This helps explain the productivity gap between rich and poor countries. Industrialisation that has occurred in the Third World remains low-tech and low skilled, generating low incomes. For instance, the likes of Australia, Ireland, Denmark and Norway have a manufacturing share of GDP of 20% or less, yet they generate incomes per capita that Latin American countries like Mexico, Argentina and Brazil, with higher manufacturing shares, can only dream about.
So, on paper, in terms of industrialisation, the gap between rich and poor is narrowing - but in terms of income, the gap is actually widening. Furthermore, with the development of microelectronic technology, there is evidence that multinational companies are shutting down labour intensive assembly in the underdeveloped world and relocating back to the developed world threatening even this low-tech industrialisation.
Underdeveloped nations are aware of the role capitalism has allocated them and have introduced economic reform aimed at breaking free of first world dominance, especially their dependence on first world imports by building up production for domestic consumption - so-called import substituting industrialisation. This process involved import controls and financial regulation in order to shelter the economy while domestic production grew. A crucial task was to stimulate the consumption of and demand for home-produced goods. This required wealth redistribution and agrarian reform to provide the mass of the population with the required buying power.
This flew in the face of capitalist post-war strategy. By the late 1940’s, as recently declassified records show, the CIA was alarmed at the growth in the world’s poor nations of "new nationalism", which aimed "to bring about broader distribution of wealth and to raise the standard of living of the masses". Thus, by 1955, the main threat to capitalist interests was no longer Soviet communism, but "nationalistic regimes", whose populist message was winning mass support, and threatening "our raw materials".
Attempts to develop through import-substituting industrialisation were quickly ended by US military intervention, notably in Latin America. Just a few examples will illustrate the point. In 1954, there was the overthrow of the "democratically" elected Guatemalan government, whose social and economic policy was described by the CIA as a "virus" that might spread. In 1960, there was the coup in Brazil, described by Kennedy as "the single most decisive victory of freedom in the mid-twentieth century". In 1973, our new friend, General Pinochet, saved Chile from Marxism.
Nor should we be fooled into thinking that the new "democratic" world order has made coups a thing of the past. The 1990’s have seen a mildly reforming government in Haiti prove too much for the US. One coup later, the dogs of war were called off, but only after the reforms were dropped in favour of the World Bank’s free market strategy.
What could be a better argument against the global market myth of mysterious uncontrollable economic laws driving the world we live in today? It is not the law of supply and demand that despatches military might to protect capitalist interests, but the decisions of the rich and powerful. The reality is that it is unelected human beings who control the world economy for the benefit of the few and the disadvantage of the many.
In some ways, however, disproving the idea that the global market will lead to greater equality misses the point, for the aim of those who argue for global market theory has little to do with greater equality. Instead, it is to intellectually underpin free market ideas, to provide the theoretical abstractions to justify extracting greater wealth from the world’s poor. This, of course, can never be admitted. As such, the global market thesis should be seen more as a capitalist propaganda tool than an explanation of how the world works. For a truer explanation, that over-used cliché, "imperialism", still has much to offer.
[h2]A Plague of Locusts
A plague of locusts has swept across SE Asia, Russia and now Brazil - unlike other locusts, these act not out of hunger, but sheer greed.
Super-rich investors and bankers are driving the Third World further into poverty. Judging by some media coverage, you might think these people have lost vast fortunes as currencies fall and economies are tipped into recession. But the only losers are ordinary people condemned to poverty - while western speculators laugh all the way to the next crisis.
The Brazilian working class are the latest victims in this series of crises that goes back to the 1997 devaluation of the Thai bhat. Back then, currency collapses quickly followed in Malaysia, South Korea, Hong Kong and Indonesia, all caused by western speculators. In 1996, $100 billion flowed into Asia, most destined for short-term investments in shares, bonds, and land speculation, rather than direct investments like plant, machinery or infrastructure. However, these short-term, fast-buck merchants panicked and, by the following summer, the money was flowing out as fast as it had flowed in.
United Nations Children’s Fund (UNICEF) statistics for south east Asia now show a 30% malnutrition rate among under 5’s - comparable with Africa. Meanwhile, 80 million Indonesians have sunk below the poverty line as food prices have doubled following devaluation of the rupiah. Wages and welfare benefits have been slashed across the whole region.
The culprits for this poverty are the big investment banks and brokerages like Merril Lynch, Goldman Sachs and Morgan Stanley. Of just over 110,000 Americans who earned over $1 million in 1996, a disproportionate number of them worked on Wall Street. Such undeserved prosperity is reflected in an orgy of mindless consumerism - sports car sales up, yacht sales more than doubled, and a rash of 8 and 9,000 square foot "trophy homes".
Investing in south east Asia promised massive profits from the exploitation of low waged workers. Stockmarkets took off as foreign money poured in and the speculative frenzy took hold. To build factories and hire labour, local capitalists borrowed vast quantities of US dollars, converting them into local currencies, thus maintaining their value against the dollar. What happened in 1997 was that the speculators realised that no amount of super-exploitation of Asian workers could generate profits high enough to justify the huge investment. That’s when the tide turned.
And now a practically identical situation has occurred in Brazil, the largest country in South America and, as such, crucial to the economic future of the whole continent. With 50% of Latin America’s total GDP, Brazil is vital to both American continents, including the US. Hence, western institutions attempted to prop up the Brazilian economy leading to heavy falls in equity markets due to the collapse in the currency, the real. At one point, 3% was wiped off the UK stock market. In January, despite 50% interest rates, massive lay-offs, and vicious pay and welfare cuts, speculation finally forced the devaluation of the real, leading to immediate price rises in food imports. This failure to convince foreign investors of Brazil’s financial and political credibility will inevitability lead to yet more deaths from hunger.
So, do investors get their fingers burnt through stupidity and greed? No, they actually lose very little, if at all. They lobby the IMF as soon as currency collapses begin. Since the IMF only lends to countries on condition that they adopt IMF policies, those with currencies under attack are forced to raise interest rates to insane levels. This is to give investors a higher return, and therefore stem the outflow of capital. But whatever the currency, experience shows that collapse cannot be delayed once investors have lost confidence. For instance, the sterling devaluation of 1992 occurred amid desperate interest rate hikes. However, what such responses do achieve is to give investors just enough time to get their money out without sustaining heavy losses. So, high interest rates are good for the short-term investor but disastrous for the working class who, as usual, end up paying, as the economy nose dives.
In Brazil’s case, the IMF arranged $41 million of assistance, designed to relieve not only the pressure on Brazil, but on the whole of Latin America, hoping to prevent the contagion spreading northwards into the US. However, all it achieves is a safety net for investors rushing to get their interests out of the Brazilian real, which continues its downward spiral.
Capitalism survives by lending money and raking in the interest. But it has now over-stretched itself by lending vast amounts to countries with no hope of repaying the interest without driving their people to poverty and beyond. Capitalist institutions regularly devise ‘rescue packages’, which mean lending even more money. And Brazil, despite being very rich in resources, is being sucked dry by debt repayments.
It is becoming increasingly impossible for developing countries to keep up. The crisis resembles the Hydra of Greek mythology which, having had one head chopped off, immediately sprouted two more. No sooner is one emergency sorted out, than stock markets start crashing elsewhere. Global capitalism is haemorrhaging.
Campaigners call for debt cancellation and, following horrific hurricane damage in central America and the Caribbean, tentative progress has been made in this direction. But debt repayments are capitalism’s life blood and cannot simply be wiped away, if it is to survive. However, the situation is becoming one of "can’t pay" rather than "won’t pay". It is inevitable that the rot will spread sooner or later to the US and on to the rest of the developed world. And when it does, capitalism will squeeze us all more than ever before to keep its profits up. Meanwhile, the locust speculators go on, descending on nation after nation, stripping whole economies bare to satisfy their never-ending greed. They leave behind countries bereft of work and affordable food, their health and education systems in tatters.
Libcom note: text from: https://web.archive.org/web/20030807091310/http://direct-action.org.uk/
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