Chapter 32

Chapter 32

Colonization To GLOBALIZATION
A review of Metamorphosis.



I developed interest in the impact of economic Globalization on the working class when I returned to Bath NY in 1991. Rural counties of upstate NY are agriculture based and have never been very affluent. In 1983 Steuben County of which Bath is the “capital”, the largest employer was Corning glass. Notable among other employers were Taylor wine, VA Hospital, a small Phillips plant, Mercury Aircraft, and a plant, which manufactured rail cars. In the neighboring Chemung, Schuyler and Tioga counties we had a Westinghouse and a Helicopter building factory and some other factories. Ithaca about sixty fives miles away has cornel University, Ithaca college and a Singer Sewing machine factory. Binghamton further a field had IBM and a SUNY campus.
The eight years that I spent in Pakistan saw great changes for the worse in the economy of the region I had returned to. Singer factory closed down, Taylor wine bought by a Global corporation, moved away; Westinghouse closed its doors and Corning Inc (nee Glass Works) outsourced most of its work. I have mentioned only a few examples as this is not supposed to be an exhaustive survey of the economy of the area I have chosen as home. It is a bird’s eye view of a trend that has prevailed all over the country .
As a consequence unemployment was at an all time high. People could not afford medicines. Too many houses were on sale. Bankruptcies were rampant. But there was surprisingly little resentment among the populace. They had all been brain washed by the mainstream media . When I pointed out that Canada next door had National Health Service; treatment and drugs were free, they said it took too long to have an x-ray done. They were completely taken in by the neo-con propaganda that we had the best health service in the world, never mind that forty six million persons did not have health insurance in a country, which controlled seventy five percent of the resources of the whole world. Inexpensive education meant little as few wanted to go to college. Commonly held opinions were that higher taxes were bad, free loaders were an evil; that they themselves were on welfare was conveniently forgotten. The rate at which Bush administration was cutting back at welfare was of little consequence. They voted for the lesser Bush (I owe this apt term to Arundhati Roy) in 2004 again because he was pro-life, never mind the hundreds of thousand lives, including several thousand American ones lost since the commander in chief lied his way into the Iraq misadventure.
A brief review of various aspects of Globalization would be in order .
Globalization is a continuation of capitalist development. Capitalism is 400 years old and uneven development is inherent in the law of motion of capitalism.
Accumulation of wealth in the world has always been uneven and that gave birth to mercantilism, which in time led to capital accumulation and capitalism. But the qualitative difference between the two systems is that in mercantilism the differential space was due to activities of nature on which poverty or prosperity of a region depended where as capitalism owes it to conscious activities of man.
History is the evolution of material reality in time, while geography is evolution in space. Our inquiry is directed to understanding uneven development using the methods of historical-geographical materialism.
Mercantilism engineered a division of labor based on natural differences. Under capitalism the UK, other European countries, the USA and Japan intensified and extended the division of labor they inherited. The division was raised to higher levels during the period of colonialism and for reasons of greater efficiency was replaced by a new system of neocolonial space. Multinational corporations (MNCs) are the most evolved practitioners of neocolonialism.
Capitalism created uneven spaces with in neocolonies for the latter to serve as a market for its products.
In addition to dividing the space globally capitalism also divides the minds of the people. For this purpose it has invented the religion of consumerism. Control over media helps it achieve global cultural uniformity.
Operation of the capital is through foreign direct Investment (FDI) through MNCs. It is proposed that FDI has not helped the masses or underdeveloped areas. It has concentrated wealth in a few hands. Sky scrapers and over passes look down upon slums. This process started during the period of colonialism has continued and further intensified during globalization.
The level of exploitation of the people is akin to barbarism.
Value is based on socially necessary labor time. For value to rise exchange is necessary. For the latter differentiation is a prerequisite. Under capitalist exchange the mechanism is so controlled that differentiation is not only maintained but also intensified and expanded. Differentiation is accentuated by transfer of value from India (and other underdeveloped counties) to developed countries through FDI.
The earliest reference to capitalist structure and uneven development is in works of J.H. von Thunen. He delves in location of farm activity with reference to the city.
Karl Marx speaks of division of labor between the town and country as the foundation of capitalist development and extends it to the whole world. He contends that effect of machinery is to increase the supply of raw material as cotton gin augmented the production of cotton. Cheap articles and improved transport furnish the weapons for conquering foreign markets by ruining handicraft production. Modern industry gives spur to emigration and colonization of foreign lands eg Australia. International division of labor converts one part of globe into an agricultural field and the other part remains industrial field.
Three schools have attempted to theorize an explanation of uneven development. 1 Neoclassical, 2 dependency and 3 Marxist

Neoclassical
Neoclassicists views are similar to those of Adam Smith the founder of political economy that as market developed there would be efficient division of labor and more over all development. W.W.Rostow enunciated a universal theory of five stages:
-traditional society
-precondition for development
-take off
-maturity
-mass consumption.
Among the Neoclassicists the technocrats believe that perfect information and free movement of capital and labor will lead to trickle down benefit to all. Institutionalists on the other hand would like state intervention to overcome uneven development. They contend that it is nature's bounties, which decide the location of industries.
Sixties and seventies saw the advent of neo-technology school. Its message was that the countries, which innovate and diversify, would have an edge and developing countries can produce only simple products.
All above theories propose a doctrine of free trade. They are however undermined by government intervention in favor of certain industries, which they deride as protectionism. Neoclassicists have developed a strategic trade theory for targeted policy interventions to optimize national interests. Interventions can be entry barrier, tariff and non-tariff protection and differential interest rates. It is based on retaliation and aggression. Acquired comparative advantage is the result of initiative at industry level. Induced advantage is due to state intervention.
Stephen Hymer (1972) contends that MNCs have three-tiered setup. Knowledge based activities stay in home country, while actual production goes to cheap labor rural areas of the host country and regional management is located in major cities of a host country like India. Vernon (1978) postulates that firms innovate by exploiting economies available from redesigning the product as assembly products whose components are transportable at low cost. Developed countries produce exportable components; developing countries assemble them at low cost.
Castells (1997) contends that knowledge itself has become the major product traded internationally now.
Neoclassicists regard capitalist society as a given, eternal and universal. Accordingly they reduce social reality to economic reality.

Dependency School.

In 1967 Frank published "Capitalism and Underdevelopment in Latin America" and dependency school came into existence. Underdevelopment occurs because the world capitalist system functions under metropolis-satellite structure. Metropolis exploits the satellite and surplus is concentrated in metropolis. Satellite is reduced to a state of dependence.
Wallerstein divides capitalist system into 1 core, 2 semi-periphery and periphery. The essential differences is in the strength of the state power, which operates to alter the terms of trade so that surplus continues to pour into the core.
Monopoly capital like MNCs is administered three tiers. Head office is in a major world center, regional offices in large world cities and production in cheap labor areas with easy access to raw material and transport. Intermediate levels are just agents and the real relationship of exploitation is level of wage.
Rey and Arrighi hold that since preconditions of for capitalist production did not arise naturally in most parts of the world, they were imposed by external force. Resources were opened up by displacing the existing ruling class and reorganizing indigenous societies by direct military coercion. Rey called it the colonial mode of production.
Once the framework had been transformed to fit the needs of capital it could be left alone and domination assured by economic means and a political base in the area. Formal decolonization became possible. Capitalist mode of production was hampered by existence of pre-existing mode of production. This was circumvented by reaching the stage of finance capital and Capital acquired the power to impose capitalistic mode of production from out side.
Samir Amin holds that core countries developed capitalism earlier and even when wages rose at the center the lead ensured lower costs.
Capitalist development in the periphery was blocked and the latter could compete only in resource-based exports. Large arts of population were excluded so that pre-capitalist mode of production was not entirely eliminated. Amin calls it peripheral capitalism.
Once the system is established it is managed by the center by 1- technological monopoly, 2- financial control, 3- access to resources, 4 media monopoly and WMDs.
Hymer disagrees. He sees the new administration structure at three levels a) top managers who decide goals, plans and stay in finance centers, and b) middle managers who manage subsidiary supervisors and field managers and c) day to day managers who are located in cheap labor areas with access to raw material and markets. Expansion of MNCs into periphery does not improve the welfare of population. It only brings more profits to the center.
According to Harry Magdoff dependency is a way for continuation of the benefits of former colonies by substituting physical control with IMF, WB, UN dicta and by military dominance.
The process of value transfer works by paying petty producers less than subsistence wage. The coexistence of capitalist, petty commodity and subsistence mode of prediction causes stagnation in the last two.
The dependency schools fail to recognize significance of autonomous third world histories and the resistance to colonialism. The theorists are unable to explain the qualitative changes. Qualitative essence of capitalism is expansion of surplus value through increase of relative surplus labor.
Dependency theory asserts that underdevelopment was a result of unequal exchange relations and the conclusion that severance of the relations would bring about domestic accumulation and self-reliant development. The theories were adopted precisely because they could not provide framework to transition to socialism. With the latter capitalism was involved in a mortal combat.

Marxist school.

Henry Lefebvre defines three levels of reproduction: 1- biological, 2-labor power i.e. working class and 3- social relations of production. Capitalist organization predominantly related to 3. Dominant relations of production are produced in the urbanized space of advanced capitalism. Space is created, parceled and organized into locations of control and extended to global scale through state bureaucracy. Survival of capitalism depends upon juxtaposition of overdeveloped and underdeveloped regions. Capitalism can break down only when capitalist social relations cannot be reproduced.
Mandel holds that unequal development between regions and nations is the essence of capitalism. If in order to survive all working people got jobs where they lived there would be no reserves free for sudden expansion of industrial capitalism. When not produced naturally they are produced by force. During the freely competitive capitalism up to the end of nineteenth century super profits were derived from juxtaposition of industry and agriculture in the advanced countries. Capitalism did not suddenly internationalize. Mercantile capital had been operating for centuries to extract profit through commodity trade. Imperialism internationalized finance, money and investment transactions.
According to Harvey uneven development is the result of capitalist effort to solve its internal contradictions of over production and devaluation of goods. The state intervenes by extending credit and capitalist forces extend the market beyond national boundaries leading to over accumulation at global level. A solution to this hierarchy of spaces is created with imperialist countries at the top and underdeveloped ones at the bottom.
Neil Smith speaks of seesaw movement of capital. When profits dry up in one region, capital moves elsewhere and moves back to the first place after squeezing the second one and will survive as long as it can work the back and forth movement.
Bannerjee-Guha states that in India operations of MNCs are associated with unevenness, inequality and distorted growth. At the level of production capital-intensive technology and foreign control, at cultural level conspicuous consumerism and at the fundamental level of development creation of regional inequality, export industries and extreme urban-rural-class divides.
Class analysis locates the force of history in class struggle and allocates a strong influence to people on their destiny. Class analysis is basic to understanding of underdevelopment. It is necessary to focus on the role of domestic bourgeoisie, class formation, class alliances and role of the state. In their creative activities human beings confront materials of nature and transform them to meet their needs and aims.
They are conditioned not only by nature, but also by what they make of it. Concept of nature as a complex of natural and social conditions of production and human intervention is very significant. The path of production and consumption humans adopt determines every aspect of their existence.
Initially all the regions of the world were more or less identical and people developed in isolation. Developments were dictated by geography and differed from each other. All the people of a region enjoyed benefits more or less equally. They are referred to as primitive communities.
With advancement of human society primitive communities were dismantled and differentiated into towns and villages. The villages existed for towns. This was differential space, was hierarchical in nature and eventually expanded into imperialist countries and colonies. The latest division into imperialist countries and neo-colonies is the widest and deepest division so far. This is global hierarchy of space.
It is essential to analyze the factors, which gave rise to global hierarchy.
A person becomes a capitalist if he uses his money to expand and may be a) money capitalist, b) production capitalist or c) merchant capitalist.
The money capitalist advances funds to production capitalist that produces things which merchant capitalist undertakes to sell. Surplus value is created and profit is shared along the chain. A person combining all the three functions is industrial capitalist.
The motivation is accumulation of wealth and that is inherent in capitalist production. The motor driving capitalism is accumulation and production for their own sake. Capital gets concentrated in fewer and fewer hands.
For capital to circulate and wealth to accumulate there are certain minimal requirements: credit institutions, lawmakers and enforcement of laws, issue and maintenance of money, and physical infrastructure of roads, railways, factories, storage, power stations, ports, ships and waste dumps. The nation state provides the above cost effectively.
Capitalism inherited absolute space from city-states and under pressure of productive forces combined into Nation states, which served the purpose of maintaining capitalist control over politics of the area and to provide a captive market in times of crisis.
With further enhancement of productive forces capitalists faced a dilemma. They needed a state but to continue expansion would have to break the boundaries. To accommodate the requirement Europeans established the colonial system in the 19th century. Later by the USA and Japan adopted it as a solution to the problem.
Imperialist forces took it upon themselves to build the social and physical infrastructure of the colonies for accumulation of capital of the imperialist states. It was a nonviable system as imperialist states vied with each other for colonies and fought two world wars. The problem of Increasing opposition from colonies was solved by creating much more efficient relative spaces of neo-colonies which though different in form are a continuation of the old system. The task of the neocolonial system is to maintain the differentiated and hierarchical system of states necessary for capital accumulation.
Underdevelopment of particular spaces is produced/reproduced as a part of accumulation of capital, which has now evolved into the global neocolonial system.
Globalization is nothing but a postmodern expression of the historical process of capitalist expansion.
Capitalism is commodity production. Any product for sale in the market possessing use value, exchange value and value is commodity. Use value is for example cloth for wearing. Value comes from concrete labor, which goes into production. It depends on productivity of labor and will differ from firm to firm. Exchange value refers to the amount of commodity needed to buy another commodity and is determined by socially necessary labor time. The common factor in all products is labor, which constitutes value.
The labor time expended by commodity producers is called individual labor time. Time required to produce use value under existing conditions of production is socially necessary labor time.
Value is conceived as a social average taken over all locations and integrated into a network of exchange and can vary with a change in networked area. Spatial integration is thus central to the concept of value and the law of value plays a central role in capitalism.
Under capitalism labor is a commodity. Value of labor power is the value of the means of livelihood to keep the worker alive and his offspring growing as future workers. The special mark of labor power is that it can create higher value. The difference between value and higher value is surplus value. The process is augmentation of value is the ultimate motivation of capitalism. Law of surplus is the basic economic law of capitalism.
The part of capital used to buy means of production is called constant capital. Part of capital used to buy labor power is called variable capital. Surplus value is value augmentation by variable capital.
Labor time needed for sustenance of a worker is necessary labor time, that used to produce surplus is surplus labor time.
Capitalists resort to lengthen labor time and surplus value arising from it is called absolute surplus value. Capitalist can not lengthen labor time beyond a limit with out incurring labor opposition so they shorten the necessary labor time and lengthen relative surplus labor time by introducing new technology. The reason capitalists introduce technology is to reduce individual labor time in below socially necessary labor time and are able to sell the commodity at the value determined by the latter time and gets more profits than other labor intensive capitalists do. But others adopt new technology soon, product value comes down, but general labor productivity will have been elevated and necessary labor time will be shortened leading to ever more profit.
The activity of continuous capital accumulation requires continuous increase in the scale of production, the bigger capitalists have greater advantage, and they can buy larger equipment and new technology. Smaller capitalists will be swallowed up, thus competition becomes an external force to necessitate more and more accumulation.
Capital is value in motion .In the first phase of this motion capitalist buys means of production and labor force thus transforming money capital into production capital and prepares to create surplus value. In the second phase means of production are combined with labor force. Production capital now takes the form of commodity capital, which contains surplus value created by labor. This product is taken to the market for the final phase of motion. Industrial capital passes through all the three phases and is involved in a circular flow.
Now the capitalist has more money and goes to buy more. This circulation is called turnover and the time taken for one cycle is turn over time. To reduce turn over time the capitalist lengthens labor time, labor intensity and improves production methods. In the exchange phase better transportation and communications and organization are developed.
To achieve spatial integration, in addition to exchange, barriers to movement of commodity and money have to be reduced to a minimum. The important thing is not the distance but the speed with which the market can be reached.
Production of commodities is tied to a particular location for the duration of labor process. Advantage of a location depends upon cost of production, transportation and interest rate. Cost varies with natural resources and social, political and economic conditions which affect the value of labor power, intermediate out put and demand. Relative locational advantage translates into more profit akin to that arising from better technology. Concept of abstract space arises when there are exchanges between large numbers of differentiated spaces. Production in areas where space is cheaper than the social average leads to more profit.
Capitalists who sell at social average but produce at local costs, which are less, enjoy this type of surplus value. This is different from the permanent form of fall in the value of labor power when value of commodities falls. If rent rises capitalist would want to shift his production activity. Barriers to this shift are full turnover of fixed capital and the need to create new infrastructure. Harvey (1999) holds that the factors of technology, organization may lead to agglomeration of activities in large urban centers. Movability of labor is also a factor and capitalists demand removal of all barriers to this mobility. In order to push down the exchange value of labor power capital needs an army of unemployed but to take advantage of that mobility of labor has to be curtailed and it should not be allowed to go back to the land. This is one of the internal contradictions of capital.
Another contradiction is that reduction of socially necessary time requires concentration of production and consumption to reduce turnover time, but this leads to increasing costs, rigidity in use of infra structure, rising rent and lack of space. This calls for dispersal, which has its own constraints. This tension forces simultaneous or successive deepening and widening of its spatial configurations leading to antagonism between the center and the periphery.

Crises and Their Transmission.

Crisis is one of accumulation due to overproduction, which is rooted in the contradiction between the social nature of production and private ownership manifested in great increase of productive forces while purchasing power of working class decreases. Along with expansion of production consumption level should rise too, but the capitalist tries to reduce wages to the lowest possible. New techniques enhance the number of unemployed. Peasants and handicraft men are bankrupted. Economic crises of over production become inevitable.
All enterprises are disconnected. Individual capitalists do not know the actual demand and production is chaotic. The problem is solved by the banking and credit system to step in and transfer money from those who have a lot, or the government may step in as advocated by Maynard Keynes (The general Theory) propounded after the crash of 1930. Creating demand at government initiative to compensate for lack of demand in the capitalist system is called Keynesianism. The forms it had taken are welfare type in Europe, spending on the military in the USA and development activities in less developed countries. The huge money supply by the state creates the impression of sustainable demand. Every increase in production leads to more concentration in the hands of a few. The short fall in demand becomes in time more severe. State and banks work hard to create more money to increase demand leading to inflation which is devaluation of money. There will be sectoral imbalances as well between production and demand. Prices will rise.
One solution is to open up borders and export commodities and that needs international money. Gold was inherited from the mercantilist system. Infra structure of banks, communication and transport is needed which were created in the colonial period through the export of capital. The export is at the cost of devaluation of the assets and labor of importing country. Producers in the importing country lose out in the competition. Exporting countries have exported their problems, not solved them.
Stocks of unsold goods pile up, machinery gets rusted and devalued, and workers lose jobs. And wages are pushed down.
People of the importing countries may oppose the devaluation of their economies. With political control exports can be forced on colonies, but that market would get exhausted. If capital is not used for expansion it will get devalued. Export of capital does not replace export of commodities though capital by increasing the purchasing power of a few people may increase demand.
Export of capital takes the form of loans and technical partnership. The most important form however is foreign direct investment (FDI). Returns are greater, the untapped resources of the host countries can be tapped and it can enter the local market. FDI needs infra structure for its function of expansion, so it concentrates in the areas where it is available. These areas flourish and surrounding areas are devalued which become a source of cheap labor creating in them the willingness to work at ever lower wages and reinforce the culture of TINA-there is no alternative.
Crisis over accumulation is converted into crises of switching of capital from one region to another.
In its four hundred years history capitalism has evolved through various guises and is going through a transition from export of commodities to export of capital to a Globalized chain of production. Export of capital creates spaces whose objective is to aid accumulation in metropolitan centers. Development should be complementary hence it seeks subordinated spaces. This space was created by conquest in mercantilist phase in some parts of the world and in the whole world in the imperialist phase. Hierarchical space of colonialism has been reproduced through the machinations of imperialist countries and multinational corporations (MNCs). The latter play the central role in globalization.
According to Lefebvre capitalism inherited absolute space-that of the church and the nave, of the castle and the palace, as a result of unity of political, economic and religious-cultural space. Capitalism has created separate for these separate forces in the society and has reserved abstract space for itself as an artist has the concept of abstract space in his mind and allocates different spaces for activities, such as furnishings, passages and toilets. In the context of a city, the class orientation of the planner will be reflected in whether he emphasizes fly-overs or low cost housing.
Information revolution has provided enormous collection of data about natural and human resources and can help plans for efficient utilization of resources. Only the imperialist countries have the capacity to plan and they leave details to MNCs. Their decisions re location, and outsourcing are based on greater relative surplus value (profit).
Cost of production is related to skills, standard of living, constant flow of labor power and human development index, (HDI). HDI developed by UNO is a good indicator of all the above. Low HDI is a crucial condition for MNCs to extract surplus value.
As a general rule any one who has control over abstract space has control over concrete space as money has control over commodities. International capital is able to maintain control with the help of comprador capital of neocolonies where backward areas exist for cities and cities exist for imperial centers. IMF, WB and WTO backed by military power have been established for enforcement of the activities of MNCs.

History of Uneven development.

Feudal society was driven by maintenance of hierarchy and its privileges; accumulation was a bye-product. Situation changed during two hundred years of mercantilism; it was a period of transition between feudal and capitalist mode of production.
In primitive accumulation under mercantilism surplus was extracted during exchange. The merchant gathered a large number of craftsmen into a factory and introduced division of labor. Slowly the capitalist reorganized production to increase absolute and relative surplus values and to extract them in the production process by reducing necessary labor time.
Capitalists do two things to accumulate 1) increase relative surplus value by improving technology and 2) reduce turn over time by improvements in transport and communications. Now parts of a product like for example a car can be produced in 50 places and surplus is generated in all 50. Globalization has been able to shift production into under developed countries. Workers in developed countries are pacified with social security and pensions.
Outsourcing appears to have similarities with mercantilist system, but the differences are:
-Under handicraft system technological knowledge was free, workers worked at their own rhythm and creation of technology was in the workshop. Under globalization technology is the most important product and activity of developed countries. Modern small-scale producer enjoys no autonomy.
Intermediate producers over accumulate too, and fire their workers easily as the latter are often casual employees. Thus outsourcing partially solves an inherent contradiction; that of inability to find markets. Wealth gets concentrated in a few hands in centers which produce knowledge while the workers who produced the surplus value live in poverty with misery of an uncertain future.
Globalization is in the logic of capital. It did not suddenly break out. Capitalism has to keep on expanding to survive. It is also a search for an internal solution for surplus value; reduce turn over time and to reduce organized resistance to exploitation. In a sense it is a sign of dynamism of capitalist system.
Success of globalization depends to a great degree on cooperation of the ruling elite of the neocolonies to suppress development of revolutionary class consciousness by spreading religious fanaticism and racial/caste/ethnic and religious divisions by compromising with feudal forces (and its subsidiaries, the clerics and the military) and most importantly by promoting the new religion of consumerism.

Feudalism to Capitalism

Feudalism arose and thrived as it could develop productive forces better than its predecessor, slavery which collapsed due to its inability to do so. By giving land to slaves productivity could be increased. Feudal lords also organized colonization and introduced technology like water mills. Monks were the only literate group and spread technology. Feudal lords were wasteful consumers and continual warfare took a great toll; only 4-5% revenue went into investment.
Over a thousand years the system was dynamic enough to allow recovery from collapse of the Roman Empire and enabled the West to out strip China and Islamic Empire. Feudalism is the hegemony of small-scale individual production plus the forced seigniorial levy. Trade, wage laborers, primitive accumulation and sequestration of peasants from land caused its decline and the rise of capitalism. The transition started in 14th century.


RENT- Labor as rent to the one in kind to rent in money

Feudal society faced Malthusian crisis of food shortage, which occurred once every century. Feudalism had occupied all cultivable land and could expand no further. Crises in 14th and 15th centuries loosened feudal ties.
To underwrite their conspicuous consumption the lords needed more and more revenue and discovered that collecting rent in kind was more productive as peasants took more interest in production than the serfs did as the former could keep a part of produce. The producer had become a little independent and the next stage was rent in money. The traditional common law relationship between the peasant and landowner was transformed into cash and led either to expropriation or to peasant buying his land and liberty. This also anticipated the formation of property less laborers.

Advent of wage labor
Wage laborers are essential for capitalist relations to emerge and are produced when people are deprived of land and tools are taken away from artisans .

Towns.

In the towns merchants could skim off a part of surplus and became a class. Towns also offered handicraft as a new way of creating wealth. Inventions like spinning wheel, lathe, printing, eye glass saved labor and enhanced productivity.
The logic of town was commodity and production was division of labor based. Serfs escaping oppression of lords provided the Work force. Workshop owners used the guild system to restrict production and competition. Journeymen suffered, fought guilds and tried to introduce free wage labor. This was proto-industrialization.

Mercantilism and Role of international trade in primitive accumulation
.
International trade, which may be defined as exchanges between communities with different social formations, has been a fact of life since times unknown and through the process of primitive accumulation was the most important factor in the transition from feudalism to capitalism.
Pre-capitalist communities only wanted what they actually needed and except for a few luxury goods and spices produced them at home. Exchanges such as payment of dues and gifts were a part of social obligations and were affected through extra economic means. That they were aware of long distance trade is borne out by the discovery of China porcelain in Central Africa and ostrich feathers and spices in Europe.
In pre-capitalist exchanges the middleman made profits. People of the mid-East controlled the trade and European merchants had to offer gold as the more advanced and self sufficient economies of India and China did not need any thing Europeans could produce. Morocco produced gold, which passed into mid-Eastern-Muslim hands.
Portuguese were the first people to go beyond the boundaries of Europe. That was to secure control of trans-Saharan gold routes and they captured Ceuta in 1415. They did not find gold but the venture gave them familiarity with the coast and the idea to outflank overland Arab trade network. Columbus in an effort to outwit them went west and ended up in the Caribbean in 1492 and Vasco de Gama in Kozhikode in India in 1498. Long voyages were commonplace among Asians, but were new to Europeans Ziauddin 1993.
Aztecs in Mexico and Inca in Peru were overcome by Spain in early 16th century. Following Arab practice Africans were taken across the Atlantic as slaves to satisfy labor shortage.
The first demand for slaves came from Spaniards, but the Portuguese, the Dutch, the French and the British organized the trade; the last after gaining naval supremacy became the leading slaver.
Between 1451 and 1807 ten million slaves were taken across the Atlantic.
Following Vasco de Gama's arrival in 1498, the first trading post was established in India in 1500. By 1510 spices and other goods started flowing into Europe bypassing Arab traders and drying up Ottoman revenues from overland trade. By 1509 Portuguese had reached Malacca and Albuquerque captured Goa in 1511.
With bases in India the Portuguese with better ships captured coastal towns in Oman and Iran and extracted tributes from local rulers. Abbas 1 of Safavid dynasty sought the help of the Dutch and the British, and threw the Portuguese out only to fall under the control of the British-who defeated the Dutch-by the early 19th century.
Moluccas in Indonesia was the only source of cloves, nutmeg and mace. In 16th century it came under the control of Portuguese, fell under the sway of the Dutch in 17th century. They did not establish direct rule but controlled it completely. Once coffee became popular in Europe they forced Indonesians to grow it and paid little. When sugar replaced coffee as the main export of Indonesia. By the end of 18th century cotton goods the erstwhile main export of Java had been eliminated.
Robert Clive defeated Nawab Sirajuddaula of Bengal in 1757 and started the subjugation of India. In the mercantilist phase between 1757 and 1813 when the monopoly was abolished the East India as the sole legal company as the sole legal monopolist was the vehicle of exploitation of India. 1813 t0 1834 was the transition free trade phase of exploitation. The company traded in Cotton, agricultural goods, indigo and opium.
During 15 hundreds West Europeans took control over international trade and the following three centuries if mercantilist phase Capitol accumulation paved the way to industrial capitalism. While West European countries progressed into the capitalist mode, the rest of the world was pushed into miserable poverty. Africa for three centuries only supplied slaves. American Indians had been killed in their millions. After Spain was weakened in Napoleonic wars, South Americans led by landlords and merchants and helped by the British won independence by the first quarter of 19th century. The leaders shifted allegiance and the native industry and handicraft were destroyed by British manufactures.

Colonialism.

During the industrial revolution capitalist countries matured and transformed themselves into imperialist powers. Adam Smith, David Ricardo, J.S. mills, J.B. Say and Thomas Malthus were the main theoreticians and their work gave rise to the market theory that, left to itself world economy will grow.
Marx pointed out that market was not as liberating as classical economists would have it; actually it s only a cover for the exploitative social relations between the owners of the means of production and workers who created surplus value that led to accumulation and that the new relations of production was more exploitative than the one it had replaced.
Suez canal in 1869, Panama canal in 1914, faster ships since 1840s, transatlantic cables in 1850s and mass production goods due to industrial revolution, military innovations like breach loading rifles all played a role in spread of imperialism.
Capitalist accumulation has two basic tendencies, namely concentration and centralization of capital, which led to monopoly, which caused further reduction in costs of production and increase in profits. Once capitalism reaches monopoly stage rules of competition and accumulation change.
By early 20th century US monopoly organizations controlled 70% of metallurgical, 66% of Iron and steel, 81% of chemical, 80% of tobacco and sugar, 85% of aluminum and 95% of coal and oil production. Free competition capitalism grew into monopoly capitalism and transformed itself into imperialism. Banks, joint stock companies and new technology among other factors played important roles in the transformation. Stocks of other joint stock companies are bought through a major joint stock company, which in turn buy others. In this way a relatively small amount of capital can control a much larger capital.
Important features of imperialism are 1) domination of monopolistic organizations, 2) export of capital, 3) international division of labor, 4) international domination of finance capital, 5) division of the world among imperialist countries. (Lenin-Imperialism).
With emergence of monopoly, capital rather than commodity export dominated. This was to control sources of raw material. Under imperialism the system of production is a few organized economic powers with a periphery of underdeveloped agrarian or semi-agrarian countries.
In the economic field Gold and Silver standards had come into being by 1770s, by 1908, 89% of the world lived under convertible currencies. Business and commercial codes were adapted from Napoleonic code, universal postal service was established in 1878.
During 1830s and 1840s North Africa was colonized. Britain subjugated China after 1839-42 opium wars. India went down in 1757 and the process was completed in 1857.
Having won independence Latin America entered international trade as exporter of primary products in the 1840s.
Coinciding with transition of European economies from mercantilism to industrial capitalism and changing pattern of demand for raw materials, the first half of 19th century saw abolition of slave trade.
In the late nineteenth and early twentieth century the British got involved in Egypt/Sudan, and made deals with Sheikhs of Gulf region. Aden was annexed in 1830. France took over Algeria in 1830, Spain invaded morocco in 1860, and Tunisia came under French in 1881. Europeans carved up Africa at the Berlin conference of 1885. Britain went to war with Egypt for right of passage to India as late as 1956.
During the mercantilist phase Europeans stopped at the coast. African states and merchants, which managed the trade on in the interior, were destroyed by colonization.
East India Company not only taxed India but also monopolized opium trade and production and between 1757 and 1822 5-6% of GDP was siphoned off (Bagchi 1982.) Previously an exporter India became an importer of British cotton as the British destroyed the indigenous industries of India by controlling production of raw material. Land revenue pattern along with de-industrialization created a semi-feudal society.
From mid nineteenth century colonists started building railways, irrigation works and ports. They also developed mines, tea plantations and jute industry. Between 1850s and 1918 it was so worked out that India had deficit with Britain and surplus in trade with rest of the world, which the former used to balance their deficit with USA and Europe (Bagchi 1982).
Till 1880 mercantile trade Europeans exploited China. In imperialist stage they occupied parts of Chinese Empire.
Japan could resist colonial onslaught thanks to the Meiji enlightenment revolution of 1868 in which bourgeoisie and nobility joined hands, the former adapted factory system and that put the country on the way to capitalist industrialization. With the advent of industrial revolution in mid 19th century shipyards, arsenals and textile mills appeared in the country. Government played a critical role by collecting taxes and putting it in private hands and Japan reached the monopoly stage by early 20th century and started expanding, but was handicapped by a small internal market and lacked raw materials. In 1872 they seized Luchu. In 1894 they captured Pescadores and Taiwan and separated Korea from China. In 1904 they fought a war with Russia, defeated them, established protectorate over Korea and control over Kwangtung province, Port Arthur and southern branch of Chinese railway In 1907 they made a deal with Russia over spheres of influence in Manchuria, in 1910 Korea was annexed and between 1902 and 1914 Japanese investment in China went up 220 fold.
During mercantilist phase Europeans settled in North America, Australia and New Zealand whose development followed the European pattern. Due to high productivity they attracted European capital and developed domestic markets and labor force and moved towards early industrialization and were regarded by Europeans as extensions of their own space and not as colonies.
The USA had a nucleus of industry by the time of independence. Textiles followed in 1820. A neutral stance in Napoleonic wars saved its merchant fleet; the East had industries, the south produced exportable, and mid-west provided food. With establishment of monopoly competition changed from with in national boundaries to international competition in which weaker countries were absorbed by the stronger ones.
Countries with less developed finance capital (Britain and France) gave loans and purchased shares in foreign firms. Countries with more developed finance capital -Germany and USA- they made direct investment in production (FDI) ensuring tighter control.
The term globalization encompasses trans-nationalization of information, culture, language, immigrants, feminist and Human Rights movements as well exploitation of the working class, but when used with out further qualifications, is meant to indicate the economic aspect of the integration of human society. It means that Global corporations are no longer bound by territory under respective government’s nominal control . About the only positive effect is transnational solidarity of Human Rights and feminist movements, which the governments are forced to pay some heed to.
In order to fully comprehend the nature of the beast we must analyze and distinguish the late post-colonial imperialism and the subtle encroachment on sovereignty of less developed countries (LDCs) practiced since WWII from the naked aggression of European countries between fifteenth and nineteenth centuries. I am not including the earlier pre-historic colonization of India and Europe, as the character and motivation of invasion were different. Travel was slow; colonists settled in the new land and were gradually assimilated. In any case adequate documentation is not available to enable rational comparison.
In a way earlier colonization of the second millennium was more humane and adventurers exploring far off lands were driven by actual hunger. Europeans lived in harsh climes; the soil was not fertile and did not produce enough food to go around. The few rich ones had plenty. Their sycophants were relatively well fed on the crumbs from the feudal table. Ordinary mortal had a meal a day in times of plenty and starved at other times. With no refrigeration available, excess produce of the summer months could not be adequately preserved. They could not discard it and it rotted and needed spices to suppress the fetid smell, hence the beeline natives of cold climates made to mid-East, the sub-continent and further afield.
They went as supplicants, beseeching oriental monarchs for permission for trade and settlements to live in. Asian countries were by and large self-sufficient. Denizens of the region had become indolent and enervated by luxury. They did not mind if some one took a bit from their plenty. Favors were readily granted in the then prevalent spirit that one should not turn a hungry beggar from the door. India especially had a tradition of reverence for mendicants.
As so well described in the paraphrased text of Thomas Sebastian, eighteenth century ushered in industrial revolution. Mode of production changed, as did the class structure. Fewer hands were needed to do the same amount of work. Landowners ejected their tenants and peasants who found jobs in the emerging industries. Capital grew out of surplus value produced by workers. Control of government, hitherto in the hands of feudal lords, had to be snatched from the latter. Capitalists had numbers in their favor. Workers, indoctrinated in the concept that the mill owner was doing God’s work by hiring them, were beholden to them. Feudal lords had entrenched power. In the ensuing struggle workers had to be given votes. That gave birth to Democracy. The old feudal system was side lined and gradually became extinct except in Pakistan and some South American countries.
Europe was deficient in raw material. Asia had plenty of it. Now it was not just food. The well off had it any way and the poor could be ignored with out compunction. But the machines could not be ignored. Control of the source of resources became essential. Europe could no longer live with out colonies. Adventurers spread far and wide. Finding the indigenous people much weaker and bereft of modern guns and powder, they subdued and for practical purposes exterminated them in Americas, Australia and New Zealand. In Africa climate was too harsh, huge masses of desert intervened between settlements and considerable number lived a nomadic life. These conditions were not conducive to mass extermination. In Asia there were too many people to herd in settlements. Though laid back, they had had martial traditions and were familiar with guns. They had been exposed to germs, so blankets impregnated with small pox exudates did not work as well as it did in the Americas.
Invaders found out soon enough that natives had become too civilized to put up a good fight. They were divided too. High seas had been left unguarded, as the threat of invasion from that quarter was minimal. In addition to traders they sent missionaries to convert the heathen to Christianity and when the natives demurred or declined redemption, they were punished. At times the missionaries were injured or killed. That provided a good excuse to send the troops to rescue them. Aggression was, by and large, subtle till Europeans were sure of their standing.
Colonial wars for raw material bearing territories soon broke out. The English, for a variety of reasons, were the most successful. They captured the biggest prize of all-India. The French, the Dutch, the Spaniards, the Belgians and even the lowly Portuguese had to be content with consolation prizes. The process was facilitated by the decline of Ottoman Empire. Wars continued till Napoleon lost at Waterloo after which the colonizers accepted status quo.
In earlier centuries public did not care much about the skin, language, race or even the religion of the ruler. They were happy if the over lord left them alone to live their life, not demand all the produce and did not interfere with their faith. In most instances they adapted the rulers creed any way. They would join the army to defend their hearth and home, serve in the house of the master with out pay and willingly part with part with their possessions for the service of the king. Some kings were kind, others were cruel. It was all in the laps of fates. True most kings were the progeny of invaders. Natives had suffered from their depredations. But Europeans were different. They did not mix with Indians; they brought women from back home and would not permit even the highest native into inner portals of power. They went back to their own country after retirement and to die.
Early colonizers of India had made a good faith attempt to assimilate. They had adapted local ways, married local women and learnt native languages. But that phase did not last very long. I think the reason was the ease and acceleration in the mode of transport. With the advent of steamships, a journey of months could be made in two weeks. Invention of Telegraph made communications much faster. Lured by tales of fabulous riches in India, hordes of hopeful girls took to the ships and made short work of liaisons between white men and brown women. The pull of culture and language was too strong for the men to resist.
It was not just control over natural resources that the colonist used to promote industry in their own countries. Native skills, arts and craft were actively suppressed. In the eighteenth century India produced twice as much steel as all of Europe did. The ships British fought Napoleon with were built in India. Cotton weaving was a wide spread cottage industry in India. They produced the best fabric in the world. Dacca muslin was very fine in quality. You could yards of it through a wedding ring. The weavers had their hands broken. Lancashire mills could not compete with it in quality. Cotton fields were forcibly taken over. Farmers were denied the right to sell their product at the highest price. Fields of recalcitrant tillers were destroyed though arson committed by paid agents.
Raw material of different kinds- wool, iron, and indigo to name a few-was taken directly from the producer to the mills in the UK. They even had monopoly on extraction of salt from seawater. Transportations and communications were developed only to the extent that will serve British interests. And it was by no means a gift. India paid every penny of it. Indian soldiers protected trade routes. The allies won WWI and WWII largely with the blood of Indian conscripts and volunteers. Indian public provided a vast captive market for finished goods produced in the UK. India paid the salaries of the secretary of state in charge of Indian affairs in the British cabinet and of all the staff of the department and the whole cost of the department. Viceroy was paid a fabulous salary Rs 22,000.00 PM when with Rs 500.00 one could afford an affluent life style. British officers and soldiers and members of the civil service, police and other departments overwhelmingly of British origin were similarly pampered.
Nineteenth century saw the rise of nationalism. People started to identify with their own geographic entity, which they called their own country, father and motherland. They accepted leaders of their own race as their own in the fond hope that the latter would treat them fairly. Rulers of other races were branded as usurpers who exploited their God given natural resources for the benefit of their own people back home. The perception was to some extent true, though child labor and debtors prisons were extant in early twentieth century Britain, yet the middle class in the UK lived better than that in India. The same situation obtained in other European countries. Slavery was still practiced in the USA, though it had been abolished on paper during the civil war. To obey some one unquestioningly because the person had white skin was as irksome. Falling on their knees at the sight of an Indian Raja was fate. To bow to an English man was not.
The above account is based on the situation obtaining in India. But it could be applied to all colonies with minor local modifications.
German people united into a nation by Bismarck had been left out of the equation. They had quickly industrialized and felt hampered by the lack of raw material. They demanded living space, a euphemism for colonies to exploit and loot, as other European nations were doing. WWI erupted. Jackals already feeding at the trough beat up the intruder and imposed a humiliating treaty on it. The battered jackal recovered from the wounds swiftly and started gobbling up territory once again. This time it brought along an ideology-fascism. That was anathema to capitalist dispensation. They ganged up on Germany again. But there was a complicating factor this time- Soviet Union. Capitalist countries were the mortal enemies of the socialist government. Mutual co-existence was out of the question. Germany wanted to finish off the west before dealing with USSR. Latter also wanted a breathing space. Miscalculating the state of the west Hitler turned prematurely on USSR and had his face bloodied. Capitalists were quite happy to let their enemies finish each other of. They very reluctantly supplied Soviet Union with military supplies, lest it collapse enabling Nazi Germany to direct all its forces against them. Soviet Union broke the back of Nazi army. Capitalists launched their invasion, jackal fashion, on the western front. They had waited too long. Soviet armies broke through German ranks and would have over run Europe, but for the deals Stalin had made on spheres of influence in the continent.
But Europe had been bled dry and could not stand on its feet, much less hold on to colonies. The USA resuscitated the countries with massive aid and gradually took over the colonial role.
National capitalists had ridden to power on the backs of the working class in their countries. They continued to need the support as feudals entrenched in the power structure could not be dis-empowered in a short period of time. Some benefits were allowed to trickle to them especially before elections. After the market crash of 1929 wide spread reforms were introduced and welfare benefits offered. In the after math of WWII, when Communist parties were resurgent in Europe and it was felt that France and Italy may actually elect them to national offices, a near welfare state was established in most of Western and Northern Europe. National Health service, disability and unemployment benefits, retraining programs in the UK, France and Scandinavian countries all date back to 1945.
Capital was hitherto national. They ganged up on opponents, but at the end of the day tried to amass wealth in their own countries. Post WWII colonial powers were too debilitated and could no longer hang on to overseas possessions. Britain withdrew with finesse and retained the goodwill of the erstwhile colonial people. French and the Dutch had to be driven out through a militant struggle. French government wanted to hang on to Vietnam and was humiliated on the battlefield by a guerilla army. Communists were on the verge of take over. John Dulles the American Secretary of state enunciated the domino theory. If Vietnam fell all the neighboring countries will succumb to communist lure. USA replaced the French and were driven out by the rag tag Communist forces after several years of conflict and fifty thousand American and half a million Vietnamese dead.
They had resorted to direct aggression because indirect subversion had failed.
The stage was set for all capitalists to unite under the banner of the USA. Incipient global corporations in the field of arms, oil, steel, construction and other industries were honing their skills to take over assets and resources of the third world. European capital was co-opted. Britain harboring imperial fantasy was only too happy to play the role of a subsidiary. France had pretensions of grandeur, but willingly agreed to cooperate if lip service was paid to their glory. Germany was divided into two states and American forces had large bases to control the natives if they became restive.
But there was a huge stumbling block. With the emergence of the Soviet Union as the other super power, direct aggression became too risky. The latter had been flexing their muscles. Americans not sure of the firepower of USSR kept away from the joint British-French and Israeli aggression on Suez Canal in 1956. They even went to the extent of asking the aggressors to with draw. Khruchev went about threatening London, Paris and Tel Aviv with missiles, and honoring even poor Pakistan with Peshawar as a potential target. Nationalist movement could shelter under its wing. Communist parties got substantial material and more ideological sustenance from the parent party. Nationalist, socialist, working class sprung up everywhere. India in a sense gave them great moral boost. It played the West against the East with finesse of ravishing and cruel damsel. The era saw emergence of such nationalist super stars as Nasser, Nehru, Soekarno, Tito, Mossadeq, Kassem, Nkrumah, Ben Bella and Lumumba. Some, given a timely push by western intelligence agencies, fell under the weight of their own inner contradictions. In other places CIA engineered riots and suborned generals. They met with singular success in Iran and Indonesia primarily because the nationalist movement in the countries was not grass roots based and depended on the middle class, which traditionally bends like a weak reed. They failed in Cuba as it had a dynamic system
Another method of suborning army officers, bureaucrats and politicians was to play on their fears. Pakistan is a classical example. The circumstances of its birth had made it very insecure. Jinnah had thwarted Moutbatten’s desire to be the joint governor general of both India and Pakistan. He avenged the humiliation by fiddling with the boundary award and given India land access to Kashmir by changing the award of the boundary commission. Parts of a Muslim majority district, which by rights should have been included in Pakistan, were gifted to India. The British commander in chief had disobeyed Jinnah’s direct orders to halt the advance of Indian forces in Kashmir. With the connivance of Mountbatten India had with held Pakistan’s share of assets. But for the timely and massive financial help of the Nizam of Hyderabad Pakistan would have succumbed to bankruptcy. The country fell into the trap of mutual defense pacts like a rotten apple.
The American secretary of state John Foster Dulles was the prime innovator of “you are with us or against us” dictum. India under Nehru was on the non-alignment path. He offered to bolster Pakistan’s defense capability, but interest free aid soon transformed itself into high interest loans. Armaments purchased from the USA had to have spare parts and maintenance from the country. It also willingly embraced the insidious policies of IMF and World Bank. In 1965 it realized that defense was mutual only against communist regimes. Pakistan earned the hostility of Soviet Union with nothing to show in recompense US military academies. Army officers were offered training in American military academies. Indoctrination was thrown in gratis. The situation came to such a pass that no officer unless certifiably pro-American could be promoted above the rank of Lt Colonel in Pakistan army. Banks worked on the Shylock principle. But it was too late; it was already hooked like a long-term addict.
Third world countries were persuaded to build an army they could not afford. They were burdened with so many loans for high technology projects for which they had no use and which the country could acquire at less than a third cost it would have to pay the USA. US technologists who charged many times the going consultation fees came in the package as did mandatory use of American shipping which charged the captive country four times as much as they would charge another. Fully three fourth of the annual budget of under developed world was spent on defense and servicing the loan-a euphemism for interest. The loan stood intact and actually went up in several countries unable to service it. According to the pre-eminent Nobel laureate American economist Joseph Steiglitz, less developed countries actually subsidize the economy of the advanced countries.
Kermit Roosevelt, a CIA operative and grand son of the early twentieth century American president Theodore Roosevelt, is ‘credited” with pioneering the subversive method of regime change. Grandfather Roosevelt was an empire builder in the mold of early colonists and managed to capture quite a bit of territory in South America. Kermit was following in his footsteps. He took measures to destabilize the nationalist government led by Mossadeq in Iran. Street riots were fomented. Mullahs were incited to harangue in mosques that the government was “atheistic”. They did not require much encouragement. A radical change in social set up would threaten their life style and affluence. Army officers linked with the Shah did not need much goading either. They just waited to hear the word from Kermit. The Shah, who had fled only a little while ago, returned in triumph and let lose a reign of terror unrivalled for the time. Mosaddeq spent rest of his life in jail; his foreign minister Husain Fatmi was executed along with tens of thousands of other less known political workers. Radical leftist Tudeh party members were made special targets and were hunted and killed mercilessly. Hundreds of thousands of Iranians fled the country and sought refuse in neighboring Afghanistan, Iraq, Turkey and Pakistan.
CIA helped Shah set up the notorious secret service Sawak which was above the law. They would pick up any opponent of the regime, even people who were inactive, whisk them away to special jails run on the style of Nazi concentration camps. Prisoners would be tortured with subtle and crude means like sleep deprivation, immersion in water to suffocating depths, savage beatings, cigarette burns, electric shock to genitalia and sexual assault, Victims, if they survived would be mentally and physically broken. Dead ones would not be handed over to their relatives, but left out as feed of vultures. Jewish Iranians, Bahais. After Khomeini took over and there was all this uproar over the summary trials and execution a pro-shah American observer was forced to concede that the mullahs did not kill as many in a month as Sawak did in a slow weekend.
But there was catch to this success. Kermit was employed by the CIA and if captured would have divulged tightly guarded secrets.
Credit for developing the technique to train and use Economic Hit Men (EHT) , and Jackals is given to the National Security agency of the USA. Promising young men are recruited by under cover agents of security services. They are given employment in specific industrial, commercial and construction firms and given intensive training in subversive and sabotage techniques. When deemed ready they are launched in the underdeveloped world. They offer plans for infra structure, industry, dams for generating electricity, all kinds of manufacturing plants, military supplies and training, industrial parks with complete disregard to the country’s needs, requirements, capacity to absorb state of the art technology and consequent depredation of its ecological base. Needs of the poor are totally discounted. Human and animal habitat is destroyed. Whole cities are sunk under water, rivers polluted with toxic material and millions are rendered food, home and shelter less.
World Bank, IMF, international banking houses, large corporations and foundations fund all this “development”. A tiny number of the rich of the country so favored are made even richer. Politicians, government functionaries, members of security services, academicians, NGO workers, trade union leaders, clerics and business people are all suborned. Military officers are controlled by training and indoctrination. School of Americas in Panama which specializes in training staff of the repressive apparatus of South American countries, was a special point of contention when Jimmy Carter was negotiating with Panamian president Trojjos for hand over of Panama Canal. It was, along with the hostage crisis and Sadaat-Begin treaty, a mark against President Carter. Ronald Reagan repudiated Panama Canal treaty. Bush senior invaded the country and abducted the Panamian President Noreiga months before Sadaam invaded Kuwait.
Military officers from other countries are trained, indoctrinated and some insist brain washed in regular military academies. Pakistan sent hundreds of its officers to such academies. Ayub Khan was a particular favorite of US establishment. He was reportedly reluctant to take over the country in 1958 and more reluctant to get rid of Iskander Mirza who had been his long-term patron, but was induced to do so by the US. He was dissuaded by JFK when he was inclined to let his forces walk into Kashmir while the Indian army was in complete disarray during that country’s conflict with China. All he got in return was a verbal assurance from Nehru and JFK to resume negotiations after the end of fighting with China. Similarly Ayub was averse to let Kosygin of USSR play the role of mediator after 1965 war with India. Lyndon Johnson reportedly called Ayub to go to Tashkent or else .

After EHT’s have “convinced the governments in “developing countries to accept the projects, they advise and assist in procuring loans. The contracts for consultation, construction, supplies and training of local technicians to run the projects go, naturally, to the EHT’s employers. The firm charges several times the going rate for the services . A few subsidiary deals are made with the power brokers in the recipient countries and compensation deposited in American Banks. Immigrant visa to the USA is also arranged for a few key natives of the country, their children placed in second-class universities and a few jobs offered to assorted relatives.
Every one is happy except the poor people who may have been thrown out of their ancestral lands, their homes inundated under water, their water supply and air polluted-in short their whole life wrecked.
The projects are completed. Natives do not know how to run them. The firm obliges by offering long-term management and maintenance services. Spare parts are also available only from USA and are on offer at much more exorbitant rates.
It will take many years for the projects to become productive; that is if they do so at all. In the meanwhile the natives have to pay the loan back. They are unable to. They are already spending most of their funds on a bloated army as ordained by the neo-imperialists. They have to cut back on the already miserable social services-health, education, welfare-and job and industry creation.
Many countries in identical bind have to take more loans to service the previous ones. Their economies are not particularly stable. Foreign earnings are dependent on capricious markets for their raw material. Global financiers can manipulate the markets at will. Not too long ago several South Asian economies were brought to their knees by manipulators . If sanctions are imposed and aid is held up as happened to Pakistan after Zia over threw Bhutto, the country is reduced to sell “family silver’ to get by. Russians came to timely rescue of Zia. He contemptuously turned down the several hundred dollars offered by Jimmy Carter as peanuts. Pakistani chauvinists were overjoyed at he unkind cut. Carter had been a peanut farmer. They were more recently thrilled by Musharraf’s antics. Zia accepted 3.2 billion dollars. But Pakistan was not better of. It was left the legacy of heroin and firearms. It is still riddled with gun and drug running mafias. Assorted fascist and fanatic political groupings have joined hands with the mafias.
Not all countries get away with just reducing their public to destitution. They are still unable to service the loan. EHT’s go back and demand that the natural resources and assets be handed over in lieu of the loans. The rulers usually give in. If a ruler takes it into his head to defy direct orders, jackals move in with assassination teams, which use several methods to get rid of the recalcitrant native. The favorite is mid air explosion- the fate of Ecuadorian and Panamian Presidents. If that does not work EHT’s and jackals arrange civil disorder and give the army, already champing at the bit, an excuse to topple the government. If that fails too direct aggression made feasible since the implosion of the USSR is ready at hand.
This sequence has been utilized in various permutations and combinations in a number of countries, and not just in countries in economic bind. In fact it has become the catchall policy of the US Government (USG) . Countries at the receiving end have been spread all over the continents, the more notable ones being Iraq, Afghanistan, Iran, Haiti, former Soviet block Eastern European countries, Somalia, Zimbabwe, Venezuela, Bolivia, Chile, Ecuador, Panama, El Salvador, Indonesia; the list goes on.
It would all have been hunky dory for global corporations, but for the inconvenient fact that the people of the “favored” countries did not line up on the streets to shower rose petals on the armies bearing the “gift of freedom”. The plan was to take out Iraq and then to go on to Iran and Syria. With Egypt under the firm control of a satrap, Saudi dynasty fully vested in Wall Street, Jordan ruled by a king on CIA payroll. It would have given them a full hand. All oil would be easily accessible, Israel could expand at will and bible’s prophecies come true.
But curse the insurgents, the remnants of Baath party party, the disciples of OBL, the nationalists, the foreign Jihadis, the Taliban and Al-Qaida, neither Iraq nor Afghanistan has been pacified. Iran openly defies “International” community and poor GWB cries himself every night to sleep. He is so helpless!
People in the third world seem to have taken Harry Truman’s words to heart. When asked why the USA condemned some dictators and embraced others-they are all sons of bitches- the man said that the favored ones were our sons of bitches. Afghanis are again falling into the lap of the once despised “Taliban” and Sunni Iraqis do not think Saddam was so bad after all. May be the whole idea is to chastise the recalcitrant agents and then to rehabilitate them by showing the alternative to be worse.
USG under Bush is ostensibly driven by Biblical prophecies. It supports Israeli expansion because the Messiah will only arrive after Jews have taken over all the lands in “greater Israel”. The boundaries are being constantly pushed out. Teheran and Syria are accused of supporting terrorism, which is a danger to Christian way of life. It is curious though, that Bible directs USG to and threaten and attack only energy rich countries. North Korea, though dubbed a part of the axis of evil is not really in the eye of the storm, though it exploded an atomic bomb and tested long range missiles before that.
Former security services agents train EHT’s, and jackals. Firms with symbiotic links with USG hire them. Private firms rake it in and USG gets deniability. World Bank and IMF are controlled by the USG. International commercial and investment banking is predominantly in US hands. Financial institutions and governments in Western European countries are treated as poor cousins and allowed crumbs from the table. They are after all family and cannot be allowed to starve. Britain as the favorite poodle sits in the lap of the master. Japan as a solo don is kept on a tight leash. Russia as a former rebel is on probation. China, an emerging rival, is encircled by hostile client regimes.
The most curious case is that of India. Led into independence by nationalists with the predominant liberal-socialist wing of Indian National congress under Nehru, the country launched into restructuring of the industry, economics, politics and education. Strict controls on imports were imposed so the nascent industry could flourish. Feudal system was abolished so that energy is released for indigenous Capital. Science and technology were promoted and organized on to conform to the country’s requirements. In foreign policy non-alignment was adopted as an article of faith. Secularism was already the official creed. Nehru loomed large over international scene. India had great name and greater prestige and was courted by the communist block and capitalist blocks alike. Because of Nehru’s proclivity, she smiled more often at the socialists, but not too frequently to drive the capitalist away. In fact her fond glances at the rival whetted capitalist appetite even more.
Then the Chinese intervened. The motivation behind the border conflagration is shrouded in mystery. Some claim that it was a Machiavellian move by Mao to hamstring Zhou who was protecting the “gang of four’ from the worst excesses of Mao cohorts. He had brought China and India too close together. Others insist that it was the right wing in India aided and abetted by foreign capital, which induced the border forces to incite a local fight, which Chinese responded to with excessive force. Still others would have it that it was the anachronistic Hindu and Muslim fanatics who joined hands to save India from socialist atheistic clutches for them to fight over later. Pakistani chauvinistic school asserts that Ayub persuaded China to have a go at India so he could take over Kashmir. Their fevered imagination saw visions of the green flag flying over the red fort in Delhi.
Be as it may, Indians were caught with their pants down. They had to appeal to the lover they had disdained. Euphoric beyond their wildest hopes USG poured in arms. Nehru had to adopt a more evenhanded policy. He never really recovered.
After the death of Nehru in 1964, the right wing of Indian National congress made a full-hearted attempt to have their man Morar Ji anointed as PM. They failed. Shastri took over as a compromise candidate. He died with in a year. The right wing made a last ditch attempt, but the liberal wing had a few trick yet up its sleeve. Indra was elected to PM’s office.
That redoubtable lady perhaps harbored neo-con tendencies already. May be her insecurity led her to tilt to the right. She may have wanted to ease her liberal mentors out. Whatever the reason, she was unscrupulous enough to play communal, conservative, capitalist cards. Pakistan by suppressing the nationalist movement in its Eastern wing gave her a lease of life. But if you sow the wind you reap the whirlwind. Her Sikh bodyguards assassinated her.
The walls of socialist citadel had already been breached. Her successors could not or did not want to stem the tide. Liberalization of economy gradually crept in. Successive governments gave in more and more. Nationalist capital wanted to emulate international capital and exploit the resources of less developed countries. They cast covetous glances at next-door Pakistan. But the feudal disposition in that country was not about to commit Hara Kari. Indian capital cast their net far and wide. Comprador capital wanted the crumbs from Global corporations. The plans were eventually to come to fruition in the shape of multi-billion dollar IT out sourcing.
With the demise of Soviet Union floodgates were opened. The Indian governments, irrespective of the party flag sold out forests, crops, patents, and water and built dams. At one point Indians could not grow ginger and turmeric or use their extract as medicine with out paying royalty to patent holder, which, of course was a global corporation. Small farmers were forced out of their hearth and home. I am quoting Jag Mohan former Union minister in India (manmohan @ spectranet.com) India has the largest number of poor, illiterate and the undernourished in the world. Over 250 million of its people go to bed hungry. Out of 150 million children in the world who do not go to school 130 are Indian. 640 million do not have access to sanitation, 170 million to safe water, 293 million to health services. So much for the flaunted development of India. One hundred thousand farmers committed suicide between 1998 to 2003 Compared to China India has 300 million under the poverty line to China’s 30 million.
A documentary on Link TV showed an even uglier face of Globalization of India. A research worker at Johns Hopkins, Wang by name, developed an anti cancer drug. After totally inadequate preliminary animal trials she passed the drug on to the India based employees of the drug company G SK. Cancer patients, with out being made aware that the drug had not had sufficient animal trials, that they were a part of an experimental study, or that there could be side effects . They were reassured that they would get better and made to thumb print a consent form written in English which they could not read. If they refused to sign they were told in no uncertain language that they would in any case not get the drugs they were already on. In fact they had been kept off the drugs for a month to wash out the system and not interfere with the new chemical. Numerous operable cancers were advanced to an inoperable stage. The same firm tried untested drugs on patients suffering from Rheumatoid Arthritis.
Employees another drug company Johnson and Johnson (J&J) in India similarly put severe cases of psychiatric illnesses on experimental drugs with scant regard for informed consent and consequent manic crisis. Medical director of J&J in NJ, of Indian extraction himself, blandly claimed that informed consent was always obtained. Indian drug control czar also parroted the J&J official. Physicians who broke the scandal to media were given exemplary punishment.
The unkindest cut of all, Wang sent an e-mail to investigative reporters that the drug trials though not good enough for American patients were all right for India.
Doctors in Nazi Germany were put on war crimes trials for such experimentation.
I have dwelt at length with India to show how a show case liberal/socialist country succumbed to the blandishments of global capital.
Capitalism has changed its essential character. National capitalists would install manufactories and industrial plants in their own countries, loot the raw material from captive countries and push the end product into captive markets. Industry and commerce in the West, USA included, developed on this basis. Skilled and unskilled workers in the country had to be employed and paid minimum wages. With empowerment of the workers on the upswing, especially with the advent of communist rule in Russia, unionization of labor took rapid strides. Workers demanded and got living wages. Capitalist tried all kinds of tricks and stratagems. Adverse laws were no problem. Legislatures were their own kin. Union breaking with the help of mafia did not take them too far. Union leaders were bought at great cost. Color and race were used blatantly to cause dissension in the working class. This worked a little better. But the world had run out of expendable and willing whites. Other races-Latin Americans in the USA, Arabs in France, Indonesians in Holland and people from the Indian sub-continent in the UK- were imported. It kept native workers in line for a while, but foreigners had brought religious baggage and that helped racist fires to get out of control. That was not too good.
Then capitalists hit the jackpot. Jobs could be out sourced. Their virtual slaves in legislatures obeyed the commands and reduced tariffs on imports. The way things worked in the past was that even if a US corporation bought a shirt, which cost it a dollar in the USA, for ten cents in Bangla Desh, USG would impose ninety cents as duty. The overall cost would be the same. They might as well have it sewn in the states. With changes in legislation the corporation pocketed ninety cents in addition to the mark up for profit. It was recently reported on Free Speech TV that a popular line of shirt named after an actress made in Mexico for five dollars sold for seventy-five in the states. Recently Delphi a former subsidiary of General motors asked its employees to take a drastic cut in its salaries. Workers threatened strike. Management was quite willing to go along with the idea. The workers were told that Delphi already had a functioning plant in next-door Mexico. Workers could continue to work at Mexican wages or go unemployed .
Global corporations have industrial plants every where-in South Korea, India, Far Eastern countries, Latin America and China. Training local labor, logistics of the operation, sending out operatives from main land USA (who were told to travel abroad frequently or join unemployment lines) was cheaper than paying decent wage to workers at home. If global corporations continue to have free hand, and on the present record there is no reason to think other wise, the land of hope and freedom would in a not too distant future be left only with service industries-hotels, banks, holiday resorts, airlines, TV and Radio stations, a few newspapers and magazine offices and shops. Among the professions lawyers, accountants, investment bankers, financial advisers and elitist Physicians, dentists and academics will cater to the rich. Legions of third world immigrants, legal and illegal are already in the USA to serve the rich. Young women are favored and not for their physical stamina alone. Japan has taken the lead in issuing work permits for “entertainment” industry. One big bonus of the arrangement is that global workers movement would be nipped in the bud. Bitter rivals for the same job are not likely to get together on the same platform.
But there is a catch to this otherwise flaw less scheme. The unemployed in advanced countries would claim benefits from the state won with their sweat and blood and grudgingly conceded by the government. With swelling ranks of the discards it would cost a pretty penny. A solution had to be found. Legislatures were at their beck and call to whittle away at welfare. Margaret Thatcher was the pioneer in the field. Ronald Reagan took up the challenge. Bush the senior and junior, with Clinton the philanderer carried on from the point Reagan left off.
One more hurdle stands in the way of the fast sweep of Globalization of economy and is potentially the most important as originates in the capitalist societies themselves. It is a politically conscious public. Remember global capitalism has not yet found an alternative to popular opinion and movements. But awareness depends on free dissemination of information. An astute young man observed that USG had learnt the lesson of Vietnam very well indeed. Casualties are down played. Bodies in bags are not displayed on TV and devastation of the country is carefully kept under wraps. Independent reporters from Europe are not allowed unescorted to scenes of may hem. They are told that it is for their security, and to drive the point home some were killed on the pretext of being in the line of fire .
Economic cost is also hidden in other headings. Tax on air tickets adds nearly thirty percent to the basic cost. Price of gas (petroleum) per gallon reached three dollars in most of the country. Property and school taxes have gone up. Welfare program like Medicare, Medicaid and income and child support, subsidies to state universities have been cut back. National loan has sky rocketed. If investors in US bonds and stocks were to with draw even 25% of their holdings, markets will come crashing down. If even ten percent of foreign deposits in American banks were to be with drawn, the whole system will collapse. At the first hint that Arabs will use Euro as common currency, pentagon starts upgrading plans to invade Saudi Arabia.
As a part of disinformation academia have been suborned. Lucrative fellowship in think tanks, tenured professorships and hefty book contracts are all on offers for those who comply. Dissidents and non-conformists have a rough time keeping their jobs and of course miss all the plums.
But the most effective ploy has been purchase of the news media. All the mainstream TV channels, Radio channels, newspapers are owned by global corporations and publish and broadcast news according to a well-defined program. They color events in such a way that the agenda of global corporations is served. They slant the report of events, which is akin to calling white black and vice versa. People believe what ever is repeated again and over again. Goebbels could have learnt a trick or two from these kept journalists. They have had remarkable success. A majority of people still believes that Saddam had weapons of mass destruction, that he played a leading role in 9/11 or that he had close links with Al-Qaida. They have never been told that he had been a key ally of the West for a long time or that US ambassador April Gillespie gave him a go ahead to invade Kuwait. Saddam had the cunning to tape the conversation and had it played in UN security council-for all the good that it did him. They were shown a tearful new conference in Washington DC given by one of the daughters of the Kuwaiti ambassador to the USA, in which she graphically described seeing babies being thrown out of incubators by Iraqi troops. She had fabricated the whole eyewitness account. In fact she had stayed in Dc through the whole Iraqi invasion and occupation of Kuwait. They have not been told that OBL was a full partner of USG in the fight against USSR occupation of Afghanistan. That USG agents trained and provided arms to Taliban is not common knowledge.
True there is an independent media. But their audience is minuscule. An average American out side of large cities has only heard vaguely of Free speech or Link TV or Pacifica radio. True demonstrations are organized against world trade moots. But the coverage they get is scant and the leaders have taken to choose obscure cities to meet in.
Having painted a gloomy, though realistic picture I would like to offer some solace. Afghanistan has a long history of bleeding the invaders slowly and driving them away in due course. Resurgence if Taliban was no surprise. Iraqis did not have a history of rising against occupiers. The Turks ruled them for centuries. British took over where they left of. The natives tolerated an alien imposed on the throne. They surrendered to the bestiality of Saddam. The way they rose against foreign occupation restored faith in human kind. But wonder of wonders was the resistance exhibited by Hezbullah to Israelis in Lebanon. Though out gunned and out manned they gave as good as they got. Israelis announced in pentagon fashion that they were winning, they had reduced Hezbollah infra structure to rubble, and had destroyed most of the rockets. They had run down the capacity of the guerilla group so they would not be to fire rockets any more. But the day before cease-fire Hezbullah launched the highest number of Katushkas. They forced Israelis to sue for cease-fire. They brought an army lavishly supplied by USG, an army that had set a record of victories against a more numerous enemy from day one of its existence, to its knees. Israeli citizens were reduced to whimpering that could no longer live in bomb shelters.
Insurgency in Iraq and Afghanistan, demonstrations against globalizations moots all over the world, resurgence of radical forces in South America and the Caribbean, emergence of European Union as an alternative focus, strides made by China altogether have slowed the pace of globalization. But critical mass will develop only when workers in the developed countries wake up. They are less affected by globalization of economy as they have heavier cushions to fall on. But they have been used to a life of plenty. They will gradually feel the pinch. Jobs are going away to cheap labor countries. When they have remained unemployed for long, when welfare runs out and is not restored, they will rise. They will forget the animosity they bear for workers in less developed countries and will make common cause with the wretched in the third world. Being situated in core countries they will have less difficulty in overthrowing the system.