Economic Update: The Economics of Colonialism Part 2 - The Neo-colonialism Variation

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In this week's show, Prof. Wolff presents a brief summary of last week's Part 1 as basis for analyzing how WW2 provoked the political independence struggles that changed colonialism into neo-colonialism; how and why political independence is not, by itself, a break from colonialism; why neocolonialism lasts into the present and positions a rich minority of each former colony as the ally, collaborator, and agent of continued entrapment of the former colony within global capitalism. Modern neocolonialism likewise positions a poor majority that seeks real economic independence alongside political independence. The politics of most countries in the world - who are mostly ex-colonies - is a deep class war between that neocolonial minority and its majority/adversary.


Transcript has been edited for clarity

Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of our children. I'm your host Richard Wolff. Today we do part two of a two-part series called the Economics of Colonialism or if you like, Capitalism and Colonialism. It's because of the interest in the subject of colonialism and even more the fact that most of us understand it's far from consigned to the past. It's all around us as we live our lives today.

Last week's program was devoted more to the past when colonialism was called colonialism and when the capitalist form of colonialism, the one we've seen over the last three or four centuries, was in a position of being formally recognized for what it was. A group, mostly of European countries, that expanded with capitalism from their origins in whatever part of Europe they existed through the growth built into capitalism. You might even call it the urge, the impetus, the built-in need to grow that Europeans went abroad and established empires —owning, grabbing, controlling, administering, using far-flung territories in a kind of race, if you might call it, to take over the whole world. In those days the normal way this was done, the usual way, was to literally establish a colony usually beginning by military incursion, killing local people, moving them, forcing them away, and establishing either your own dominance with military troops and an administration or settling your own people. These were called settler colonies. Sort of like the United States, for example, but there are many other examples: South Africa, Australia, New Zealand, and many more. In those days, again, it was formally recognized, mother company, excuse me, mother country and colonies and the whole thing together — Empire. That's why the word colonialism goes together with imperialism, the notion being that you could sit back in these European countries. The key example, the greatest example, is Britain, the British Empire, and as we noted last week on which the sun apparently never set.

Well, over time, the problems of administering the people, the problems of what you had to do to the local people…which was often killing large numbers of them or making them work under conditions that really it's hard to believe human beings treated each other this way. But then again, we do know from the historical record what was done in the German colonies, the Belgian, the Dutch, the British, the French, and so on. Well, eventually it was unsustainable, like so many of these things in history proved to be. Particularly with the Second World War, in the middle of the 20th century, these empires suddenly—having been around in many cases for more than a century — collapsed. In the immediate aftermath of World War II, for example, India stopped being a colony of the British. Indonesia stopped being a colony of the Dutch and so on. The French lost most of their African territories, if not immediately after the Second World War, within a decade or two. Suddenly, we didn't have colonialism the way we did.

But, did the whole relationship disappear? My answer would be no, it never did. It changed its form and I'm going to explain that in the next time that we have today. It's still with us and that has been recognized around the world and it's been given a name — neocolonialism and that prefix, neo-, is to show you that it's a new form but the basic thing is still there. What is the thing? The use by an advanced capitalist country of a territory much less advanced, maybe not very capitalistic, still now, and its use by that I mean its resources, its people, its whole society for the benefit of the dominating advanced country. Under colonialism, it could literally be forced to do that by local agents of the metropolitan country, of the colonial power, who were there as the governor.

But, after the Second World War with independence, there had to be an indirect way of controlling them or you lose your control, and then you'd have a genuinely independent country…where before you’d had a colony. So, we're going to trace how all that happened so that you can understand why there is such a feeling about, such debates over, such struggles against, neocolonialism in our age that really are just changed forms of the anti-colonialism and anti-imperialism of before World War II.

All right, so let's start. Why do capitalist countries that are advanced in development…why do they go abroad? The answer has to do at base with capitalism. The survival of every capitalist depends on growing. You can't stay where you are with the competition of others around you, with ever-changing conditions. You have to be able to adapt, and what makes it possible for you to adapt? How many profits do you have? How much discretionary money can you use to respond, to take advantage of, adapt, to your shifting environment? So the bigger you are, the more profits you have, the better your chance to survive. Growing and surviving become the same activity in capitalism.

Which means, sooner or later, whether they start in a little country, a medium-sized country, or a big one, they bump up against the boundaries of their nation…of their country. Whether it's Britain, France, Germany, or Italy it doesn’t matter…sooner or later, it’ll happen. It did happen to all of them as it did to the United States, Japan, and so on. Why? Why do you have to go beyond your border? Well, if you're competing now on the whole world scale, all of Europe, let’s say, well, you need to be able to get the best cheapest raw materials to survive competitively. If those are not inside your border, you better go get them outside your border. If you need to feed your workers because you pulled all of your farmers off the land to come into the cities and work in the industry, where are you going to get the food to feed them? They can't feed themselves if they live in apartment houses in an industrial center. Well, you get some food from your own country’s farmland, but suppose it’s not enough? Then you have to tap the agricultural productivity of other parts of the world.

Let me give you another example, suppose you run out of workers. Suppose your industry is growing so quickly that you don't have enough workers and so with a shortage, you have to bid up the wages as the employers compete with one another for the workers. But, they don't want to pay higher wages because that eats into their profits which is what they’re trying to maximize. Solution? Immigrants. Bring the workers in, bring them in from India, or the Caribbean, or wherever you can if you’re the British Empire or the same with others.

Here's another one, not only do you want to bring in the food, raw materials, and possibly workers but, you know, you want to be able to sell what you produce. If you can't sell what you're producing, you're not going to make profits and that's what you're in the game for…that's your survival. You have to grow your market and that means not just selling to your own nation’s people but having a place beyond and a colony you can force to buy your stuff. If you're a big producer you go to your government you say, “I want to have the privilege of the market in that colony that you control.” The more colonies, the more market you control, and here's the final one, you want to invest. You know if the rate of profit in your own country is 6 percent but if you go and invest in a mine or a mill or something else far away you can get 20 percent. Well, then to compete in the world, you have to go where the profits are higher so the colony becomes a place to invest when the profits are high. Given how little you can get away with paying the people in your colony, profits are often very high. So for all those reasons…food, raw materials, labor, market, and a place to invest, the European capitalists had to go abroad. They had to snatch the rest of the world, literally competing for what they could control because of their fear of what you would have to do if you actually had to go into the market.

There’s an irony here I want no one to miss, you know these companies could have said, “We don't need a colony, we'll just go and buy it in the market.” But, of course, they didn't do that. Why? Because they were constantly afraid that their competitors would control a piece of the world and not let them in. In other words, relying on the market was too uncertain. That's why a lot of companies become bigger and bigger and buy each other out because if they can control the other company by absorbing it they don't have the uncertainty of dealing with that company as a market other…as somebody you have to buy and sell and negotiate with. What you hear about the market — we buy and we sell and we negotiate — that’s a two-edged sword, that can really mean you're in trouble because you suddenly have to pay too much. You don't want to be stuck in the market by having to pay too much for an input. You don't want to be stuck in a market where you can't get enough to make a profit when you sell. When you control something with an empire then you can make sure that you can buy at the price you want and sell at the price you want and so you don't depend on the market because it's uncertain.

Consolidation, making big corporations that absorb little ones is like the colonies. It's a way of getting around the market — having a special influence. If you're a big company, you go to your government. You support them taking over the rest of the world because it's a privileged area in which you can operate. It enhances your chances of making big profits which is why they all ended up doing it. The only thing that changed after World War II was the demand of people that this was ripping them off — which it had been for centuries. The wealth of England is the wealth of India moved over there. That's not all it was but that was a huge part which is why India was so important and why the British fought and lost so many pounds sterling and so many lives — not even speaking of the Indian and Pakistani people — to hold on to what had been so crucial to their wealth.
After the war, we got rid of all of that. Independence. We're about to see what that meant.

We've come to the end of the first part of today's show. Before we move on I want to remind everyone that Economic Update is produced by Democracy at Work, a small donor-funded non-profit media organization celebrating 10 years of producing critical system analyses through a variety of media. Since October is National Co-Op Month, you should be sure, please, to check out our podcast, All Things Co-Op, that explores everything having to do with co-ops from theoretical and philosophical conversations to on-the-ground interviews with co-op and cooperative workers. You can find this show and more on our website democracyatwork.info and while you're there be sure to follow us on social media – sign up for our mailing list and support our work in a variety of ways. Please stay with us, we’ll be right back.

Welcome back, friends, to the second half of today's Economic Update. We are working on part two of the Economics of Colonialism or the alternative title, Capitalism and Colonialism. In our previous discussions we've taken things up to that famous World War II breaking point when a large portion of the world's colonies saw struggles, often violent struggles…often extremely violent struggles. If you add up all the people that got involved in the centuries of struggle against colonialism, you're talking in the tens of millions of dollars of money lost and even more, human beings lost. A terrible cost of modern capitalism and it's not the only one.

Then I said, and I want to pick it up now, that what was achieved in all those struggles was independence. The colony was no longer. India was no longer a colony of Britain. They tried for a while to have another name. They called it the British Commonwealth. None of that stuff worked. Those places didn't want to be subordinated to Great Britain in any significant way as they had been. It was a fundamental change. The question arose in every one of the struggles for independence: “What exactly does it mean? Yes, we are no longer legally a part of the old empire. We have fought against them. We've won in the fights.” (Often, as I said, bitter long, violent fights) “We are now an independent country, we have our own government, we have our own currency, we have our own, etc, etc and we sit in the United Nations, for example, as an independent equal voting with other countries and all the rest.” But the real issue was did colonialism stop? That was the crucial question and the answer to that is unambiguous. No, it did not.

It turned out in every country that won its independence, which is most of the countries sitting in the United Nations today, was once a colony. A minority were colonizers. A majority were colonies — the subjects, the controlled spaces of the minority. In that situation, they didn't break away economically. They broke away politically but not economically and as I'm about to explain if you break politically but not economically you haven't broken. It's a bitter lesson to learn. It was bitter for all these countries and it's bitter today because it's still being learned. Why? During the time that you were a colony, the dominant country…so let's say you were…I'll pick up a country I talked about before, Kenya, an East African country that was for a long time a colony of Britain. Well, the British built the harbor. The British built the railways that were there. The British designed the school system, even though a vast majority of people couldn't go to school because they didn't build enough schools and they cost money, and all the rest that colonialism did that I’ve talked about. But, you left only a skeleton. You didn't leave enough resources and the resources that were there were focused on, designed for integration with the country that was dominant. So, even though you were independent…I’ll give you the example of Kenya.

Kenya had become an important place for the British Empire to secure a food that they needed called coffee. Kenya to this day depends on producing and selling coffee. That’s not a part of African history, that's what the British brought there. They also brought the settlers, if you recall, who pushed the African population, the Kikuyu tribe, and others, off of their land to settle the British where they could run coffee plantations…forcing Africans back to work on the land taken from them…to produce the coffee that profited those few settlers and the British merchants who took the coffee, processed it, and shipped it all over the world. In other words, Kenya's economy after independence, as much as before, was geared to the global capitalist market in which Britain was a very powerful player. The same is true for French colonies and so on and so on and so on.

It is really important to understand this, that you don't become independent when you declare it even if you fight a bloody war to get it. You're still stuck. The United States — after our revolutionary war and after the War of 1812 — we were still dependent on producing cotton and sending it to Great Britain. Before the Revolution and after that it was the most important industry in this country. That’s why slavery was so important. That’s why we kept bringing slaves from Africa to the American South to produce the cotton which continued to be sold to England because that was the lifeblood of the economy. The United States had a formal independence but it took them a long time to have a real economic independence and during that time what the British did still shaped what the United States did. The British bought that cotton and that made the South rich and that kept the slave trade going and that destroyed large parts of Africa. Those things didn't stop because the United States got independent. Those kinds of things don't stop in Asia, Africa, or Latin America when they stopped being a formal colony and become, yeah, an informal colony, a neo-colony hooked into the dominant foreign power that took them over as a colony in the first place.

The struggle against colonialism and imperialism continues under neocolonialism and neo-imperialism right to our present day. The United States plays a special role because the United States as itself a former Colony came late to the game of colonialism. By the time the United States’ capitalism was big enough to want to expand beyond our borders, the British, the French, the Japanese, and others had already taken most parts of the globe. The great dividing up of Africa happened at a conference in 1884. The United States wasn't involved in that process because it hadn't yet grown big enough to be a player among the capitalist colonial powers but by the end of this century, it was. That's why there's Puerto Rico, and that's why there's the peculiar status of the Philippines and until Castro, that was the peculiar history of Cuba. They were places that were colonies of the United States and were given independence at a certain point. The United States was big into independence because it fought for its own independence. That’s why for the last two centuries, all of Latin America was a neo-colony of the United States. President James Monroe enunciated the Monroe Doctrine back early in the 19th century and for the last 200 years, the whole world has dealt with Latin America as a de facto neocolonial area for the United States. Europe got Asia and Africa. The United States, as an exploding capitalist power across the 19th century, got Latin America. That was the understanding and it's fairly true. Countries in Latin America are geared to the United States. This one produces coffee for the United States market…this one produces bananas for the United States. This one mines tin or copper…or fishing or whatever and they market it to the United States. American companies go down there to make a profit off producing with low wages for the US market. In other words, that part of Latin America integrated into US capitalism.

Here comes the most important point for today. As that unfolds over decades, the countryside — in Cuba, in Mexico, in Brazil, in Chile, and in Argentina — is divided into two broad groups. One group of the people are the ones who become the agents of the American big corporations. They’re the local lawyer who acts as a lawyer for the company in their little country there…the cab driver who moves the executives around in the town…the young people who go to university in the United States to have a degree to learn English so they can get a job working as an agent for the big New York company that has offices in Buenos Aires or Mexico City or São Paulo.

In each of the countries, a group of people develops who want neocolonialism to continue because they're getting rich off of it. They're the local people who are the agents of the collaborators with the metropolitan country that is still exercising the kind of power that neocolonialism confers. They become agents in keeping down the wages so that the American company keeps coming and that pays their salary as an executive or as a lawyer or as an architect or as any other servant of the metropolitan. On the other hand, you have the mass of the people whose wages are abysmally low and they want to be what? Less poorly paid. They want better jobs. They want public services. They want what everybody else wants and there's a clash there…and out of that clash, you get the politics of every country in Asia, Africa, and Latin America. A struggle from below that wants to break from neocolonialism and a core of people sitting at the top of those societies who are at best ambivalent. Their lives are comfortable because they're the local agents, the local collaborators with neocolonialism. Even in places that are technically independent, like China, that struggle is profound.

All of the people in a place like China or India or Brazil that are hooked into international trade that is still dominated by the powerful capitalist countries — they are ambivalent. They want a slow moderate let's not rock the boat…we're doing real well. I can get my son or daughter into Harvard or Yale and then they’ll come back and they'll be the finance minister or they'll have a lovely doctor practice here in town. They want the upper-middle-class life that collaboration has meant now for some generations of them and they are very frightened by the demand from below. “No, no, no, no. We want a real break. We want to break and really take care of our own country.”

Over the last 30 years, that fight has been fought out in China. One of the reasons China is less and less dependent on exports was it was figured out by the Chinese that by being dependent on exporting to the United States and Europe…we're still stuck into their economy. We're going to have to develop our own domestic economy and produce for it or we’ll never be broken from neocolonialism. So, it's a fight going on now, shaping our politics all over the world. The politics that will shape whether you and I live many more decades or are consumed by this politics. Colonialism is alive. Neocolonialism is its form and that’s the issue being fought out in most of the countries of the world, and shaping their politics, their culture, and even their music. This is Richard Wolff. I hope that this discussion in two parts on colonialism and capitalism has been interesting and informative. Many of you asked for this. This is what we were able to produce. I thank you for your interest and as always, I look forward to speaking with you again next week.

Transcript by Barbara Bartlett

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Showing 1 comment

  • Les Lothringer
    commented 2022-10-19 16:32:12 -0400
    Colonial exploitation did not cease after independence movements removed the foreign interventionists.

    It got better and in a way, worse, as the populations therein came to believe that they had a free and fair democracy when, in fact, they were more brain washed.
    Say two generations to forget the lessons of the past.
    Vietnam as an example and a US ally, plus a bought off leadership.
    Socialism for the rich.

    Economics 303, the way things really work and discussed here as well – https://les7eb.substack.com/p/ukraine-long-proxy-war-vi-god-favours
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