Deep Thoughts: our imperialist world system hasn't changed much since 1820
The Imperialist World System
Paul Baran’s "Political Economy of Growth" After Fifty Years
by John Bellamy Foster/Monthly Review
The concept of the imperialist world system in today’s predominant sense of the extreme economic exploitation of periphery by center, creating a widening gap between rich and poor countries, was largely absent from the classical Marxist critique of capitalism. Rather this view had its genesis in the 1950s, especially with the publication fifty years ago of Paul Baran’s Political Economy of Growth .1 Baran’s work helped inspire Marxist dependency and world system theories. But it was the new way of looking at imperialism that was the core of Baran’s contribution. A half-century later it is important to ask: What was this new approach and how did it differ from then prevailing notions? What further changes in our understanding of imperialism are now necessary in response to changed historical conditions since the mid-twentieth century?
The classical Marxist approach to the worldwide spread of capitalist relations has often been characterized as a crude theory of linear stages of development. Such interpretations frequently turn on Marx’s famous passage in the preface to the first edition of Capital , in which he sought to explain to his German readers that, although his analysis was based on conditions in Britain, the most developed capitalist country, it was fated to apply to Germany as well. Quoting the Roman poet Horace, Marx wrote: “ De te fabula narratur! [The tale is told of you]....The country that is more developed industrially only shows, to the less developed, the image of its own future.”2 Marxists in the second and third internationals generally treated this as a universal law applying to all historical conditions.
However, Marx himself in other historical contexts was to point to divergent paths of development. In Capital hewrote that “a new and international division of labor springs up [under industrial capitalism], and it converts one part of the globe into a chiefly agricultural field of production for supplying the other part, which remains a pre-eminently industrial field.” In his writings of the 1860s and after he discussed what we would now call conditions of dependency imposed on nations such as Ireland and India. The 1882 preface to the Russian edition of The Communist Manifesto pictured world revolution as beginning in Russia, still a largely peripheral country. In his famous letters to Vera Zasulich Marx advanced the notion that a revolution based on the Russian peasant commune might side-step capitalism. Later Marxist theorists, most notably Lenin and Luxemburg, also acknowledged aspects of dependency and non-linear development in their analyses of imperialism. For example, Lenin referred in the case of Latin America to “dependent countries, which, politically, are independent but in fact are enmeshed in the net of financial and diplomatic dependence.” But Marx’s early followers stayed mostly within “the tale is told of you” mold. Once the chains of colonialism were broken, the former colonies, it was assumed, would be in a position to advance.3
Baran and Underdevelopment
The recognition that there was a much more fundamental problem of development—what we would now call the “development of underdevelopment”—was thus slow to emerge even amongst socialist thinkers. It is true that European countries had colonized much of the world in the early centuries of the capitalist era, but systematic, persistent discrepancies in economic development were not as evident as they would be later on. In 1830, in Marx’s youth, the countries that make up what we now call the third world accounted for 60.9 percent of the world’s industrial potential. By 1860, the decade in which Marx’s Capital was written, this had fallen to 36.7 percent. By 1953, around the time Baran was writing The Political Economy of Growth ,it had declined to a low of 6.5 percent. China’s share of world industry fell from 33.3 percent in 1800 to 6.3 percent in 1900 and 2.3 percent in 1953. As historian David Christian has noted, “The twentieth century term the third world could have made no sense in 1750, when today’s third world countries accounted for almost 75 percent of global industrial production. By the late twentieth century, they counted for less than 15 percent.”4
Following the Second World War, new nations were rapidly emerging as a result of the breakdown of the colonial system. Under the pressure of the Cold War it became necessary for the leading capitalist states to promise development to these newly liberated countries. The 1949 Chinese revolution raised a major challenge to the imperialist system. A whole new industry of development economics and political-sociological modernization theory emerged replacing the old colonial civilizational discourse.
The best known mainstream work on development to be published in the early post-Second World War period was W. W. Rostow’s Stages of Economic Growth , significantly subtitled A Non-Communist Manifesto . Rostow described five stages that all countries had to pass through: (1) traditional society, (2) the preconditions for take-off, (3) the take-off, (4) the drive to maturity, and (5) the age of high mass consumption. The key stages in this process were of course the preconditions for take-off, during which the cultural and technological foundations for an industrial revolution were laid, and the take-off itself, which in Rostow’s theory could be explained primarily by the sudden increase in savings from 5 percent to 10 percent.5 The final result was not in question; the only real issue was when countries would pass through these various stages. The conditions allowing for a take-off could be speeded up, Rostow argued, through the diffusion of Western culture, know-how, and capital, overcoming legacies of economic and cultural stagnation.
Paul Baran’s Political Economy of Growth challenged such dominant views, arguing that the way in which imperialism had penetrated underdeveloped countries had destroyed earlier social formations and distorted their subsequent development, creating lasting conditions of dependency. Underdeveloped countries in this argument were systematically subordinated to the developed countries in the international division of labor. Baran was not of course the first to make such arguments. Traces of such views could be found as we have seen in Marx and Lenin. The Peruvian Marxist José Carlos Mariátegui had developed ideas along these lines in the 1920s to explain the distorted capitalism of Peru beginning in its guano export period in the early nineteenth century, and the need for a revolution on indigenous-nationalist foundations.
The development of a fairly systematic liberal Latin American dependency theory can be traced to the work of Argentine economist Raúl Prebisch and the UN Economic Commission for Latin America in the late 1940s and early 1950s. Prebisch pointed to the external dependence of peripheral countries on the countries at the center of the world economy and on the systematic imbalances in trade that this produced. Underdeveloped countries were, in this view, bound to an international division of labor where they exported low-value primary commodities and imported high-value manufactured goods placing them at a structural disadvantage. Underdevelopment, it was argued, was not the same as original undevelopment, i.e., the mere absence of development. The 1955 Bandung Conference in Indonesia established the non-aligned movement, marking the emergence of a distinct third world view on imperialism and underdevelopment.
Baran brought to all of this a systematic Marxian critique aimed at the bourgeois economic ideology of development, but also departing from earlier preconceptions within Marxism. “The question that immediately arises,” he stated, “is, why is it that in backward capitalist countries there has been no advance along the lines of capitalist development that are familiar from the history of other capitalist countries, and why is it that forward movement there has been either slow or altogether absent?” In Asia, as well as Europe, pre-capitalist orders were already in “disintegration and decay” during the opening of the modern era. “The general direction of the movement [toward development] was everywhere the same.” If it were not for the distorting effect of imperialism, Baran argued, along the same lines as Marx, “the country that is more developed industrially” would have shown “to the less developed the image of its own future.”
Yet, the glaring fact was that the peoples and territories in the periphery had not advanced along the path of autonomous capitalist development. Baran’s answer was that this result was “determined by the nature of Western European development itself....[by] the effects of Western European capitalist penetration of the outside world.” This penetration was not everywhere the same. It took two forms: (1) the type of penetration associated with the European settler colonies of North America and Australia, which led to their autonomous development, and (2) the type that occurred in Latin America, Africa, and Asia, where there were larger, more populous, and often more developed indigenous cultures. In the latter the Western European countries “engaged in outright plunder or in plunder thinly veiled as trade, seizing and removing tremendous wealth from the places of their penetrations,” leading to intercontinental resource flows that were enormously detrimental to the subject peoples. The economies of these “donor” countries fed the industrial revolution in Europe, while themselves being systematically underdeveloped. Immense obstacles to development were thus erected by the very nature of the capitalist expansion into the periphery and the emergence of a self-perpetuating, imperialist world system.6
The power of Baran’s analysis arose from his introduction of the concept of economic surplus in order to counter the dominant ideological refrain that such factors as a lack of capital and know-how and excess population explained the poor economic performance of underdeveloped countries. Economic surplus was defined by Baran as the difference between output and consumption in a given economy. He introduced three concrete variants of the economic surplus concept: actual economic surplus, potential economic surplus, and planned economic surplus. The actual economic surplus was “the difference between society’s actual current output and its actual current consumption.” This was the surplus or savings as usually treated in economic theory. In underdeveloped countries the actual realized surplus in this sense was typically quite small, leading to notions of a shortage of capital, or a chronic lack of surplus (or savings) for investment.
In contrast, potential economic surplus was defined as “the difference between the output that could be produced in a given natural and technological environment with the help of employable productive resources and what might be regarded as essential consumption.” The difference between actual and potential surplus left its statistical trace in: (1) society’s excess consumption, (2) loss of output due to the existence of unproductive workers, (3) output lost due to “irrational and wasteful organization of the existing productive apparatus,” and (4) loss of output due to open and disguised unemployment. The point was that while actual economic surplus in underdeveloped countries was usually small, the potential economic surplus that could be mobilized through a process of radical social reorganization was normally very large.
The concept of planned economic surplus was meant to apply to the quite different situation of socialism. It was defined as “the difference between society’s ‘optimum’ output attainable in a historically given natural and technological environment under conditions of planned ‘optimal’ utilization of all available productive forces, and some chosen ‘optimal’ level of consumption.” The planned surplus might be considerably smaller than the potential surplus since optimal output might be less than potential output and optimal consumption might be more than “essential consumption.” Planned surplus was seen as encompassing a rational “scientific policy of conservation of human and natural resources.”7
Baran acknowledged the great variance in conditions in the underdeveloped world. But he argued that there were common conditions that justified viewing these countries together at a high level of abstraction. The characteristics they shared were: (1) a history of imperialist penetration, (2) low per capita incomes and low levels of economic development, and (3) similar internal and external obstacles to development resulting from the history of colonialism/imperialism. Since all of these countries were far behind the advanced capitalist states, the goal of rapidly catching up required not simply an industrial take-off but economic growth rates of 8–10 percent per annum for extended periods, as opposed to the historical average of around 3 percent. Such growth rates had occurred before, with the United States reaching an 8.6 percent rate of growth in the second half of the 1880s, Russia 8 percent in the 1890s, Japan 8.6 between 1907 and 1913, and the Soviet Union credited with double digit rates of expansion in 1928–40. The principal question was therefore how to mobilize and rationally utilize surplus to achieve the goal of catching up with the advanced capitalist countries, as opposed to falling further behind as at present.
This framework led Baran to a consideration of the class and imperial environment of underdeveloped countries governing the use and misuse of society’s potential surplus: what he called “the morphology of backwardness.” Here he concentrated on how his four major leakages to potential surplus were related to the dominant class (and intra-class) structure of underdeveloped societies, focusing on the role of (1) a semi-feudal landlord class, (2) the proliferation of mercantile interests and money lenders of all kinds, (3) the small, monopolistic industrial bourgeoisie that tended to be heavily dependent on foreign enterprise, (4) foreign capital, and the (5) state. The entire distorted class structure that emerged was prone to waste: luxury consumption by the wealthy coupled with loss of output and misallocation of surplus due to the irrational and wasteful organization of production and chronic unemployment/underemployment. The state apparatus was often distorted by these developments reflecting the parasitical class relations. “What results,” he stated, “is a political and social coalition of wealthy compradors, powerful monopolists and large landowners dedicated to the defense of the existing feudal-mercantile order.” The ruling elements in the underdeveloped countries tended to invest large parts of the surplus at their disposal abroad “as hedges against the depreciation of the domestic currency or as nest eggs assuring their owners of suitable retreats in the case of social and political upheavals at home.” The mobilization of the surplus for new investment was thus typically blocked at every turn, leading to dismal economic performance and the expansion of poverty in a vicious circle. “Just as investment,” Baran wrote, “tends to become self-propelling, so lack of investment tends to become self perpetuating.”8
A crucial element was the disarticulated, outward orientation of the peripheral capitalist economies, which were geared to the requirements of foreign capital and the markets of the advanced capitalist countries more than to their own internal needs. This dependence took various forms, including: remittance of surplus abroad to foreign investors and reinvestment of some of the surplus by multinational corporations: “While there have been vast differences among underdeveloped countries,” Baran wrote, with regard to the amounts of profits plowed back in their economies or withdrawn by foreign investors, the underdeveloped world as a whole has continually shipped a large part of its economic surplus to more advanced countries on account of interest and dividends. The worst of it is, however, that it is very hard to say what has been the greater evil as far as the economic development of underdeveloped countries is concerned: the removal of their economic surplus by foreign capital or its reinvestment by foreign enterprise.
Such reinvestment was normally directed at the export economy, organized around the export of raw or semi-processed agricultural products, minerals, and other primary commodities—and tended to weaken rather than strengthen the internal development linkages of the underdeveloped country thus impeding any possible “investment snowball effect.”
Although the rate of exploitation in certain sectors of third world economies was very high, this was predicated on low wages and very high unemployment and underemployment, which meant that the internal market within the economy was virtually non-existent. The typical underdeveloped country was constituted as “an appendage of the ‘internal market’ of Western capitalism,” blocking the rational allocation or even retention of the economic surplus produced. Rapacious imperialism, moreover, robbed the land of the conditions of its reproduction on a scale exceeding the ecological destruction wrought by the advanced capitalist nations on their own environments—disregarding nature’s “lasting assets” in the pursuit of mere accumulation of capital.
The dialectic of imperialism and underdevelopment was most obvious in the case of major third world resource-exporting countries. Baran closely analyzed the case of Venezuela, including the U.S.-supported coup in 1948 after a decade in which the surplus produced from oil revenues had been diverted increasingly to economic and social development. “Under the reign of the present companies-supported dictatorship,” he wrote, “what is spent on economic development is considerably less than what is at its disposal, and the purposes of such spending are determined not by the best interests of the Venezuelan people but by the requirements of foreign capital.”9
Those third world countries that sought to break out of this trap through the growth of an oppositional state apparatus aimed at mobilizing the potential surplus for development either on democratic or authoritarian lines were faced with direct or indirect intervention by the United States and other center capitalist states. Thus the United States, acting in the interests of the imperialist bloc frequently intervened militarily (by overt or covert means) to stop development. Moreover, it did so, Baran pointed out, whether the challenges came from democratic movements/states (such as Venezuela, Guatemala, and British Guiana), indigenous popular struggles (such as Kenya, the Philippines, and Indochina), or nationalist-authoritarian governments (such as Iran, Egypt, and Argentina). “Operation Killer” thus reinforced “Operation Strangle” in keeping the underdeveloped countries in their place. The huge waste on military expenditures in underdeveloped countries was part of the imperialist control system, aimed at facilitating comprador regimes and targeting internal populations rather than external dangers.
“The tragedy of the situation,” Baran wrote, has the dimensions of a Greek drama. In Hitler’s extermination camps the victims were forced to dig their own graves before being massacred by their Nazi torturers. In the underdeveloped countries of the ‘free world,’ peoples are forced to use a large share of what would enable them to emerge from the present state of squalor and disease to maintain mercenaries whose function it is to provide cannon fodder for their imperialist overlords and to support regimes perpetuating this very state of squalor and disease.
Baran did consider the possibility that certain states might be able to develop along either the authoritarian-statist lines mapped out by the Japanese Meiji state (here he considered Nasser’s Egypt to be a possible candidate) or along the lines of a democratic socialist commonwealth (here he pointed to the possibility of Nehru’s India developing—if it could mobilize its surplus along lines that broke with strict capitalist dependency). But the chances of either of these paths being successful and unleashing rapid economic growth in the near future were far from good. The reason was that the system as a whole worked against such possibilities: “The main task of imperialism in our time,” he wrote, was “to prevent, or, if that is impossible, to slow down and control the economic development of the underdeveloped countries.” Such slowing down and controlling meant that these countries were to be kept in the capitalist fold and to remain, to whatever extent possible, subject to imperialist levels of exploitation and domination.
Baran therefore pointed to the pressing need for more revolutionary responses. “In the underdeveloped countries,” he wrote,
the gap between the actual and the possible is glaring, and its implications are catastrophic. There the difference is...between abysmal squalor and decent existence, between the misery of hopelessness and the exhilaration of progress, between life and death for hundreds of millions of people....The establishment of a socialist planned economy is an essential, indeed indispensable, condition for the attainment of economic and social progress in underdeveloped countries.
In this respect he pointed to the example of China, which in dropping “out of the orbit of world capitalism” had become a source of “encouragement and inspiration to all other colonial and dependent countries.”10
The Political Economy of Growth was enormously influential and helped engender an explosion of work in Marxian and radical dependency analysis in Latin America, which was inspired much more concretely by the Cuban revolution of 1959. Baran visited Cuba in 1960 along with Leo Huberman and Paul Sweezy and met Che Guevara who was then president of the National Bank. Che associated himself closely with Baran’s general analysis of underdevelopment.11 Some of the main Latin American and Caribbean contributors to dependency analysis included Theotonio Dos Santos, Fernando Henrique Cardoso, Pablo González Casanova, Ruy Mauro Marini, Walter Rodney, Clive Thomas, and Eduardo Galeano. Coming from the United States, Andre Gunder Frank made an enormous impact beginning with the publication forty years ago of Capitalism and Underdevelopment in Latin America , which highlighted the “development of underdevelopment.” In Africa, Samir Amin introduced a critique of mainstream development analysis in his 1957 doctoral dissertation (completed in the same year as Baran’s book was published) and released later under the title Accumulation on a World Scale .12 He subsequently contributed massively to dependency and world system analysis. In India, major contributors to this broad perspective included Ashok Mitra and Amiya Kumar Bagchi. Much of Marxist dependency theory later blended with world system analyses as pioneered by Oliver Cox and Immanuel Wallerstein.
Although the dependency approach was often reduced to a straw argument and heavily criticized by both mainstream development theorists and traditionalist Marxists, and no less frequently pronounced dead, the deeper “third-worldist” critique of imperialism that Baran and others introduced has persisted into our own time.
The original criticisms of the dependency approach in the 1970s pointed to the “economic miracles” in Brazil, Mexico, and East Asia. In Brazil, Cardoso, who presented what was often viewed as a more nuanced argument on “dependent-associated development,” characterized dependency theory of the type presented by Baran and Frank as “a kind of constant reproduction of underdevelopment.” In contrast to this, Cardoso took the position that the penetration of “industrial-financial capital accelerates the production of relative surplus value; intensifies the productive forces...producing...an effect similar to capitalism in the advanced countries, where unemployment and absorption, wealth and misery coexist.” (Cardoso later moved to the right, becoming Brazilian finance minister in 1993–94 and president of Brazil from 1995–2002, during which he promoted neoliberal policies.)13
For a while in the 1970s, the dependency approach appeared to some to have been decisively refuted by economic development. Then when import substitution industrialization, inspired by the liberal current of dependency, was judged a failure in the 1980s, dependency theory was seen as having failed on that count as well. Meanwhile, numerous revolutions were defeated, thereby suggesting that delinking from the system, as often propounded by radical dependency analysis, was virtually impossible in this period. Neoliberal ideology became hegemonic with the reemergence of stagnation in the overall world economy and the upsurge in financialization beginning in the 1970s, thereby displacing radical views.
The New Imperial Gap
Yet, despite the ideological turning away from the dependency approach, the general critique of the imperialist world system for its systematic and sustained exploitation of nations at the bottom of the global hierarchy that Baran and others introduced received strong support from the historical process. If the immediate post-Second World War growth period seemed for a short time to be a rising tide that lifted all boats this was clearly no longer the case in the late 1970s and after. The third world debt crisis suddenly emerged full-blown in the early 1980s, as the crisis in the advanced capitalist world led to a sharp rise in real interest rates in the United States, with disastrous effects for the debt-dependent countries of the global South. The 1980s were to be a “lost decade” for Latin American development. African economies plummeted and failed to recover.
Rapid development continued in parts of East Asia, particularly in seven countries and city-states (China, Taiwan, South Korea, Hong Kong, Singapore, Malaysia, and Thailand) that collectively averaged a 5 percent rate of growth from 1973–99. These economies speeded up in this period while the world economy as a whole was slowing down. All of these high growth states were able to mobilize potential economic surplus and thus initiate high levels of investment. But these were nations that for the most part deviated considerably from a market-determined path of capitalist development and managed to create more statist models of development—in the case of China arising from a revolution, and in the cases of South Korea and Taiwan as a result to a considerable extent of their special positions as front-line states in the geopolitical containment of China, crucial to U.S. imperial hegemony over the Pacific Rim.
Both Taiwan and South Korea were states that were divided off in the Cold War era from parts of their earlier selves (the former cut off from mainland China, the latter from North Korea) and thus took on unique geopolitical roles. Both benefited from the stimulus provided by U.S. orders during the Vietnam War. South Korea adopted an economic model similar to Japan’s, which had earlier colonized it, forging close connections between the state and monopolistic conglomerates. Hong Kong and Singapore were both strategically placed city states engaged in entrepôt trade.
In Asia a new growth pole thus began to emerge, breaking, although not entirely, with the conditions of peripheral status in the world economy. A more recent economic contender is India, which achieved an economic growth rate of more than 3 percent per capita for the first time in the 1990s, but which still exhibits chronic conditions of underdevelopment.14
As East Asian economies increasingly opened up in the 1980s and 1990s to the imperialist system of finance centered in the advanced capitalist countries, they found that they too could be vulnerable to conditions of financial dependency, as manifested in the Asian financial crisis of 1997–98, which presented major setbacks for Malaysia and Thailand in particular.15
The sad truth is that, despite some limited successes, fifty years after the publication of Baran’s landmark Political Economy of Growth the overall center-periphery gap within the world economy has not narrowed but has widened. As World Bank economist Branko Milanovic has explained: “the hierarchy of the [world] regions [has] stayed about the same since the time of Adam Smith, but income differences among them [have] widened.” Looked at from a two century standpoint, the rich capitalist countries have “been able to pull ahead of the rest, and in only a few exceptional cases have non-Western countries been able to catch up.” In 1820 the richest and poorest countries were separated by a per capita GDP differential of at most 3:1 (2:1 in Paul Bairoch’s estimate), by 1992 this had risen to 72:1.
The most notable fact of world development over the last quarter-century, as Milanovic puts it, has been the reinforcement of “the position of the West as the club of the rich.” While “the hope of non-Western countries catching up has effectively been dashed” over this same period. The only countries to rise from underdevelopment to rich or near-rich status, judged in terms of per capita income, between 1960 and the end of the century were South Korea and Taiwan, and the two city-states, Hong Kong and Singapore. If in the “golden age” of monopoly capitalism the gap in per capita income between the richest and poorest regions of the world fell from 15:1 to 13:1, by the end of the twentieth century the gap had widened again to 19:1. The period since the 1960s has seen a vast “purge” of most non-Western European, North American, and rich Oceanic (WENAO) countries from the position of contenders to riches, creating “a downwardly mobile world.” This has been accompanied by a vast swelling of the “fourth world”: those countries that under present conditions have no real hope for development.16
There can be no doubt that this widening gap between center and periphery is a product of the dynamics of the imperialist world system as a whole. In accounting for this Amin has referred to “five monopolies” retained by the center even in the context of a limited globalization of production: (1) technological monopoly, (2) monopolistic control of worldwide financial markets, (3) monopolistic access to the planet’s natural resources, (4) media and communication monopolies, and (5) monopolies over weapons of mass destruction and other advanced means of destruction. Added to this is the power exercised by the states in the advanced capitalist world both directly and indirectly through the intermediary triad of the IMF, the World Bank, and the WTO. Capitalist globalization has further eroded the possibility of autocentric nation-state development, creating increased dependence of underdeveloped countries on the world market and even more so on world finance, which is dominated by the vested nations. As in Baran’s day, most third world economies are heavily dependent on the export of primary commodities. In Latin America such primary commodities account for the majority of exports for nearly all countries. The disarticulation of peripheral economies has thus continued into the present.17
The laws of motion of capitalism emanate primarily from the center of the system, around which the satellites orbit. In the 1970s the growth rates of both the advanced capitalist economies and of the world economy as whole slowed, producing a “leaden age,” replacing the golden age that had preceded it.18 As Baran and Paul Sweezy argued in Monopoly Capital, the advanced capitalist economy had a tendency toward stagnation staved off only by means of military spending, the sales effort, and the growth of finance (together with such contingent historical factors as the high level of consumer liquidity after the Second World War, the need to rebuild the European and Japanese economies, and the second wave of automobilization in the United States). The various stimulating factors, however, waned by the early 1970s and the per capita annual growth rate in the advanced capitalist nations dropped precipitously from 3.7 percent in 1950–73 to 2 percent in 1973–98. The reemergence of stagnation, marked by a shortage of profitable outlets for the massive investment-seeking surplus, fed the financialization of the advanced capitalist and world economies. Lacking investment opportunities in the “real” economy, money capital sought out speculative, financial outlets.19
The shift in gravity of capitalism toward accumulation of financial assets and speculation in the 1980s and ’90s became the central phenomenon in the growth of neoliberal globalization, requiring an even more intensive system of world exploitation and enormously complicating the developmental problems of third world countries. Underdeveloped nations were forced to restructure their economies toward greater inequality, which did not however produce the promised growth. The goal of the neoliberal regime, it soon became clear, was not to generate development so much as to create “emerging market economies” that would enhance the accumulation of assets within global centers. The result has been acceleration of the flow of economic surplus from poor to rich countries. As reported in the New York Times (March 25, 2007), “According to the United Nations, in 2006 the net transfer of capital from poorer countries to rich ones was $784 billion, up from $229 billion in 2002....Even the poorest countries, like those in sub-Saharan Africa, are now money exporters” to the rich countries.20
The onset of stagnation also coincided with the decline of U.S. hegemony as the United States lost some of its previous productive edge and was no longer in a position to dominate world manufacturing. In response to this challenge and taking advantage of the geopolitical vacuum left by the demise of the Soviet Union, Washington has sought to restore and expand its power by military means, intervening more aggressively in the third world and in areas formerly within or on the borders of the Soviet sphere of influence. Although as recently as 2000 Michael Hardt and Antonio Negri described the Vietnam War in their book Empire as the last imperialist war, this is clearly refuted today with the U.S. war machine engaged in Afghanistan and Iraq and expanding its operations in all three continents of the periphery. A key motivation in the current aggressive U.S. grand strategy is to gain control over vital strategic resources (particularly petroleum) in an age of growing resource scarcity.21
Of You the Tale Is Not Told
The consequence of all of this has been renewed revolt in the third world. Attempts by the imperialist war machine to control Iraq have generated fierce resistance from nationalist and religious forces. Latin America is now the site of serious attempts to define alternative socialist paths, particularly in Venezuela and Bolivia, and in a resurgent Cuban socialism. South Africa has seen an upsurge of popular resistance to what is viewed as economic and ecological (if no longer political) apartheid. In Nepal a peasant revolution aimed at democratization and popular control offers new hope to a people caught in a condition that combines semi-feudal rule and imperialist economic, political, and military penetration. The global justice (antiglobalization) movement has continued to grow worldwide. Everywhere the regime of neoliberal capitalism is under attack.
The answer to imperialism, and beyond that to capitalism, Baran emphasized, was to be found not simply in seizing and mobilizing potential economic surplus. Indeed, the point was not so much to exploit the differential between essential consumption and potential output in order to catch up with the advanced capitalist countries. Rather the real radical goal was to break with production for production’s sake (or surplus for surplus’s sake) and to organize a society geared to optimum consumption and optimum output in accordance with genuine human needs: a society in which the surplus and its utilization were democratically planned. It was this notion, embodied in his concept of planned surplus, that was Baran’s core message: the possibility of building a rational, egalitarian, and sustainable society geared to the optimal fulfillment of genuine human needs. In any such endeavor mistakes would be made. “What is decisive, however, is that irrationality will henceforth not be—as it is under capitalism— inherent in the structure of society.” Like Marx in his general critique of capitalism, Baran insisted in the end: Of you the tale is not told. A realm of freedom of action ( le libre arbitre ) always existed: the potential for renewed struggle for human liberation.22
1. Paul A. Baran, The Political Economy of Growth (New York: Monthly Review Press, 1957).
2. Karl Marx, Capital , vol. 1 (New York: Vintage, 1976), 90. In referring to “The tale is told of you” Marx was quoting from Horace’s Satires , Bk I, Satire 1, in which Horace, influenced by Epicurus, had written a critique of the amassing of wealth. For those of his readers who failed to see themselves in this portrait of greed he wrote: “Change the name, and the tale is told of you!”
3. Marx, Capital, vol. 1, 579–80; V. I. Lenin, Imperialism, the Highest Stage of Capitalism (New York: International Publishers, 1939), 85; Kenzo Mohri, “Marx and Underdevelopment,” Monthly Review 30, no. 3 (April 1979): 32–42; Sunti Kumar Ghosh, “Marx on India,” Monthly Review 35, no. 8 (January 1984): 39–53; Teodor Shanin, ed., Late Marx and the Russian Road (New York: Monthly Review Press, 1983).
4. David Christian, Maps of Time (Berkeley: University of California Press, 2004), 406–09, 435; Paul Bairoch, “The Main Trends in National Economic Disparities Since the Industrial Revolution,” in Bairoch and Maurice Lévy-Leboyer, eds., Disparities in Economic Development Since the Industrial Revolution (New York: St. Martin’s Press, 1981), 7–8.
5. Walt Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge University Press, 1961), 39. See also Paul Baran, The Longer View (New York: Monthly Review Press, 1969), 52–67.
6. Baran, Political Economy of Growth , 136–43.
7. Baran, Political Economy of Growth , 22–43.
8. Baran, Political Economy of Growth, xxix, 280–81, 175–77, 195.
9. Baran, Political Economy of Growth , 174, 184–87, 211–14.
10. Baran, Political Economy of Growth , 10, 12, 197, 219–26, 249–51, 258–61.
11. See the 1964 comments by Che, then minister of industries, and of the theoretical organ of his ministry in Leo Huberman and Paul M. Sweezy, Paul Baran: A Collective Portrait (New York: Monthly Review Press, 1965), 107–08.
12. Andre Gunder Frank, Capitalism and Underdevelopment in Latin America (New York: Monthly Review Press, 1967); Samir Amin, Accumulation on a World Scale (New York: Monthly Review Press, 1974); Eduardo Galeano, Open Veins of Latin America (New York: Monthly Review Press, 1973).
13. Fernando Henrique Cardoso, “The Consumption of Dependency Theory in the United States,” Latin American Research Review 12, no. 3 (1977): 19–20.
14. Angus Maddison, The World Economy: A Millennial Perspective (Paris: Development Centre, OECD, 2001), 142–49.
15. See B. N. Ghosh, “Globalization, Capital Inflows, and Financial Crises,” in Ghosh and Halil M. Guven, eds., Globalization and the Third World: A Study of Negative Consequences (New York: Palgrave Macmillan, 2006), 182–99.
16. Branko Milanovic, World’s Apart: Measuring International and Global Inequality (Princeton: Princeton University Press, 2005), 40–50, 61–81, 199; Maddison, World Economy , 125; Samir Amin, The Empire of Chaos (New York: Monthly Review Press, 1992), 92–93; Duncan Green, Faces of Latin America (New York: Monthly Review Press, 2006), 23. The term “third world” is still used to describe underdeveloped countries in general. In this sense “fourth world” is usually taken to mean the very poorest countries of the third world.
17. Samir Amin, Capitalism in the Age of Globalization (London: Zed, 1997), 3–5.
18. The contrast between a high accumulation “golden age” and a low accumulation “leaden age” was introduced in Joan Robinson, Essays in the Theory of Economic Growth (New York: St. Martin’s Press, 1962).
19. Maddison, World Economy , 129; Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966); John Bellamy Foster, “Monopoly-Finance Capital,” Monthly Review 58, no. 7 (December 2006): 1–14.
20. Tina Rosenberg, “Reverse Foreign Aid,” New York Times Magazine (March 25, 2007): 16–19.
21. See John Bellamy Foster, Naked Imperialism (New York: Monthly Review Press, 2006), 31–38.
22. Baran, Political Economy of Growth, 299; compare Milanovic, Worlds Apart , 148.