From New Left Review I/59, January-February 1970.
Copied with thanks from Louis Proyect’s Marxism Mailing List (September 2007).
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
Before answering Martin Nicolaus’s critique of Where is America going?, the origins and intended function of that article should be explained. It is the transcript of a speech given to a seminar of Finnish students at Helsinki, in the framework of a symposium on American imperialism today. It was not intended to be a global analysis of the contradictions of American imperialism, still less a broad outline of American or world perspectives, in the coming decades. I do not consider myself an expert on US capitalism; there are Marxists who are much better equipped to tackle such an analysis, among them close friends of mine in the USA. It is sufficient to recall the origin of this transcribed speech to understand the limitations of the subject with which it dealt, arising out of the needs of an elementary division of labour. Other speakers, in the first place Perry Anderson, dealt at that same symposium with the phenomenon of American imperialism, its industrial-financial-military infrastructure and its repercussions at home and abroad. To myself fell the task of outlining trends inside American society which were slowly eroding its previous relative social and political stability. It was taken for granted that the worldwide activity of American imperialism, and its contradictions, had been analysed by previous speakers and assimilated by the audience. For this reason I mentioned them only in passing.  Surely, even the harshest critic could not believe that I ‘underestimate’ the stupendous effects of the Vietnamese war on social political and ideological developments in the USA.
What was the political purpose of my speech? It was, obviously, to oppose the fallacies of that ‘Third Worldism’ which, from Franz Fanon and Lin Piao to Baran and Sweezy’s Monopoly Capital and Herbert Marcuse’s One-Dimensional Man, writes the American working class off any medium-term revolutionary perspective.  It is clear that only the most mechanistic and undialectical ‘marxists’ would deny that the national liberation movements in colonial and semi-colonial countries, and their potential development into socialist revolutions (under adequate proletarian leadership), are part and parcel of the process of world revolution as it has unfolded for 40 years, since the second Chinese revolution of 1925–27.  This mean that the inter-relationship between the colonial revolution and the socialist revolution in the West (as well as the inter-relationship between the colonial revolution and the political anti-bureaucratic revolution in the so-called socialist countries) is complex and manifold.
The difference between revolutionary Marxists and supporters of ‘Third Worldism’ does not lie in the fact the first deny this inter-relationship and the second uphold it. It lies in two basically distinct approaches to the nature of that inter-relationship. Revolutionary Marxists do not believe in a fatal time-sequence, whereas ‘Third Worldists’ do believe that imperialism has first to be overthrown in all, or the most important underdeveloped countries, before socialist revolution is on the agenda again in the West. Lin Piao’s famous thesis that the ‘countryside’ will have to ‘encircle the cities’ is the most striking expression of this idea. Revolutionary Marxists do not believe that the loss of an important or even a decisive part of foreign colonial domains will automatically create a revolutionary situation inside the imperialist countries; they believe that these losses will only have revolutionary effects if they first trigger off internal material changes inside imperialist society itself. Between world politics and revolution in the West there is a necessary mediation: changes in the function of the economy, changes in the relationship of forces between classes, changes in the consciousness and militancy of different social groups.
It is now possible to clear up a misunderstanding which permeates all of Nicolaus’s critique. When I spoke of ‘internal’ developments as against ‘external effects’ upon US society, I did not have a geographical but a social context in mind. The very argument which Nicolaus attacks most strongly – our thesis that inter-imperialist competition is already and will be increasingly one of the forces upsetting the relative internal stability of US imperialism – should have shown him this. After all, ‘geographically’, competition from Western European and Japanese imperialism is not an ‘internal’ but an ‘external’ factor in the USA. Why did I treat it the way I did? Because I was looking for effects of world developments on social forces, on classes and layers inside imperialist society. Without this necessary mediation, historical materialism ceases to be a ‘guide to action’ and becomes an empty economism and fatalism.
From this point of view, to speak of the world as one society, as one single framework for political action, is an impermissible metaphysical abstraction. It is quite true that imperialism has woven all countries and societies of the world into a single net of world market and world exploitation (with the exception of those countries which, through a socialist revolution, have been able to break out of this net). It is also true that monopoly capital of the imperialist countries exploits in various forms and to various extents the workers of ‘its own country’; workers of foreign imperialist countries where it invests capital; workers of underdeveloped countries; poor and middle peasants of these same countries; peasants and artisans of ‘its own country’; nonmonopolized sectors of the capitalist class of ‘its own’ and foreign imperialist countries; and practically the whole ruling class of underdeveloped countries. But to draw from this the conclusion that the differences in form and degree of this exploitation have become secondary and insignificant or to argue that because exploitation is universal, it is also homogeneous, is to have a completely lopsided view of world reality under imperialism, yesterday as well as to-day, and to open the road to disastrous analytical and political mistakes.
The historical specificity of imperialism in this respect lies in the fact that although it unites the world economy into a single world market, it does not unify world society into a homogeneous capitalist milieu. Although monopoly capital succeeds in extracting super-profits, directly or indirectly, out of most of the people on earth, it does not transform most people in the world into industrial producers of surplus-value. In short: although it submits all classes and all nations (except those which have broken out of its realm) to various forms of common exploitation, it maintains and strengthens to the utmost the differences between these societies. Although the United States and India are more closely interwoven today than at any time in the past, the distance which separates their technology, their life-expectancy, their average culture, the way of living and of working of their inhabitants, is much wider today than it was a century ago, when there were hardly any relations at all between these two countries.
Only if we understand that imperialism brings to its widest possible application the universal law of uneven and combined development, can we understand world history in the 20th century. Only if we understand this law of uneven and combined development can we understand why, because of an integrated world market, the first victorious socialist revolutions could break out in three underdeveloped backward countries, Russia, Yugoslavia and China. Only if we understand how this same law continues to operate today can we understand that the decisive battle for world socialism can only be fought by the German, British, Japanese, French, Italian and American workers.
‘In this day and age of imperialism, more than in any previous epoch, the contradiction between labour and capital emerges in a universal form. The days when it was possible for that contradiction to show itself only within a national ... sphere, are far behind us,’ writes Martin Nicolaus. Permit me to point out the mistake in the first sentence, and the non-sequitur of the second one. The contradiction between labour and capital emerged in a universal form, tendentially from the beginning of the capitalist mode of production (see in this respect the significant passages of Marx’s Grundrisse, well-known to Martin Nicolaus), and factually from the beginning of the age of imperialism, more than three-quarters of a century ago. In that sense, neither the Russian Revolution, nor the Spanish Revolution, nor the Chinese Revolution (to cite two victories and one defeat) were any more ‘national’ than the Vietnamese Revolution; all of them were both expressions and focal points of the ‘universal contradiction’, which did not manifest itself only ‘in this day and age’. But to conclude from the universal character of class contradictions to the necessary universal form of class struggle is to presume immediate and total correspondence between objective socio-economic developments and human action, i.e. to eliminate from the picture the whole problem of national pecularities, political forms, social relationship of forces, varieties of consciousness and rôle of organizations, in other words, Lenin, Trotsky, Luxemburg and a lot of Marx and Engels too!
Polemicizing with Bukharin precisely on this subject, Lenin had this to say during the 8th Congress of the Russian Communist Party:
‘In order to understand in what situation we find outselves, it is necessary to say how we marched, and what led us to the socialist revolution. It is imperialism which led us to it, it is (also) capitalism in its primitive forms of (simple) commodity economy. It is necessary to understand all this, for only if we take reality into consideration, will we be able to solve questions like, for instance, that of our attitude towards the middle peasants. In fact, whence did this middle peasant arise in the epoch of a purely imperialist capitalism? For he didn’t even exist in the properly speaking capitalist countries. If we connect the question of our attitude towards this nearly medieval phenomenon of the middle peasantry exclusively to the point of view of imperialism and of the dictatorship of the proletariat, we shall never arrive at making ends meet, and we shall only get bruises and bumps. If, on the contrary, we have to change our attitude with regard to the middle peasant, please make the effort to say, in the theoretical part of the programme, whence he arises and what he is. He is a petty commodity producer. This is the ABC of capitalism which we have to state, because we have not yet got out of it.’ 
Lenin summarizes his position by stating that ‘imperialism is a superstructure of capitalism’, and when it crumbles, the whole capitalist foundation still subsists. Imperialism, in other words, is a combined form of social development, locking together the most backward and the most modern forms of economic activity, exploitation and sociopolitical life, in variable forms, in different countries. For that reason, socialist world revolution, under imperialism, cannot be an instantaneous, simultaneous, synchronized event in all or most countries of the world. It can only be a process in which the imperialist chain is broken first in its weakest links. In order to determine what link is the weakest in each determinate phase of development, it is necessary precisely to study the economic, social, political, cultural, historical differences between various countries – in the last analysis: the different correlations of socio-political forces in these countries – which survive in spite of the ‘universal form of contradiction between labour and capital’.
Martin Nicolaus writes: ‘There are no more “local” contradictions, and no more “economic” contradictions in the sense that is usually meant; all our contradictions and the deeper they are, the truer this is, have universal causes and universal effects; one baby in one room in one town who cries from hunger throws the entire history of the world into question.’ This is quite true, and nicely said. It is not new, for it was true also a century ago. But it begs the real question. For the question which I was discussing, the point of view against which Nicolaus polemicizes is not whether the world economy has objectively been united and ‘socialized’ (this is ABC for Marxists, and I have myself written this dozens of times). The question which I was asking is this: when, why and how will the great majority of the American working class (the white working class) revolt against all these infants crying >from hunger in the world, and will stop that hunger by making a socialist revolution.
To refer us back, in answer to that question, to the objective causal relations, is misleading. After all, infants have been crying for many decades, and have not American workers let them cry? Have not most of the American New Left argued, till very recently, that the American working class would never revolt against capitalism, for various reasons (because it was ‘corrupted’; because it was ‘integrated’; because of the ‘mass media’; because of its ‘lack of revolutionary tradition’)? Nicolaus should admit that even for somebody who agrees entirely that capitalist exploitation and alienation have ‘universal causes and universal effects’, this question has still to be answered, by something more than mere pious incantations (‘When (!) this contradiction finally comes home to roost ...’) or blind faith.
Now in the history of the world socialist movement, there are only three fundamental answers to this question. One is the answer given by utopian socialists, and various propaganda sects of very different colours and origins, who all agree on one basic point: that the working class (or mankind for that matter) will never move towards socialism as long as it has not ‘seen the light’ – i.e. let itself be persuaded by the particular creed of the particular sect in question. The second answer, diametrically opposed but parallel to the first one (and as fundamentally wrong) is that ‘when objective conditions are ripe’ (when ‘the productive forces have ceased to grow’; or when ‘misery has become unbearable’; there are many variations of fatalism), the ‘workers will become socialists’ and ‘make a revolution’. The third and correct answer, that of the classical socialist movement, perfected by Lenin, says that workers will make a revolution when (a) socialist consciousness has been introduced in their midst by an organized vanguard; (b) this consciousness merges with a growing militancy of the whole class, which is a function of growing social contradictions, and (c) that militancy emerges into an objective situation of sudden and extreme instability of the ruling class (a ‘pre-revolutionary situation’, a ‘revolutionary crisis’).
Attempts to introduce socialist consciousness into the American working class have been manifold and uninterrupted for a century now. Sometimes they were broader, sometimes they were more limited; sometimes they were effective and sometimes miserably inadequate, but they never ceased. What has obviously declined since the period of the great upsurge of the cio and the sit-down strikes (or, if one prefers, since the postwar strike wave) is the militancy of the American working class, i.e. the objective class struggle itself. In order not to stumble into the dual pitfalls of utopianism and fatalism, one has to ask the question: what factors could determine a new rise of proletarian class militancy and struggle, after more than two decades of relative quiescence in the USA?  What factors are already upsetting and will increasingly upset the relative social and political equilibrium which the American capitalist class enjoyed between the Second World War and the mid-sixties?
When we examine the question of the relative quiescence of the working class in the richest imperialist country of the world, we have at least to take that basic fact into consideration. It cannot be an accident that the leading imperialist country has the weakest development of socialist class consciousness in the working class. The precedent which inevitably leaps to the mind is that of 19th century Britain. The comments of Engels and of Lenin on that situation are well-known. It may be useful to reproduce Engels’ opinion in full, in order to examine whether there is an analogy between the English situation of that time and the US situation to-day:
‘As long as England’s industrial monopoly lasted, the English working class has participated to a certain degree in the benefits of that monopoly. These benefits have been divided among it in a very unequal way; the privileged minority appropriated the largest part, but even the great mass received at least temporarily sometimes its part. That is the reason why there has been no socialism in England since the withering away of Owenism. With the collapse of the monopoly, the English working class will lose this privileged position. It will find itself one day reduced – including the privileged and leading minority – to the same level as their working colleagues of foreign countries. That is the reason why there will again be socialism in England.’ 
‘Industrial monopoly’ means of course a monopoly in advanced industrial productivity of labour; there was no absolute industrial monopoly of Britain, either in 1885 or even in 1845. Once we refine Engels’ reasoning in this sense, the analogy with the situation of the USA since the Second World War is evident. It is hard to deny that American workers ‘participated to a certain degree’ in the benefits of US imperialism’s monopoly of advanced industrial productivity (technology). It is even harder for a Marxist to deny that there is at least a partial causal link between this participation – i.e. the fact that the American working class enjoys the highest standard of living of the world proletariat – and the absence of socialist class consciousness of that same class.
Now when Martin Nicolaus himself examines the probable causes for the ‘re-emergence of the contradiction between capital and labour’ in the United States, he enumerates 14 factors, no less than 10 of which are of a subjective nature, i.e. concern phenomena of superstructure, and are therefore obviously begging the question. To give only one example: why should growing involvement of conscripted young soldiers in reactionary wars abroad automatically lead to an opposition of a socialist nature? Were not these soldiers also conscripted during the Korean War? Did this involvement lead to a powerful socialist mass movement of soldiers, to a rise of proletarian class consciousness of the American working class? Of the four remaining factors, only two, the growing industrialization of the South and the rapid decline of the farmers, are objective processes which change relations of forces to the advantage of the proletariat, but which do not lead directly to increasing socialist class consciousness either. So there only remain two basic factors on which Nicolaus can count fundamentally to upset the relative social and political quiescence of the white proletariat in the USA: ‘absolute impoverishment’ and increasing insecurity and instability of employment.
But these two factors suddenly fall from the sky, completely unrelated to the economic analysis which preceeds them. They are even in opposition to the main thesis of Nicolaus’s article, i.e. the thesis that the absolute superiority of US imperialism in the capitalist world is growing, and not declining. Surely, if this were so, monopolist super-profits flowing to US capital would increase and not decrease – and its capacity to ‘corrupt’ the American working class would grow, and not decline. Surely, if US imperialism were all-powerful in the realm of international capital, it would endeavour to ‘export’ instability of employment first to its weaker competitors, and unemployment would consequently be lower in USA than in, say, Germany, Britain and Japan.
Nicolaus speaks darkly about ‘an import of colonial conditions into the US metropolis’, and ‘a process of intensification of all exploitation, of reduction of all labour to the status of colonial labour’. Let us leave aside the obvious exaggeration and over-simplification contained in this sentence: long before the American working class saw its standard of living depressed to the level of ‘colonial labour’, it would undoubtedly be ready to make a socialist revolution! What is missing in this sentence, and in the reasoning based upon it which involves all the ‘fourteen points’, is the socio-economic rationale of US monopolists’ behaviour. After all, they do not ‘intensify exploitation’ out of sheer wickedness, or because they are secretly conspiring to make America ripe for communism. If, after having enjoyed for three decades a situation of relative political and social stability in their country, these monopolists suddenly act in a way to upset that equilibrium, one cannot seriously assume that they do this without being compelled to act in that sense. Now what compels them to behave in that way? Once we formulate that question, we are happily back where we started in the first place – and where Nicolaus assumed lightmindedly we should not have started: the specific inner contradictions of US imperialism in a given span of time, i.e. in the new phase of postwar development opened up somewhere around 1965 and not the ‘universal contradiction between capital and labour, or the ‘general contradictions of the epoch of imperialism’.
There is only one basic driving force which compels capital in general to step up capital accumulation, extraction of surplus value and exploitation of labour, and feverishly to look for profits, over and above average profit: this is competition.
It is true that there is not only competition between capitalists, but also competition between capital and labour as well, i.e. the attempt of capitalists to replace living labour by ‘labour-saving’ equipment, whenever there is full employment and the rate of exploitation (of surplus-value) starts to decline as a result of a more favourable relationship of forces between wage-labour and employers. But capitalists’ attempts to stop this decline in the rate of surplus-value is again not caused by their fundamentally ‘evil’ or ‘anti-labour’ character, but by the compulsion of competition. If they let labour get away with ‘excessive’ wage increases, their own rate of capital accumulation will decline, they will fall behind in the competitive race and be unable to introduce the most modern technology and finally be destroyed by their competitors.
Today’s world is no longer a ‘purely’ capitalist world, and politicalmilitary considerations have played an important rôle in motivating some of the key decisions of US imperialism during the last decades. Imperialism feels threatened by the spread of social revolution and wants to stop it by all means, including open warfare as in Korea and Vietnam. On the other hand, a purely politico-military explanation of the world involvement of US imperialism misses two important economic points: first, that the very nature of capital accumulation, under monopoly capitalism even more than under ‘laissez-faire’ capitalism, creates an economic compulsion to world-wide expansion for capital; second, that the emergence of a capital surplus, inevitably linked with monopoly capitalism itself in the leading imperialist nations, creates a strong economic compulsion for building up a powerful arms industry and military establishment. The existence of noncapitalist states and of a powerful revolutionary upsurge in the colonial world gave these processes a specific form; but in themselves, they existed before the Second World War, and before the October revolution at that.
Two questions related to our subject arise from this summary repetition of some of the basic origins and features of imperialism. What are the effects of international capital accumulation upon imperialist competition and rivalry, under the specific circumstances of present-day world developments? What are their effects on class relations inside the USA?
The answer to the first question can be read in all statistics relative to basic international capital movements since the end of the Second World War. For 20 years now, capital export has been larger and more powerful than ever before, but it has been flowing primarily between imperialist countries, and not from imperialist to under-developed countries.  The worldwide upsurge of liberation movements in the colonial and semi-colonial countries has created a risk of loss of capital, which apparently more than offsets the still higher rate of profit which foreign capital enjoys in these countries.  Inasmuch as the world domain of imperialism has been shrinking and not expanding, such a powerful international flow of capital, and in general the stepping up of capital accumulation during the past two decades (or, what is the same thing under capitalism, the higher rate of economic growth) could only lead to an intensification of competition, as well as to its necessary corollary, an intensification of capital concentration. The emergence of the ‘multinational corporation’, as the leading form of organization of monopoly capitalism to-day, testifies both to stronger international competition and greater international concentration of capital.
The answer to the second question is less obvious and more controversial. But the inner logic of capitalism leads us to the inescapable conclusion that as long as competition clearly and unilaterally operates in favour of US imperialism, it can neither threaten the standard of living of the working class, not shatter the relative stability of employment. It is just not true to write, as Nicolaus does: ‘Short of a general Soviet capitulation to capitalist investment-penetration, and short of collapse of the Chinese revolution, both improbable, capitalism has reached its limits and has no place to go but inward, in the direction of greater intensification of all exploitation within its boundaries.’ Nicolaus, after seeming to forget that ‘the Third World has been thoroughly penetrated’ not just since 1965 or 1945, but since 1900; after seeming to forget that this penetration is still far from complete, however, and that even in imperialist countries, there is even today a powerful movement of ‘industrialization’ going on, is carried away by his manipulation of the abstraction ‘capitalism’, and loses sight of the most important form of expansion of imperialist powers since the beginning of this century: their attempt to expand at the expense of their competitors. After all, that is why two World Wars have broken out, and why the history of the 20th century has been what it is.
Thus US monopolists would much sooner conquer their competitors’ markets and undermine employment there, than to have huge overproduction and unemployment inside the USA. If a point is reached where the US is forced to intensify exploitation of American workers, it can only be because this alternative course of action is being increasingly closed to it. Yet this again can only be explained because the correlation of competitive forces has become such that ‘export’ of intensified exploitation is increasingly impossible.
Nicolaus introduces a few additional facts to explain the need of intensified exploitation of American workers by reasons other than those emanating from increased international competition. He mentions inflation and taxation.  But here again, he is begging the question. Inflation has been present in the USA since the mid-’thirties. Why hasn’t it prevented a rise of the standard of living of the American workers, before it started to lead to a decline? Taxation has been steadily increasing for a long time; why has it had to be stepped up the the point where it starts cutting down real wages? Surely these two questions are interrelated, aren’t they? Surely the pressure of foreign imperialists to cut down the deficit of the US balance of payments has something to do with them? Surely the relative decline of the competitive position of US imperialism is expressed in the fact that, whereas for a whole period (including that of the Korean war) US imperialism could pay itself the luxury of a large deficit in its balance of payments, a huge military establishment, and large-scale military and economic outlays abroad, while keeping a strongly positive trade account, today the mutual effects of inflation at home and military outlays abroad have reduced the trade surplus to the point where it might disappear altogether?
Nicolaus correctly mentions the rising ‘cost of maintaining the existing boundaries of the capitalist world’, and the rising trend to ‘socialize’ (i.e. impose upon the backs of the American workers) the costs of interventions and wars abroad. But he forgets that again we are dealing here with relative and not with absolute aggregates. An imperialist country can have a rising military budget and a rising cost of living, while at the same time real capital accumulation and real income of the workers are still increasing instead of being reduced (this happened in the early forties, the early ’fifties and the early ’sixties in the USA). What is needed for this conjunction is a rise in real output and national income making possible all these increases simultaneously. Only if the rate of economic growth declines (or the rate of inflation and military outlays increases in a much greater proportion than real output) does military intervention abroad imply increased exploitation of workers at home. This again depends on how the capitalist world economy behaves, and what share of its international market accrues to US imperialism. Even with a stagnant world market, increased military outlays in the USA do not automatically mean a declining standard of living for American workers, as long as US imperialism has the possibility of receiving a growing share of that market, at the expense of its competitors. By eliminating inter-imperialist competition, Nicolaus takes all logic out of his assessment of increasing exploitation of the American working class.
In order to deny any major role for inter-imperialist competitions today, Martin Nicolaus has to contend:
At first glance, these arguments are at least partially in contradiction with each other and self-eliminating. If all ‘major corporations’ systematically and definitively resist pressures toward protectionism and capitalist nationalism, how can one then explain that ‘major export conflicts’, which Nicolaus modestly assigns to ‘major national capitalisms’ but in reality have always involved major monopolistic corporations and imperialist powers, could break out at all? Was it perhaps ‘smaller manufacturers’, and not Messrs. Krupp and Thyssen, Vickers-Armstrong and Deterding, Morgan and Rockefeller, who were responsible for the First and Second World Wars? If the economic spheres of influence of imperialism are not tied up with national state powers (the notion of ‘territoriality’ is dragged in here by the hair; what is involved is the key role of states in these conflicts!), how can one then explain the very same ‘protectionism, embargos, financial blockades, colonial wars and First and Second World Wars’ we have been talking about? Is capital export and foreign capital investment a ‘new’ phenomenon? Wasn’t it already well developed before and during the First World War – so much so in fact that innumerable liberal pacifists and opportunist Social-Democrats were convinced that imperialist wars would become impossible?  How can US banking capital be ‘predominant’ – i.e. US imperialism control most of the financial resources of the world – and at the same time, firstly be forced to ‘neutralize’ the reduction of productive advantage of US capitalists (where did the European and Japanese capitalists get the capital for financing their huge outlays of productive investment? They didn’t borrow them from US bankers!) and secondly be increasingly dependent for borrowing capital on the European capital market?
Nicolaus also alleges that the wage-costs of American corporations should be calculated on ‘world averages’, given the fact they transfer a growing part of their operations abroad. In this, he seems to have lost his sense of proportion. What is the fraction of total output of US industry produced abroad in competition withus units of production at home – excluding activities complementary to domestic production, such as oil extraction? Obviously, only a marginal proportion. What is the fraction of total manpower employed by US industry beyond the frontiers of the USA? Again, only a marginal one. Indeed, if US monopolies were ever to succeed in transferring 30, 40 or 50 per cent of their output of, say, automobiles, computers, airplanes and turbines, this could only lead to a massive increase of unemployment in the USA itself. What would be the consequence (and purpose) of this unemployment? To erode the wage differentials between the USA and Europe (or even the USA and Japan) by lowering the standard of living of the American working class. Why would US monopolies ever embark on such a course in the first place, if not under the compulsion of international competition?
The methodological toots of Nicolaus’s mistakes lie in an inability to distinguish quantitative from qualitative changes, relative from absolute superiority, the beginning from the final outcome of a process. They are connected with a gross underestimation of the State as the major instrument of defence of the capitalist class interests today (against their class enemies, against foreign competitors, and against the menacingly explosive nature of the inner contradictions of the system).
The relationship of forces between various imperialist powers can develop greatly to the advantage of one and at the expense of another. A massive relative superiority on the European continent was possessed by Germany, in the periods 1900-1916, and 1937-1944, and by France in the period 1919-1923. But that does not transform the competitors of the predominant power into semi-colonial nations, which have lost control over the means of production of their country. Such semicolonial nations only arise when in fact the key industries and banks in the country are owned or controlled by foreign capitalists, and when for that reason, the State itself fundamentally protects the interests of the foreign imperialist class, as against those of the ‘native’ bourgeoisie. That is the situation in Greece, Brazil, Ghana or Iran today. It is obviously not the situation in France, Britain or Italy, not to speak of Japan or Western Germany. Quantitative changes in the relationship of forces between imperialist powers are one thing; a qualitative change in status, the transformation of an imperialist country into a semicolonial country (as could have happened in France, if Germany had won the Second World War, or as could have happened in West Germany, if the 1945-47 trend had been maintained and the ‘Cold War’ had not broken out) is quite another thing. There is not the slightest evidence to show that US imperialism controls more than 10 per cent of the industrial means of production, and much less of the financial means of exchange, of any other imperialist power (with the exception of Canada, which is indeed a border case). There is for that reason not the slightest evidence that these powers have lost their basic independence as imperialist powers, and have become US semi-colonies.
In fact, if one studies the evolution of the inter-relationship of forces between US imperialism and its main foreign competitors, one has to conclude that the USA reached the zenith of its power at the end of the Second World War, and that its hegemony has ever since been in decline. Of course, it still retains a great relative superiority. This relative superiority might even increase again, if there is no sufficient international interpenetration of capital on a European scale, if ‘European’ multinational corporations are not established for systematic competition with US-based ‘multinational corporations’ on relatively equal terms. But independent ownership of capital, independent control of the ‘internal market’ and independent use of State power, are still basic characteristics of European and Japanese imperialists. 
But what about US military superiority? What of the possibility of new inter-imperialist wars? US military superiority over its main competitors is, indeed, much more striking than its relative economic superiority. But precisely because there has come about a contradiction between the resurgence of independent financial and industrial power of Western European and Japanese imperialism, and their continuous military dependence on the USA, the NATO and Nippo-American alliances are in deep and permanent crisis. There is only one way in which this crisis can be solved, in the long run (inasmuch as imperialism survives and the present trend in relationship of forces is not fundamentally altered): an adaptation of the military relationship of forces to economic reality, the re-emergence of independent military strength in Western Europe and Japan – in the last analysis, the emergence of independent ‘nuclear deterrents’ in Western Europe (Franco-British, or Franco-German-British, or even on a broader scale) and Japan.
As for new inter-imperialist wars, which the late Joseph Stalin predicted in his political testament, they are indeed extremely unlikely to break out, but not for reasons of US supremacy, but because all imperialist powers are threatened by a much more deadly menace then inter-imperialist competition: the menace of the non-capitalist part of the world expanding through new victorious revolutions. Against the so-called ‘socialist countries’ and new revolutions, imperialist powers indeed have an attitude of collective solidarity, which makes the NATO and Nippo-American alliances real alliances, in the common interest of the capitalist class everywhere, and not simply stooge sets for US expansion.
Imperialist competition continues, and will continue, including some very ruthless developments indeed; but it will unfurl within the framework of that collective solidarity towards the common enemy. Yet within that framework, the law of uneven development continues to operate inexorably, causing the relative decline of previously supreme powers and the emergence of newly strengthened imperialist forces. The fate of US imperialism’s supremacy will be decided neither on the battle-field nor in the ‘Third World’ – at least in the coming years.  It will be decided by the capacity of Western European imperialists (and Japanese imperialists) to set up colossal corporations, equivalent in financial power and industrial strength to that of their US competitors. I do not say that this development has already taken place on a sufficient scale or that it is inevitable. I have elsewhere made clear the obstacles and resistances towards that process. I only state that, if it takes place, it will force US imperialism greatly to intensify the exploitation of the American working class, under the pressure of competition.
The discussion on ‘ultra-imperialism’ is, in fact, an old one. It was initiated by Kautsky after the outbreak of the First World War, and received at that time a scathing reply by Lenin. It was revived during the mid-’twenties by various Social-Democrats (Hilferding, Vandervelde and others), celebrating the constitution of the world steel cartel as a triumph of ‘ultra-imperialism’ and ‘peaceful development’; the rebuff which history inflicted a few years later to that illusion is still well known by everybody.
Lenin’s answer to the fallacy of ‘ultra-imperialism’ can be summarized in one formula: the law of uneven development.
‘It is sufficient to pose the question clearly to see that the answer can only be negative. For one couldn’t conceive, under capitalism, any other basis for the division in zones of influence, of interests, of colonies etc., than the strength of the participants of that partition, their economic, financial, military strength etc. Now among these participants of partition, that strength changes in a different way, for under capitalism, even development of enterprises, of trusts, of industries, of countries, is impossible.’</>
‘But if one speaks about the “purely economic” conditions of the epoch of finance capital, as about a concrete historical epoch situated in the beginning of the XXth century, the best answer to the dead abstractions about “ultra-imperialism”... is to oppose to them the concrete economic reality of the present-day world economy. Kautsky’s theory of ultra-imperialism is completely void of meaning and can only, among other things, encourage the deeply mistaken idea ... that the domination of finance capital reduces the inequalities and contradictions of the world economy, whereas in reality it strengthens them.’ 
The developments of the last year – to go no further into the recent past – are a perfect illustration of the fact that the law of uneven and combined development, ‘strengthening the inequalities and contradiction of the world economy’, operates today as it operated 50 years ago. In 1958, West Germany’s exports of machinery and transport equipment amounted to $3.9 billion, those of the United States amounted to $6.3 billion, 62 per cent more than the West German figure. In 1968, West German exports of machinery and transport equipment had risen to $11.3 billion, as against $14.5 billion by USA; the difference had declined to less than 30 per cent. In 1969, the two figures will practically meet at somewhere near $15 billion. Total West German exports were half of US exports in 1958; in 1969, they will amount to more than two-thirds of that figure.
This industrial power is by no means without relation to capital accumulation and financial strength. The revaluation of the Deutsche Mark (in fact: the devaluation of the dollar compared to the main European currency) is correlated with a tremendous export of German capital. Net long-term private capital export was $1 billion in 1967; $2.4 billion in 1968 and probably more than $5 billion – at the new exchange rate – in 1969, i.e. already more in absolute figures than US capital exports! In fact, during the first semester of 1969 there were more bonds issued in dm (including by US corporations) than in dollars, on the international capital market.
The sapping of the dollar’s strength by foreign military outlays has so changed the financial relationship of forces in favour of other major imperialist powers, that the US government now undertakes systematic efforts to force them... to spend more on rearmament (i.e. to redivide and so the speak ‘internationalize’ the common burden of defending the ‘borders of the capitalist world’). But this is inconceivable without a military strengthening of these powers (the strengthening of Japan is now on the agenda, after that of Western Germany), which again shifts the inter-imperialist relationship of forces at the expense of US imperialism.
The most astonishing passages of Martin Nicolaus’s polemic are these in which he accuses me of ‘making sense’ only if I assume the ‘pacification’ of the Soviet Union, a military alliance between European capital and the ussr, and ‘peaceful coexistence’. In other words, he seems to imply that ‘beneath Mandel lies de Gaulle’. Here we have again a typical example of how Martin Nicolaus is led astray by operating too much with metaphysical abstractions, instead of understanding real, contradictory social forces at work and in conflict with each other.
The competition between Western European and US imperialism is a fact, visible for anybody who studies not only trade statistics but polemics and debates in all capitalist circles on both sides of the Atlantic. What did ‘Gaullism’ represent in this debate? An attempt to ‘strengthen’ Western European imperialism by outmoded techniques of 19th-century diplomacy (18th-century dynastic diplomacy would perhaps be a more correct, if more severe assessment, at that). The attempt to establish ‘European independence’ under the hegemony of one of its economically weakest imperialist powers, France, was condemned to fail, ‘independent’ deterrent or not, as I pointed out in the early ’sixties. It could only lead to a deterioration of the relative position of French imperialism as compared with German and Italian imperialism, for the capital squandered by De-Gaulle in his force de frappe determined a growing antiquation of French industrial equipment compared to Italian and German plant and a growing exacerbations of social tensions in France itself. His attempt at a diplomatic and economic flirtation with Moscow was equally condemned to failure, because over and above the obvious importance of commercial expansion towards Eastern Europe, common to all European capitalists (and for which German, British and Italian groups were often better equipped than their French competitors), there was the staunch class consciousness of the French bourgeoisie, which could not but consider the Soviet Union, in spite of all the conservatism of its leaders and the reformism of the French CP, as a class enemy with whom no alliance was possible in the present world context.
In fact, the only durable change which occurred in the French economy under de Gaulle, occurred in spite of de Gaulle: it was the constantly growing integration of France into the Common Market. Today, 45 per cent of French exports are directed to these countries, as against 22 per cent before 1958. This economic fact was strong enough to create so much opposition inside the French bourgeoisie against de Gaulle’s particular views on capitalist Western European integration that it actually caused his downfall. I predicted this years ago in the same way as I predicted that de Gaulle was blindly working pour le roi de Prusse, for German hegemony in a Common Market limited to six countries.
Now what is the main social and political ideology of the advocates of ‘European independence’ in Western European capitalist and pettybourgeois circles? Is it Mandel’s thesis of inter-imperialist competition? Not at all! It is an ideology very close indeed to that of Martin Nicolaus and the thesis of ‘ultra-imperialism’. Europe is ‘in danger of being colonized by the USA’. This colonization is ‘irresistible’, unless Europe unites. In my book on the Common Market, shortly to appear in English, I have exposed the ideological function of this propaganda: it is to use the endemic ‘anti-Americanism’ of the European working class as a means to tune down the class struggle in Europe, to disarm this working class against capital concentration and capitalist rationalization, and to collaborate with its own exploiters against the ‘common enemy’: US imperialism.
The idea of complete US imperialist supremacy on a world scale, and the idea of Western Europe and Japan being slowly but surely reduced to the status of semi-colonial powers, logically leads to such conclusions. For after all doesn’t Marxism-Leninism teach that there is a basic difference between an inter-imperialist conflict, and a conflict between an imperialist power and an oppressed and exploited semicolonial bourgeoisie? So it is the theory of absolute US hegemony which leads to capitulation before the class enemy and to class collaboration, and not at all the classical Leninist concept of inter-imperialist competition, which I continue to uphold. This theoretical prediction has already been borne out in practice, at least twice: in the early ’fifties, when the French CP (and, to a lesser degree, other CPs in Western Europe) were making a block with Gaullists and speaking on the same platform with them against ‘US imperialism’ and the ‘abandonment of national sovereignty’, as if France were a semi-colonial power, and not one competing gang in the international brotherhood of robber barons and imperialists plunderers; and in the early ’sixties, when, starting from that very same assumption, certain Maoist groups proposed to support De Gaulle in the Presidential elections against Mitterrand, using the justification that de Gaulle was ‘more anti-American than Mitterrand’.
Our theory, at the contrary, does not lead to the subordination of any sector of the international working class to any sector of world capitalism. We stand for independent class struggle of the working class in all capitalist countries, We stand for independent organisation of the working class, defending its own class interests and bent upon a socialist revolution. We do not preach to American workers that they should ‘ally’ themselves with any sector of the ruling class, nor do we propose anything of the kind to European workers. To say that bourgeois ideas lie underneath such a clear strategy of independent working-class struggle is somewhat preposterous.
There is a lot in Martin Nicolaus’ article with which we can agree. There is no doubt that we are living in an epoch of tremendous ‘socialization’ and ‘internationalization’ of productive forces, on a scale unexpected even by Lenin or in Lenin’s time.  There is no doubt that the basic contradiction in such an epoch is the contradiction between capital and labour, in the process of production itself, and that the direct road of the working class towards a socialist revolution in the industrialized imperialist countries will be not through a fight for wages, but through objective challenges against capitalist relations of production. We have been writing this for many years, and there is no reason to assume that this will not be true in the United States too.
It is also evident that the very supremacy of US imperialism at the end of the Second World War tended to involve the ruling class of the USA with all world contradictions of imperialism, and tended to introduce all these contradictions in some form into American society Itself. In spite of all its accumulated wealth and reserves, even US imperialism has proved itself unable in the long run to pay, at one and the same time, the costs of playing world gendarme, of introducing ‘reforms’ into US society in order to avoid an exacerbation of social tensions, and of financing a constant modernization of equipment to assure a rate of productive capital accumulation which would enable it to maintain its technological advance on all its competitors. It is obvious that the origin of all the strains and tensions, increasingly visible in US society since the early sixties, are linked to world developments. We ourselves have pointed out many times how great the impact of the colonial revolution and of the Vietnamese war has been on the formation of a new revolutionary youth vanguard in the USA, on the politicization of the Blacks, on the emergence of a new radicalism among intellectuals, technicians and public service employees. So we see no reason suddenly to deny these evidences now. One should add that a new wave of objectively revolutionary militancy of the West European working class, as well as militant struggles of Eastern European workers, students and intellectuals for socialist democracy – not to speak of a parallel rise of political revolution in the ussr – could not fail likewise to strengthen the rise of a new revolutionary vanguard and an upsurge of mass radicalism in the USA.
All these factors – as well as many of those which Nicolaus cites – contribute to shake the relative political and social stability of the USA, to stir up against class consciousness in advanced American workers, and to facilitate the eruption of a sweeping radicalization and massive class struggles of the proletariat in that country. But all these subjective factors, reacting from the social superstructure on class relations, cannot be the main cause of a new mass radicalization of that working class. The main cause can only be found in a change of material conditions. The growing crisis of American imperialism can only transform itself into a decisive crisis of American society through the mediation of a growing instability of the American economy. This is our key thesis. In this growing instability of the American economy, the loss of US suzerainty over the whole imperialist world, the relative decline of US economic superiority vis-`-vis its imperialist competitors, and the sharpening competition and redivision of the international capitalist market – of which the internal market of the USA is the most important single sector – will play an important role.
In ‘Where is America going?’ I did not predict that the ‘re-emergence of the contradiction between labour and capital in the USA’ would present itself ‘as a re-run of some textbook accounts of the contract-bargaining sessions between Reuther and GM’. I only predicted that the American working class, which today has trade-unionist but not socialist class consciousness, would become radicalized from the moment the capitalist system showed itself less and less able to ‘deliver the goods’, i.e. to guarantee regular increases in real wages and a high level of employment. For I argued that the relative stability of American society during the past 30 years was basically not due to some ideological factor (the alleged anti-communism of the working class) but to this capacity of the system to ‘deliver the goods’. Nicolaus agrees with me that this capacity is now declining, and that the roots of that decline are to be found in the deterioration of the world situation of American imperialism. It is hard to deny, under these conditions, that the weakening of the competitive position of US imperialism on the world market has something to do with that deterioration.
1. In the first paragraph of Where is America going? – NLR 54, p.3.
2. The latest attempt to give a supposedly Marxist rationalization to ‘Third Worldism’ has been offered by Pierre Jalée in his book L’imperialisms en 1970 (Maspero, Paris 1969). This is based on the assumption that the contradiction between imperialism and the peoples of the Third World is the ‘main contradiction’ today (one can see here the havoc this undialectical formula of Lin Piao has caused among sincere and capable Marxists), while workers’ actions in the West remain ‘reformist’, both because of the capacity of the system to guarantee for a long time to come a high rate of growth (declining fluctuations of the industrial cycle and a low level of unemployment) and because of the predominance of rightist forces in the labour movement. How this theory can be reconciled with the reality of the class struggles in France May 1968 and Italy 1969, which obviously tend more and more to outgrow the limits of reformism and to challenge capitalist relations of production, or with the reality of the world economy, characterized since 1965 by a declining rate of growth, an increase in unemployment, and the appearance in nearly all key sectors of industry of growing over-capacity of production, is hard for me to understand.
3. It is useful to stress that Trotsky rejected any notion that the peoples of the underdeveloped world had to ‘wait’ till the Western proletariat made its revolution, just as he opposed any ‘Third-World’ illusions. In his political testament, the May 1940 Manifesto of the Fourth International on The Imperialist War and the Proletarian Revolution, he wrote:
‘The perspective of permanent revolution in no case signifies that the backward countries must await the signal from the advanced ones, or that the colonial peoples should patiently wait for the proletariat of the metropolitan centres to free them. Help comes to him who helps himself. Workers must develop the revolutionary struggle in every country, colonial or imperialist, where favourable conditions have been established, and through this set an example for the workers of other countries.’
It will interest our readers that this was not a new position of Trotsky’s, only acquired after the sad experiences of European working-class defeats in the ‘thirties. As early as August 5th, 1919, in a secret message to the Central Committee of the Russian Communist Party, he wrote as follows:
‘There is no doubt at all that our Red Army constitutes an incomparably more powerful force in the Asian terrain of world politics than in the European terrain. Here there opens up before us an undoubted possibility not merely of a lengthy wait to see how events develop in Europe, but of conducting activity in the Asian field. The road to India may prove at the given moment to be more readily passable and shorter for us than the road to Soviet Hungary. The sort of army which at the moment can be of no great significance in the European scales can upset the unstable balance of Asian relationships of colonial dependence, give a direct push to an uprising on the part of the oppressed masses and assure the triumph of such a rising in Asia.’ (The Trotsky Papers, I, 1917-22, p.623, The Hague 1964).
4. Lenin, Œuvres, tome 29, pp.167-8, Editions Sociales, Paris, 1962 – my own translation.
5. When I speak of relative quiescence I do not deny that there have been strikes during these decades. But obviously, nothing occurred on the scale of the post-war strikes, not to speak of the 1936-37 sit-down wave.
6. Engels: England 1845 and 1885, article published in Commonweal, March 1, 1885 – I quote from Marx-Engels Werke, vol.21, pp.196-7, Dietz-Verlag, Berlin 1962, and have retranslated the text myself from German into English.
7. This applies of course only to private capital outflows. I do not have to deal here with the phenomenon of the so-called ‘public help to Third-World countries’ – in fact the creation, by the imperialist states, of purchasing power for the heavy industry export monopolies of their own countries.
8. According to figures quoted by E.L. Nelson and F. Cutler in The International Investment Position of the United States in 1967 (Survey of Current Business, vol.48, no.10, 1968, pp.24-25), the rate of profit calculated by capitalist firms on USA direct capital investment in 1967 amounted to 12.3 per cent in Latin-America, 14 per cent in Asia and 19.7 per cent in Africa, as against only 10.1 per cent for direct capital investments in imperialist countries (Canada, Western Europe, Australia).
9. It should be noted that, after having poked fun at me in the beginning of his article for using the categories of ‘technological revolution’, and ‘inflation’ to explain some of the causes of growing instability in American society, Nicolaus comes back to exactly the same factors when he projects, in part IV of his article, the ‘development of a general crisis of overproduction’. We can easily drop the ‘backlog of unfulfilled demand created by the devastation of the Second World War’; by no stretch of imagination can this explain a seven or eight-year boom in the US economy in the ’sixties. He is then left with only two explanations: (i) ‘No epoch-making technological innovations’ have materialized, which would imply that the high rate of expansion of the last two decades was due after all ‘epoch-making technological innovations’ in the electronics, nuclear energy, petrochemical and computer industries as I contended. (ii) ‘Both investment and demand become problematic without the artificial and necessarily temporary stimulus of inflation’. Let’s not start a dispute as to the ‘necessarily temporary’ character of inflation. But its key role in attempts to avoid a major crisis of over-production I pointed out long ago (see Marxist Economic Theory, vol.II, pp.526-36, Merlin Press, London 1968).
10. ‘While imperialism necessitates a war of capitalists of one country against those of all (?) other countries, it is unable to realise such a war. The imperialists of each big power were forced ... to arrive at an understanding with the imperialists of another, or several other big powers, and to conclude an alliance with them. But by doing so, they have already started on the road of a very important modification of imperialism itself ... It is not at all excluded that the present war will end with an understanding between the leading big powers of both camps for the partition and exploitation of the world. We have even to take into account the possibility that the world will see the spectacle, of which we should be ashamed, that the imperialist International will become a reality sooner than the International of the socialist parties.’ Karl Kautsky, Die Neue Zeit, February 16th, 1917.
11. All this is explained in much more detail in my forthcoming Europe versus America? – Contradictions of Imperialism (NLB).
12. I mean by this that the economic repercussions of Third World liberation movements in the coming years cannot by themselves cause a major upheaval in the US economy. In fact, during the last 20 years these movements, which implied the loss for capitalism of the biggest country in the world – China – as a field of capital investment, coincided with a big increase in the rate of growth of the imperialist economy. This does, not of course, mean that the political, social and subjective effects of Third World liberation struggles do not make a very important contribution to shaking the equilibrium of imperialist society.
13. Lenin: Œuvres Choisies, I, pp.874, 852-3, Editions en Langues Etrangères, Moscou 1946.
14. But Nicolaus is mistaken when he assumes that national boundaries and nation States have ceased to be obstacles for this movement of internationalization of capital. On the contrary: the more this movement increases, the stronger becomes the contradiction between the survival of the nation state and the tendency of productive forces to outgrow it. Nicolaus shows a similar inability to understand the contradictory, dialectical process of social change, in his polemic on the question of black employment. My figure of the reduction of unskilled jobs in the USA comes from Secretary of Labour Wirtz, (quoted in Baran-Sweezy: Monopoly Capital, p.267, Monthly Review Press, 1966). The official statistics of black employment in 1960 3.6 million employed. Of these only 1 million were unskilled labourers (among which a quarter of a million farm laborers), as against 887,000 semi-skilled workers, 357,000 craftsmen and foremen, and 292,000 technicians, professionals and clerically employed. The basic process in American industry has been to displace labourers by semi-skilled operatives. But at the same time, in the American economy clerical jobs, and jobs of technicians and professionals, have risen even more quickly (the number of professional, technical and clerical jobs increased from 11·7 million in 1940 to 21 millions in 1965, whereas the number of ‘semi-skilled operatives and kindred workers’ only rose from 9·5 to 14 millions). So it is perfectly possible that, at one and the same time, there are many fewer jobs as labourers, there are many more blacks employed in industry and services as semi-skilled operatives, there are proportionally many more black unemployed than white and there is a growing inter-racial income gap and occupational segregation, which has a powerful radicalizing impact on the black population.
Last updated on 11.9.2007