Encyclopedia of Anti-Revisionism On-Line

The New Voice

Imperialism Today: An Economic Analysis

Imperialism & the Working Class

Will U.S. workers fight U.S. imperialism? Is there a material basis for this struggle? These questions must be answered in detail, because some people in the movement are distorting the nature of imperialism. They state or imply that the U.S. imperialists derive most of their profits from the colonies whose economies they control. Furthermore, U.S. workers are said to receive a “bribe” consisting of part of these colony-derived profits, rather than being exploited. If this were true, then the great slogan “Workers and oppressed peoples of the world, unite!” would have no basis in reality. Unity between classes requires that they share a common material interest. So let us investigate these questions.

Where do the profits of U.S. capitalists come from? Do they come from outside the U.S., and from the colonies in particular, or are they still mainly extracted from” the U.S. working class? Overwhelmingly, the profits of U.S. capitalists are exploited from U.S. workers (wage and salary earners). In 1969, the sum of earnings on direct investments abroad, net interest income, and royalties and fees from foreign affiliates of U.S. companies totaled $9.6 billion. (Survey of Current Business, October 1970, pages 27, 33, 34). Unadjusted earnings excluding net interest, royalties and fees were $7.955 billion, and this was divided as follows:
–from other developed capitalist countries, $3-971 billion, or 50%
–from underdeveloped, colonial countries, $3.747 billion, or 47%
–from unallocated international sources (for example, shipping), $237 million, or 3%. (Same source, p. 27).

On the other hand, corporate profits in 1969 of U.S. non-financial corporations amounted to $73.8 billion before taxes and an estimated $39.2 billion after taxes. (Survey of Current Business, July 1970, p. 41).

In short, overseas profits on investment amounted to about $9 billion, while domestic profits on investment amounted to $40 billion. Furthermore, foreign profits from developed countries outrank profits from underdeveloped colonies.

Let us now get behind these summary dollar figures. On the table on page 2 [not reproduced here – EROL] a number of U.S. corporations are described according to where their production facilities are located in the U.S. and outside it, in other developed capitalist countries and in colonies.

Three-quarters of the factory space of General Motors is in the U.S. and only one-fourth in other oountries. Only 18 of Goodyear’s 96 plants are in the colonies. And so on it goes down the roster of U.S. corporate giants. These corporations, which were deliberately chosen to represent not an average business but the largest corporations most heavily involved overseas, still have the majority of their production facilities in the United States. (Oil is an exception.) And where information is available, the overseas production facilities are shown to be primarily in other developed capitalist countries, and only partially in underdeveloped colonies.

Some object that because of cheap wages in colonies, profits on investments there are larger, a fact which would not be reflected in production facility statistics. However, the wage level is only one factor in determining profits. Another factor is the productivity of the workers. The higher the productivity, the less of their working day that goes into producing the equivalent of their basic needs. More of their working day goes into producing surplus-value for the businessman. Productivity is mainly determined by the level of technology. In Marxist terms, the relative surplus-value is higher. The type of industries to be found in the colonies is labor intensive and has a low productivity. For example, the statistics for General Motors’ car and truck production are calculated for the final assembly lines. But the engines assembled into cars in Brazil are not made in Brazil; this higher technology process, the forges and foundries, remain in the United States and other developed countries. Then the engines and other parts are shipped to Brazil for assembly. Similarly, in the electronics industry, a company like Motorola makes the basic integrated circuits and transistors in places like Phoenix, Arizona. The basic parts are then shipped to Seoul, South Korea for assembly into finished radios and other products pretty much by hand.

The two factors, cheaper wage rates but lower productivity, must both be taken into account. And, in fact, the rate of return in 1969 on manufacturing investments by U.S. corporations was as follows:
–in the U.S. 12,6%,
–in other developed countries, 12.9%
–in underdeveloped countries, 12.7%. (Survey of Current Business, October 1970, p. 32)

To sum up, the majority of profits of U.S. corporations are sweated out of U.S. workers, and profits overseas come from both developed and underdeveloped countries. The October League, for example, is wrong when it says that “the aggressive nature of imperialism has driven it around the world in search of superprofits from the labor of the world’s peoples.” (The Call, May 1973, p. 14) Other, more fundamental reasons have driven the U.S. businessmen around the world. So, too, the Revolutionary Union is wrong when it says, “The U.S. ruling class not only exploits our own working people; it extends its exploitation throughout the world by a system of imperialism. Its oppression is most vicious in Asia, Africa, and Latin America, where large U.S. corporations extract, at the point of a gun, super-profits from super-exploitation.” (The Red Papers, p. 3)

The theory which places main emphasis on super-profits is not true, hides the exploitation of U.S. workers, and does not state the real drives behind the global activity of U.S. corporations and the U.S. government.

Investigation of the origin of profits of U.S. businessmen has proved that U.S. workers have a material interest in opposing U.S. imperialism. This material interest can be measured in tens of billions of dollars and the toil of which they are the product.

Most U.S. business profits are extracted from U.S. workers, not colonial populations. The “cheap labor and superprofits” theory of imperialism has been shown to be false. What, then do U.S. companies get out of the colonies? The major reason for holding underdeveloped countries as colonies remains what it was when Lenin first analyzed imperialism–for assured supplies of raw materials. The Rockefeller companies go to Venezuela for oil (standard Oil) and to Guatemala for bananas (United Fruit); Firestone holds Liberia for rubber supplies; Phelps-Dodge gets copper from Peru.

The problem is not a lack of oil, rubber, or copper in the world to meet “our” needs. There is more than enough; but each monopoly needs an assured supply of its raw materials. If it does not have this supply, it can only go to a competitor to buy them–and the price charged will drain away most of the profit of the business. For example, when Morgan brought together a number of steel companies into the U.S. Steel monopoly in 1901, it controlled most of the iron ore supplies in the United States (e.g., the Mesabi range). Other companies like Bethlehem Steel had to go overseas for iron ore of their own.

“The principal feature of the latest stage of capitalism is the domination of monopolist combines of the big capitalists. These monopolies are most firmly established when all the sources of raw materials are captured by one group, and we have seen with what zeal the international capitalist combines exert every effort to make it impossible for their rivals to compete with them by buying up, for example, iron ore fields, oil fields, etc.” (Lenin, Imperialism, The Highest Stage of Capitalism, Peking edition, p. 98).

The natural place for other companies to go for raw materials was undeveloped colonies. They had the resources but were not using them in any industry of their own, and they could be dominated by the superior power of the policemen of the world, the governments of the economically most powerful countries, which did the bidding of the monopolists.

About the time that small-scale capitalism developed into monopoly capitalism–around 1870 to 1900–the capitalist powers grabbed the less developed, pre-capitalist areas of the world. France took over Indochina in the 1870’s and 1880’s; Britain, France, and Germany carved up Africa. The United States government fought imperialist wars of aggression in Cuba and the Philippines. The scramble became so frenzied that the government grabbed a colony first and then evaluated its resources second–simply to prevent another power from getting it. Some areas became important because transport to and from other colonies had to cross through them–for example, the Middle East, which lies between capitalist Europe and India and south Asia. Underlying this wave of colonial appropriation was the need of every big business to assure itself a supply of raw materials and to squeeze its rivals out if at all possible.

The imperialists have a vested interest in preventing the industrial development of these colonies (whether along socialist or independent capitalist lines). If the colonies were to industrialize, they would take back their own natural resources; furthermore, they would become unwelcome new industrial competitors among the existing developed countries. Forcible prevention of development Is the major form of oppression of the colonies. The colonial peoples are coming to realize that they cannot make a better life for themselves until they kick out the imperialists. First the imperialists must be ousted from Vietnam, the Philippines, Latin America, etc., before these people can go on to settle their internal problems and develop a better standard of life.

To see that resource control, not manufacturing, is the major reason for imperialist oppression of the underdeveloped countries, let us look at the direct private investments by U.S. companies in the world. As Table 2 [not reproduced here – EROL] for 1970 shows, investment in underdeveloped colonies is directed to mining and smelting, and pumping oil– extraction of raw materials. A small part (26%) is directed to manufacturing. On the other hand, when U.S. companies do set up overseas manufacturing operations, they are in other capitalist countries. The amount of U.S. direct private investment in manufacturing in other developed countries outranks similar investment in colonies by $26 billion to $5 billion.

This picture is confirmed by the worldwide distribution of wage and salary earners in manufacturing. In 1964 there were 66 million such workers in the developed capitalist countries but only 19 million in all the underdeveloped colonies. (Year Book of Labour Statistics, ILO, Geneva, 1964). Business profits are derived from the exploitation of wage and salary earners, and they are in the developed capitalist countries.

There is some capital invested in manufacturing in the colonies. It tends to go into labor intensive industries. These industries are a fringe part of contemporary capitalism. There is more competition and less monopoly in them. Large-scale application of high-level technology is not used, so there is little danger of industrializing the colony in the course of exploiting some of its people. (See a later section of this pamphlet for further discussion of this question.) That is why we see shirts from Taiwan and kitchen utensils from Hong Kong in the stores. But as part of any scientific, overall summary of the facts, these prominent examples are totally unrepresentative.

There is a sizeable export of capital, especially to other developed capitalist countries–over $53 billion. Along with the search for monopolized supplies of raw materials, the export of capital is one of the two main reasons for the drive of U.S. corporations overseas. In all the major Industries, a handful of large corporations control most of the production. To increase their profits they restrict production and jack up the price. Monopoly is the artificial creation of shortages in order to hold up the community for superprofits.

Where are these profits to be reinvested? Not much can be used to expand production in the home industries, because restriction of production is the foundation of the whole system. An outlet must be sought elsewhere. Especially since World War II, U.S. companies have been exporting capital to Europe and other capitalist areas.

The export of capital hurts the wage rates of U.S. workers. Capital exported instead of being reinvested within the country means less demand for labor. This puts workers in a worse bargaining position to fight for higher wages and better working conditions. U.S. workers do not gain by imperialism; they lose, and they have a material Interest in destroying the monopoly capitalist system which requires export of capital.

Some persons. however, comparing the living conditions of U.S. workers and colonial peoples conclude that U.S. workers must be getting some benefits from Imperialism. It is certainly true that life expectancy, literacy rates, meat consumption, etc., are higher in the U.S. than in the colonies. Why? Because the U.S. is more industrialized, the productivity of labor is higher, and U.S. workers have, in struggle, kept up a share in the gains” of an increasingly fruitful apparatus of production. Higher productivity means that the working class can reproduce its food, shelter, clothing, and other needs in a shorter portion of the working day. More time is left for the production of profits for businessmen, embodied in goods workers do not directly or indirectly consume. If productivity is growing, it is possible for workers to have a higher standard of living while the businessmen exploit more surplus-value than with lower productivity. But businessmen do not pay wages any higher than they are forced to; U.S. workers’ struggle has turned the possibility into the fact. The difference in productiveness, not any transfer of colony-based profits as a “bribe”, explains the difference in living standards between U.S. workers and peasants in Ecuador or Thailand, etc.

The struggle between workers and business in the United States is a sign of the internal contradictions in U.S. capitalism. These contradictions can develop without first requiring that some “bribe” from overseas colonial operations and paid to U.S. workers (!) be exhausted.

U.S. corporations, we have seen, derive most of their profits from U.S. workers, and imperialism (monopoly capitalism) heightens the exploitation of U.S. workers. How can such a system of artificial scarcity, unemployment, unused productive capacity, war and crisis be put over on the workers? There are basically two tools that any ruling class uses, force and fraud.

Of these, the major weapon is fraud or systematic mis-education of the masses. For when the truth grips the masses, they cannot be stopped; the force which a minority ruling class can muster against a clear-sighted population is like a straw in a tornado. On the other hand, if the masses can be mis-educated, taught that things can be no better, channeled into ineffective methods of trying to change the system, or demoralized, then force can be applied locally against isolated outbreaks and as a terror device. But force and fraud are the two tools of rule–it is obviously impossible to bribe the majority of the people from which the privileges of the ruling class are sweated out. As most U.S. profits are derived from U.S. workers, who compose the bulk (over 85%) of the population of this country, there can be no “bribe” of most U.S. workers.

However, it is necessary to have a machinery of fraud to mis-educate and mislead U.S. workers. The expense of this political and ideological machinery can be borne by monopoly capitalism. This is the truth which Lenin taught in his thesis on the “aristocracy of labor.”

Lenin always recognized that “The extent to which monopolist capital has intensified all the contradictions of capitalism is generally known. It is sufficient to mention the high cost of living and the tyranny of the cartels.” He spoke of “huge, monopoly capital, which operates under conditions in which the masses of the population live in want...”

“As long as capitalism remains what it is, surplus capital will be utilized not for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists, but for the purpose of increasing profits...” “Where, except in the imagination of sentimental reformists, are there any trusts capable of interesting themselves in the condition of the masses instead of the conquest of colonies.” (Imperialism, The Highest Stage of Capitalism, Peking edition, pp. 150, 40, 73. 99).

But Lenin also said that “it is possible to bribe the labor leaders and the upper stratum of the labor aristocracy.” (p. 9). These labor leaders are the functionaries in the machinery of fraud needed to mis-educate and mislead workers in their struggle against monopoly capitalism. Perhaps the most specific and concrete description Lenin gave of these persons was in his essay “Imperialism and the Split in Socialism.” There he wrote,

“Lucrative and soft jobs in the government or on the war industries committees, in parliament and on diverse committees, on the editorial staffs of ‘respectable,’ legally published newspapers or on the management councils of no less respectable and ’bourgeois law-abiding’ trade unions–this is the bait by which the imperialist bourgeoisie attracts and rewards the representatives and supporters of the ’bourgeois labor parties.’” (Collected Works, volume 23, P. 117).

Lenin then goes on to explain that these persons are part of the “mechanics of political democracy” under capitalism. A system of fraud is necessary; “it is impossible to make the masses follow you without a widely ramified, systematically managed, well-equipped system of flattery, lies and fraud...” (same article as translated in Collected Works, volume 19, International Publishers, 1942, P. 348).

“And how this little sop is divided among the labor ministers, ’labor representatives’ (remember Engels’ splendid analysis of the term), the labor members of war industries committees, labor officials, workers belonging to the narrow craft unions, office employees, etc., etc., is a secondary question.” (volume 23, p. 115; emphasis added).

We see that Lenin mentioned the old trade unions, the craft unions. They were organized on the basis of restricting entry into skilled trades more than upon unity of all workers in an industry. Lenin always pointed out that this stratum was a minority; in his days the great masses were not organized in trade unions; today, many remain unorganized, while in industries like steel and auto there are industrial unions. Also, “office employees” were a small group in Lenin’s day, often under the illusion that they were close to the owners. Today, white-collar workers are a majority of the working class with few illusions of being in line to become capitalists. For the rank-and-file strata, Lenin’s references to the masses, not to the labor aristocracy, apply.

Thus, the possibility of a material bribe for more than a small minority of the working class is out of the question. The duty of the most consciously hired hacks– top bureaucrats of trade unions, men who serve on Pay Boards and make up the AFL-CIO Executive Council, the liaison men between Jay Lovestone and the CIA and the State Department, etc.– is the duty of misleading the workers, of enveloping them in “flattery, lies and fraud.” As a result of this fraud, the labor movement divides into two currents, “the revolutionary mass stream” and “the opportunist-petty bourgeois stream.” (volume 23, p. 119). The first stream is always the majority:

“Neither we nor anyone else can calculate precisely what portion of the proletariat is following and will follow the social-chauvinists and opportunists. This will be revealed only by the struggle, it will be definitely decided only by the socialist revolution. But we know for certain that the ’defenders of the fatherland’ in the imperialist war represent only a minority.” (p. 120).

Always it is true that “while trusts, the financial oligarchy, high prices, etc., permit the bribing of small upper strata, they at the same time oppress, crush, ruin and torture the masses of the proletariat and the semi-proletariat more than ever.” (volume 19, p. 347).

In order to connect this question with the question of racism, the following calculation may be made: if the opportunist-petty bourgeois stream represented as much as ten per cent of the working class, and if this stream were lily white, then the overwhelming majority of the revolutionary mass stream of the working class would still be white. Only ten to fifteen per cent of the U.S. working class is nonwhite; therefore, eight out of nine exploited, unbribed, untouched workers– workers who perform absolutely no political function in the machinery of fraud as do the labor politicians–would be white. Class lines are primary.

The attempt to portray class lines as less important than, or coinciding with, color lines is a racist, capitalist falsehood.

Finally, we see that the basic force we must rely on is the U.S. working class. There is no choice necessary between revolutionary people in the colonies and in the U.S. They have a common enemy in U.S. Imperialism. The theory sometimes voiced or implied that we must wait until all the colonial peoples have won liberation before class contradictions in the United States will develop is false. This is a petty bourgeois theory of imperialism. It is betrayed in 95% of the activity of the Revolutionary Union, the October League, and other groups of a similar opportunist nature; this activity concentrates on the “united front against imperialism” and the struggles of external and “internal” colonies to the point of denying that the main contradiction within the United States is the contradiction between the working class and the monopoly capitalists.

This approach is false because 1) there is no bribe for the bulk of U.S. workers, financed out of profits from the colonies. On the contrary, most U.S. corporate profits are sweated out of U.S. workers. 2) The contradictions of monopoly capitalism are intense, multiple, and may quite possibly reach the point of crisis within the United States first. The dollar crisis and contra-dictions between the U.S. and other imperialists, the parasitic and decayed nature of the society under monopoly, the movement which the attempt to suppress a single colony(e.g., Vietnam) can give rise to, and the struggle over the standard of living–all these tensions are developing. No simple sequence exists which requires the victory of the national liberation struggles first and only then the intensification of class struggle in the U.S.

Instead, any particularly sudden and sharp event or conjunction of separate events may cause a revolutionary crisis. Therefore, we must conduct all-around education and organization among the working class, and not subordinate this integral activity to a single aspect, to waiting for and giving a small helping hand to one or another national liberation struggle. Nor should we set up a timetable of tasks based on the outcome of these struggles.

A liberal in England, Hobson, saw no force capable of counteracting imperialism. Some persons today rely almost entirely on the colonial peoples as the counteracting force. But Lenin said, ”Hobson, the social-liberal, fails to see that this ’counteraction’ can be offered only by the revolutionary proletariat and only in the form of a social revolution.” (volume 23, p. 110).