“The imperialists loot the world not out of sheer piggery but because they actually need the profits they extract. That ‘surplus’ is keeping their system alive, despite its deepening decay.”

The Imperialism Study group hosted by Redline is focused on Lenin’s Imperialism, John Smith’s Imperialism in the 21st century and Tony Norfield’s The City.  Perhaps inevitably, however, we have also discussed other theorists, most particularly David Harvey (who is, to put it kindly, highly confused about imperialism) and Paul Baran & Paul Sweezy, whose work on imperialism was influential in sections of the 1960s New Left, especially in the United States.  The piece below is a follow-up to comments made earlier by veteran US Marxist Walter Daum on Baran-Sweezy (see here).  Keep in mind that these are comment pieces which are part of a study group discussion; they don’t purport to be exhaustive articles on the subject.

by Walter Daum   (October 12, 2017)

With regard to the discussion of Baran and Sweezy in the study group, there is no question that they deserve attention by Marxists, especially given the widespread influence of the Monthly Review school. They also deserve recognition for emphasizing the importance of imperialism in sustaining capitalism for the past century or more – in contrast to David Harvey, the International Socialist Tendency and others who downplay its importance and distort its role. But I also think that Baran & Sweezy’s theoretical and political influence has been harmful.

First, on their political influence. I came into the radical and socialist left in the late 1960s, when Baran & Sweezy’s book Monopoly Capital was all the rage in the US New Left. Those of us trying to grasp Marxism and to apply it to the explosive world we were facing – above all the Black struggle in the US and the imperialist assaults on Cuba, Vietnam, etc. – were up against slews of young Baran-Sweezy fans who learned from their bible that a) the law of value, and therefore Marxist political economy overall, was useless for understanding the imperialist world; and b) that the working class in the imperialist countries was useless for challenging capitalism. The main alternative analysis was the book Marx and Keynes by Paul Mattick. But that was terribly difficult to read and never became popular.

B&S’s rejection of the First World working class soon came into conflict with the world-wide and world-shaking mass struggles of 1968, as the post-war boom drew to an end. French workers seized factories and almost overthrew Charles de Gaulle’s government. The international upsurge also included powerful movements in China, Mexico and Italy, and even in the U.S. with the proletarian-based ghetto uprisings. This was a refutation of theory by reality. But damage had been done.

Baran-Sweezy are not responsible for all the turns their followers took, but their outlook helped mislead much of a whole generation of radicals into rejecting any anti-capitalist potential of the U.S. working class. Some variants of “third-worldism” contended that workers in the First World were in collusion with the imperialist capitalists and were themselves exploiters of the Third World; this current had no interest in promoting the political independence of the working class. A few years later, when radicalism faded, many of them jumped onto the career ladder of the bourgeois (and imperialist!) Democratic Party – where they serve amicably alongside many of the social-democrats they had despised and battled back in the day.

Secondly, on the theory side, subsequently Sweezy often insisted that he and Baran had not rejected the law of value as the basis for their analysis. You would not know that from Monopoly Capital, however: the term “value” does not appear there, except for a brief explanation of why they abandoned surplus-value. That was not just an oversight. For Marx, value is the starting point of the analysis of capitalism, and price relations are derivative of value. Baran-Sweezy, in contrast, said that “market relations are essentially price relations,” and therefore “the study of monopoly capitalism, like that of competitive capitalism, must begin with the workings of the price mechanism” rather than value (MC, p53). The authors also acknowledged that their method “has resulted in almost total neglect of a subject which occupies a central place in Marx’s study of capitalism: the labor process” (p8). That is an extraordinary admission for theorists who are developing Marxism, for it is in “the labor process” that value and surplus-value are generated.

B&S replace surplus-value with “surplus”, which they then defined in different ways. Indeed, they never made clear whether or not it meant surplus-value in Marx’s sense. And if it did not mean surplus-value, which arises from the exploitation of living labour and is subject to class struggle, it is not clear where it all comes from or whether it has any connection to class struggle. Years later, in correspondence published posthumously, it turned out that Sweezy had not been sure whether “surplus” meant surplus-value, while Baran insisted they were different. (monthlyreview.org/2012/07/01/last-letters). Leaving this question unresolved, and the disagreement unacknowledged, was dishonest and further helped to lead thousands of readers to the conviction that Marxist theory was obsolete.

Thirdly, on the law of the tendency of the rate of profit to fall versus the rising surplus theory.  B&S reject Marx’s theory of the tendency of the rate of profit to fall and counterpose to it their “tendency of the surplus to rise.” Sweezy had argued in The Theory of Capitalist Development that Marx’s theory was wrong even on its own terms (pp100-102). In the monopoly epoch, the rising surplus notion led to “absorption” of the surplus as the main problem facing capitalism rather than declining profit rates.

Yes, capitalism does run into problems of overproduction and hence output that cannot be sold. But that means there is too little surplus-value to be shared among the various competing capitalist claims, not too much. Moreover, overproduction is a cyclical problem, whereas the falling rate of profit is a long-term tendency.

Even granting B&S their absorption problem, it operates differently from the falling rate of profit tendency. Under the falling profit-rate theory, when one capitalist innovates and makes his rivals obsolete, his profits rise and theirs fall. Or when one stronger or more modern capitalist swallows a weaker or obsolete competitor, his profits rise and theirs disappear. The point is that not all capitalists end up in the same boat when the profit rate falls; some survive, others drown. Under the surplus absorption theory, in contrast, the capitalist who invests successfully and extracts more surplus for his own account thereby exacerbates the problem for all capitalists including himself, not just his rivals.

Fourthly, on foreign investment, I had cited this passage from B&S:

“One can only conclude that foreign investment, far from being an outlet for domestically generated surplus, is a most efficient device for transferring surplus generated abroad to the investing country. Under these circumstances, it is of course obvious that foreign investment aggravates rather than helps to solve the surplus absorption problem” (MC, pp107-108).

And I commented, “If B&S were right, the entire imperialist capitalist class has been blind to the fact that their insatiable greed for profit is overfilling the trough they pig out from and exacerbating their problem of excess surplus.”

Now it was suggested that I ought to agree at least with the first sentence in the B&S passage quoted. I agree with the second half – lots of surplus-value flows from the South to the North. But I do not agree with the first half (assuming that “surplus” means surplus-value), because foreign investment in the South is often a more profitable outlet for s-v. That’s why the capitalists do it. B&S observe that the problem they see capitalism as facing, excess surplus absorption, is not helped by foreign investment. The aggravation of the problem is a contradiction in B&S’s theory. The capitalists’ blindness to the consequences of their actions (which are “of course obvious” according to B&S) is more than paradoxical. It is a reductio ad absurdum that refutes the theory.

So surplus absorption is not the fundamental problem that B&S say it is. Yes, the imperialists have s-v that they can’t invest profitably at home, so they look abroad – or to speculation, which generates profits based on fictitious capital. They’re seeking to amass more s-v, not to dispose of it through waste etc. The falling rate of profit and the rising surplus are counterposed ways of grasping how capitalism works. When it comes to explaining the drive for imperialism, one succeeds and the other doesn’t.

  1. In arguing that the surplus absorption theory led to reformist conclusions, I cited Sweezy saying that it would be “in the objective interests of the American capitalist class as a whole” to stop exploiting the South and instead help develop poor countries. Sweezy believed that the bourgeoisie failed to do this because of capitalist greed: “the deeply ingrained capitalist abhorrence of giving anything away without receiving in return an immediately related and measurable quid pro quo.”

Baran proposed an equally naive notion in his 1957 work The Political Economy of Growth:

“Indeed, if the most advanced countries’ contact with the backward world had been different from what it was, if it had consisted of genuine cooperation and assistance rather than of oppression and exploitation, then the progressive development of the now underdeveloped countries would have proceeded with incomparably less delay, less friction, less human sacrifice and suffering. A peaceful transplantation of Western culture, science and technology to the less advanced countries would have served everywhere as a powerful catalyst of economic progress. The violent, destructive, and predatory opening up of the weaker capitalist countries by Western capitalism immeasurably distorted their development” (p162).

Baran even suggested that such a benevolent transplantation was not only possible but that it actually has occurred. For he continues,

“A comparison of the role played by British science and British technology in the development of the United States with the role played by British opium in the development of China fully epitomizes this difference.”

The idea that the European conquest of the world could have been peaceful and benevolent is fantastical. Whatever the achievements of British science and technology, the British “opening up” of the territory that became the US was not peaceful. It involved, among other things, the destruction of Native American societies and populations, as well as the centuries-long slave trade and slave economy, a crucial element in the growth of the U.S. into a world power. And in general, an essential component of “Western culture” was the contempt for “lesser races” that the ruling classes of the “advanced” countries engineered in order to justify their oppression and exploitation – indeed, their mass slaughter – of “backward” peoples.

I was astonished when I first read this passage, especially because it comes from one of the founders of a tendency characterized as “third-worldist”. I don’t doubt that Baran and Sweezy were fully aware of the depredations of imperialism – Monthly Review wrote about this all the time. I can’t help think that their wishful thinking was linked to the underlying Keynesianism of their theory, as Tony Norfield, Paul Mattick and others have suggested.

What should you conclude if your theory tells you that the imperialists, in their own interest, ought not to be the predators that they’ve been for centuries? It should occur to you – indeed, it should be “of course obvious” – that your theory is wrong. The imperialists loot the world not out of sheer piggery but because they actually need the profits they extract. That “surplus” is keeping their system alive, despite its deepening decay. If they were to stop grabbing surplus-value from the oppressed countries in their various ways, then they would have a real problem – and no reason to exist.


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