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Your guide to Communist Theory

Volume 1

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BACK 2 BASICS -Volume 1 Contents

1. 2. 3. 4. 5. 6. 7. 8. 9.

Introduction Materialism Dialectics Production (Value) Commodity Production Production (Value) Surplus Value Class The State Imperialism (Par t 1) Imperialism (Part 2)

Published by the Executive Committee of the Young Communist League, Ruskin House 23 Coombe Rd Croydon CR0 1BD

3 4-6 7-10 11-13 14-16 17-19 20-22 23-25 26-28


Back 2 Basics Volume 1 Published by the Executive Committee Young Communist League Ruskin House 23 Coombe Rd London CR0 1BD 020 8686 1659 07906 096 209 office@ycl.org.uk www.ycl.org.uk

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1. Introduction The Back to Basics series has become a regular feature in the YCL’s quarterly journal Challenge. The intention is to give a guide and broad explanation to some of the concepts and aspects of Communist theory. It does not represent the totality of the YCL’s theoretical work, but it has become an important tool for newer members, friends and allies in the labour movement as a whole and anyone interested in understanding the basic principles of Communist theory. Of course you cannot contract a living and ever developing theory into some twenty pages and the Back to Basics series will continue to run as a regular feature in Challenge exploring and developing further the theory behind the practice. Subsequent volumes will be produced in this pamphlet format. This first volume focuses on some of the central aspects of communist theory, the process of applying dialectical materialism as a tool for analysing the world is often misunderstood or misinterpreted by many and is explored in the first two parts. Our understanding of the nature and the economic basis of Capitalism and why it must be overthrown in order to eliminate exploitation is explored through Marx’s Labour theory of Value, in parts 4 & 5. Part 6 provides those with an overview of Class and how it has developed in different periods of history. Finally we deal with the communist analysis of the state and a subject of critical importance today, the nature of Imperialism. We would welcome any comments on this first instalment of ‘Back to Basics’ and hope that this is useful not just for Young Communists but for anyone striving to develop a better understanding of the world we live in. Ben Stevenson Young Communist League General Secretary

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2. Materialism The philosophical underpinning of Marxism-Leninism is often referred to as "dialectical materialism". Parts 1 and 2 of this series set out what that actually means-materialism in this issue and dialectics in the next issue. In Ludwig Feuerbach Engels describes the materialist method in the following way: "to comprehend the world-nature and history-just as it presents itself to everybody who approaches it free from preconceived idealist fancies". Lenin writes in Materialism and Empirio-Criticism that "the fundamental premise of materialism is the recognition of the external world, of the existence of things outside and independent of our mind". This leads us to one of the oldest questions of philosophy-the question of the relationship between thinking and being. This question has divided all philosophers, and indeed anyone who pauses to consider their view on life, into two camps. Those who assert that the mental (or spiritual) is primary and the physical secondary are termed idealists, while those who believe that the physical is primary comprise the materialists. Ever since this question was posed, people have attempted to blur the distinction between materialists and idealists, some by claiming to have "transcended" both philosophies or created a synthesis of the two. But in reality these "Syntheses" turn out to be either idealism dressed up in new terminology, or else what Engels called "shamefaced materialism". A particular case of the latter is "agnosticism" (the name comes from the Greek from "don't know"), which operates like materialism in practice but in theory refuses on principle to answer the question. In some cases, rather than challenge materialist philosophy, attempts have been made to change the actual meaning of the word itself. "By the word materialism the philistine understands gluttony, drunkenness, lust of the eye, lust of the flesh, arrogance, cupidity, avarice, miserliness, profit-hunting and stock-exchange swindling-in short, all the filthy vices in which he himself indulges in private. By the word idealism he understands the belief in virtue, universal philanthropy and in a general way a 'better world,' of which he boasts before others, but in which he himself at the utmost believes only so long as he is going through the Back 2 Basics Volume 1

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depression or bankruptcy consequent upon his customary 'materialist excesses" (Engels). But idealism in its correct philosophical usage means the belief that the mental (or spiritual) is the pre-cursor, and indeed the creator, of the physical world around us. In its most extreme form this becomes a refusal to acknowledge the existence of real, physical objects. It is held that the entire world exists only in our minds. However, this philosophy, in refusing to recognise the existence of the physical body, leads to the postulate that these thought processes, with which we create the world we see around us, are carried out without the use of the brain (as this would mean accepting the existence of a physical organ). This suggestion (mockingly referred to by Lenin as "brainless philosophy") in its most extreme form leads to the claim that "only I exist", and everything and everyone else is a figment of my imagination. The less openly crazed variant still runs into serious trouble-since it argues that nothing exists except in so far as it is perceived by a human mind, it is forced to deny that the world (or the universe) existed before there were people to observe ("create") it. Other, more sophisticated forms of idealism are on the surface much more acceptable. These include the various world religions, which hold that the world owes its origins to ,some super-natural creator, and other philosophies, like that of GWF Hegel, which replace the god of the monotheistic religions with the "absolute idea". This type of idealism recognises material objects, but asserts the existence of a "higher", "purely spiritual' world of which matter is only the "reflection". This is the opposite of the materialist view, which sees matter as primary and regards thoughts as images or reflections of matter, themselves created by a piece of matter-the brain. This view can be caricatured by claiming that materialists "reduce" human behaviour and society to the level of machines, leading to the argument that we need to hang onto the idea of the "sour or else abandon compassion, morality and indeed political commitment. Nothing could be further from the truth. No materialist can argue, as some idealists do, that physical suffering is needed in order to "purify" the spirit; nor, as other idealists sometimes do, that it is a preparation for a perfect life after death in which justice will be Page 4

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restored. As communists, and materialists, we recognise this reality as the only reality. We can change the world. But to do so, we need to understand it correctly. Materialism means that all aspects of reality are open to scientific investigation and analysis; nothing can be parcelled off into a separate "spiritual realm" in which science is helpless in the face of "the will of God". This is an essential part of the world outlook of scientific socialism-which aims to understand the world in order to change it. Further reading: The central concepts of materialism are set out by Friedrich Engels in his book Ludwig Feuerbach and the End of Classical German Philosophy.You might also want to look at part 1 of Maurice Comforth's Materialism and the Dialectical Method, the first volume of his textbook Dialectical Materialism.That’s pages 5-54 if you're using the 1968 edition. If you want to get more stuck into these questions, by Lenin's Materialism and Empirio -Criticism at www.marxists.org/ - its a lengthy (450 pages) and at times difficult book, but it can be well worth the effort.

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3. Dialectics Every scientific investigation must have a method. The choice of method will affect the whole course of the investigation and it is important to base your method on the reality of the situation you are studying. The method used by Marxists in studying the world around them is Dialectical-Materialism. The materialists of the eighteenth century were heavily influenced by the major scientific advances of their era. These were primarily in the mechanical and chemical sciences. The biological sciences were only examined and explained in terms of mechanical causes. The other major defect of scientific thought at the time was that, except for mechanical interactions, it studied the world as a collection of static objects taken apart from their interconnections. Both of these problems were reflected in the materialism of the time. This was inevitable in the course of scientific development. In the words of Engels, "it was necessary to examine things before it was possible to examine the processes. One first had to know what a particular thing was before one could observe the changes going on in connection with it -natural science up to the end of the last century was predominantly a collecting science, science of finished things, in our century it is essentially a classifying science, a science of the processes, of the origin and development of these things and of the inter-connection which binds all these natural processes into one great whole." Dialectical Materialism is the reflection, in philosophy, of this scientific revolution and its first premise is that all things must be studied in the context of their interconnections and interdependencies. The term dialectics was used by the Ancient Greeks to refer to a style of debating in which a philosopher would expose the contradictions in an opponent's argument then overcome them. Dialectics in the sense in which it is used by Marxists today has a slightly wider definition. It is the "study of the contradiction within the essence of things" (Lenin). The world is made up of matter in motion. All matter from the most Page 6

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complex right down to the smallest sub-atomic particle known today, is in motion. This has been shown to be the case by rigorous scientific investigation. Indeed matter without motion is as inconceivable as motion without matter. Similarly, all matter contains contradictory sides which make up its unity. It is the development and balance of forces in these contradictions which drive forward its motion. Take, for example, a seed from a tree. The seed, from the very beginning of its existence, contains a contradiction. Somewhere deep within is the beginnings of a new tree which, in time, will devour the nutrients that make up the rest of the seed. Thus the tree from the seed negates the seed itself, resolving the contradiction. There are several general rules which govern the development of contradictions in nature. It must be emphasised that these are very general rules which pick out important features of dialectical development. They are true because they occur in the natural world, not vice-versa. G.W.F. Hegel, the first philosopher to recognise these rules, made the mistake, upon finding them at work in the human mind, of assuming that they were laws of thought and that, where nature could be explained dialectically, it was conforming to these intellectual laws. He thus failed to recognize that the laws which govern our thought processes are merely reflections of the laws at work in nature. The first is that quantitative changes can lead to qualitative changes and vice-versa. Small, imperceptible changes in quantity can lead to fundamental changes in the nature of things. Consider the periodic table of elements. All are made up of protons, neutrons and electrons. A simple change in the number of one of these sub-atomic particles could completely change the substance. Similar1y, a quantitative change in the temperature of an amount of water can change it from a solid, to a liquid, to a gas and back again. This pattern is repeated in many natural and social processes. The next rule concerns negation. Traditionally, when we think of something being negated, we consider it as the end of a process. However, dialectically, every end is a beginning. When a contradiction is resolved by the negation of one part by the other, the negating part carries within it its own Back 2 Basics Volume 1

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negation, the beginnings of a new contradiction. This is what is referred to as the negation of the negation. This is not simply a return to the original phase but a progression to something higher, which may contain elements of both the original and its negation but which is entirely new in essence. Armed with Dialectical Materialism as a growing, living analytical tool, we can study the world around us and, in doing so, inform our revolutionary theory and practice. Further reading.: Neither Marx, Engels nor Lenin wrote a book which could serve as a "beginners' guide to dialectics". But most of the works listed under materialism in the previous could be of use, including Marx and Engels's The German Ideology and Engels's Ludwig Feuerbach and the End of Classical German Philosophy. If you're using Comforth's introduction to Marxist thought, then the section on dialectics is the second half of volume one (Materialism and the Dialectical Method). Or if you want to see where it all started, you could try Hegel: he gives a reasonably concise explanation of his (non-materialist) dialectic in Logic (volume one of his Encyclopaedia of Philosophical Sciences). But be warned: Hegel is a notoriously difficult author (Marx referred to the "grotesque craggy melody" of his writing), and this is book is in places very obscure.The situation is made worse by the fact that it's very hard to translate Hegels terminology into English without producing something so far from natural English that you might as well learn German. And even once you do work out what Hegel is getting at, you'll still need to keep up a running criticism of his anti-materialism (his dialectic is "standing on its head". Marx) otherwise you'll get into all kinds of problems. Arguably at the other end of the spectrum, Stalin's essay Dialectical and Historical Materialism is pretty straightforward but has been accused of oversimplifying things.

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4. Production (Value) Commodity Production Communists seek to challenge capitalism as an unjust and historically outmoded system. In order to replace capitalism we must understand capitalist and its economic basis – commodity production. Marx made a huge contribution to the understanding of capitalist economics. Karl Marx explained the labour theory of value in his major work Capital. A commodity is an article, which is produced for the purpose of exchange. Previous economic systems, e.g. Feudalism, were dominated by production for use. Whilst some articles were produced for exchange, this was not the main purpose of production. Capitalism is unique in that most articles are produced for the purpose of exchange. Commodity production is the dominant form of production under capitalism. As with any other science, in order to study commodity production dialectically, we must begin by studying its smallest self-contained unit – the commodity. The commodity-form of the product of labour – or the value-form of the commodity - is the economic cell-form. To the superficial observer, the analysis of these forms seems to turn upon minutiae. It does in fact deal with minutiae, but they are of the same order as those dealt with in microscopic anatomy. (K. Marx, Capital I) In order for a commodity to be exchanged, there must be a buyer willing to receive it in exchange for something else. Contained within the physical object there must be some useful property, which is needed or wanted by the buyer. This is referred to as the "use value" of the commodity, e.g., a coat has a use-value as it can be worn to keep out the cold. A use-value is a distinct property of the object, which is linked to the physical nature of the object itself.

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To be exchanged, any commodity must have a use-value.Yet use-value is not the only value-property of the commodity. Any study of capitalism will show that commodities are not exchanged in accidental proportions. A certain amount (x) of commodity A (under certain social and historical conditions) will be exchanged for a certain amount (y) of commodity B. x commodity A =Y commodity B At first these proportions appear to be fixed simply by tradition. As their relationships are studied more closely, it is seen that they fluctuate according to the relationship of supply and demand - when demand outstrips supply, a commodity becomes worth more and when supply rises above demand, a commodity becomes worth less. It is argued that the worth of a commodity in terms of other commodities – its exchange-value - is to be found here. Although this theory explains short-term fluctuations in exchange value, it cannot explain the underlying value, which causes these fluctuations. If these could be explained purely in terms of supply and demand then during a mild food shortage for example, the price of a loaf of bread would rise above that of a private jet. This is simply not the case although the demand for private jets is roughly equal to supply. For an equal relationship to exist between certain amounts of two different commodities there must be some common property of the two, something common to both by which they can be measured. This property is labour. All commodities are products of human labour and it is this, which binds them all together in the process of exchange. Labour comes in many different forms. For example, the labour of a farmer is different from the labour of a banker. However, for the purpose of calculating value, all labour must be reduced to its simplest form, that of unskilled human labour of average quality. It is this abstract social labour in which the value of commodities is measured. Every form of complex, skilled labour must be reduced to a greater amount of abstract social labour depending on the levels of skill and training involved. But what happens if two identical commodities are produced under different conditions by workers of equal skill and experience, one using Page 10

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traditional methods and the other with the aid of modern technology, expending half as much labour in the production of his/her commodity? Initially both commodities will have different prices, but these will be quickly equalised as buyers go for the cheaper commodity and the seller of the more expensive commodity is forced to reduce the price by the laws of supply and demand. Here is the socially necessary labour needed to produce a commodity and it is upon this that its value is based. Further Reading: Value, Price and Profit - Karl Marx Capital - Karl Marx & Frederick Engels Wage-Labour and Capital - Karl Marx A Short Course of Political Economy - L. Leontyev (Chapter 3) Political Economy - John Eaton (Chapter 2) Capital - Karl Marx (Volume I, Chapter I)

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5. Production (Value) Surplus Value In the last back to basics, we discussed the value of a commodity and found that this came in two forms - use-value and exchange-value- and that they were derived from the labour required to produce the commodity, use-value from specific labour and exchange-value from abstract social labour. But under the capitalist system, labour itself (or more accurately labour-power, the capacity to labour) is sold as a commodity. So what is the value of labour? This was the stumbling block of classical political economy and it was Karl Marx who first solved the problem. The first important distinction to be made when answering this question is between labour and labour-Power. When a worker enters into an economic relationship with a Capitalist, it is not his labour which is sold directly. If this were the case, the value of a days labour would be equivalent to a days labour and we have proved nothing. Moreover the capitalist, in paying the price of a day's labour for a day's labour, makes no profit. It was argued, therefore, that the capitalist must pay less than the value of labour to the worker for his labour. But, by the laws of supply and demand, this would only be possible if there were constantly more workers than jobs, which is not always the case. In reality, what is sold by the worker to the capitalist is not labour but labour-power the worker's capacity to labour. Thus, the capitalist pays for a day's labour-power and, for that day, the worker (at least in terms of his labour) becomes the property of the capitalist who can decide how much work is carried out and under what conditions (subject to the reasonable limits of human endurance). So what is the value of a day's labour-power? Along with other commodities, the value of labour-power can be reduced to the amount of labour required to produce it, or in this case to produce (and reproduce) the Page 12

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labourer food, shelter, clothing, etc. There came a time in human history when due to the use of tools, etc. A person could produce through their own labour more than the amount required to survive. Under capitalism, this surplus is expropriated by the capitalist and provides the source of profit. For example, suppose a worker produces (in one six-hour day) £60 worth of commodities and consumes, on average, £30 worth of commodities. This £30, required to sustain and reproduce the worker, is advanced by the capitalist in the form of wages. In return for the value of one day's labourpower, the capitalist receives the product of one day's labour. But this product is £60 worth of commodities. So, for the first three hours the worker is effectively working for his own sustenance and produces £30 worth of commodities. He has now produced the equivalent of his wages and we may well think that he has honoured his part of the bargain. "But wait!" says the capitalist, "I have paid you for a day's labour and that day is not yet finished." So the worker is required to work for another three hours, during which he produces another £30 worth of commodities. This labour is referred to as surplus-labour and the value it creates as surplus-value. It is this surplus-value which provides profit for the capitalist, rent for the landlord and interest for the banks. It is through the appropriation of this surplus-value that the capitalist class lives off the work of the mass of exploited people like some vast over-fed parasite. Further Reading Value, Price & Profit – Karl Marx Capital – Karl Marx (Synopsis Freidrich Engles) Wage, Labour & Capital – Karl Marx A Short Course of Political Economy – L Leontyev Political Economy – John Eaton (Chapter 4)

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6. Class Class is a concept at the heart of our Marxist understanding of the world, yet many on the right claim that the ‘working class’ no longer exist. How do we approach this problem? “The history of all hitherto existing societies is the history of class struggle.” Marx & Engles, the Communist Manifesto. In order to understand society, we must, therefore, understand the concept of class. Lenin said that classes were defined by “the place they occupy in social production and, consequently, the relation in which they stand to the means of production”. This definition relies on an understanding of the economic basis of society – its mode of production. Marx and Engles identified four modes of production since the beginning of recorded history: Primitive Communism, Slave Society, Feudalism and Capitalism Primitive Communism Through this mode, the productive forces were underdeveloped and all means of production (land, animals, weapons etc) were commonly owned. When the productive forces developed to the level at which one person’s labour could provide more than what was needed to keep that person alive, a surplus was created. At this point classes developed based on the way the surplus was appropriated. Slave Societies Conflicts arose between the slave-owners and the slaves on one hand and between slave-owners and independent producers on the other. Feudalism Here there were conflicts between the feudal landowners and the peasantry, and later between landowners and the rising bourgeoisie. Page 14

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Capitalism Capitalism itself divides society into two main classes (with other groups forming an ‘intermediate strata’). The first is the capitalist class who live off the surplus value of others’ labour (see b2b part 4). But in order for the capitalist find a worker willing to sell his labour-power for its price of production (and hand over the surplus value of that labour to the capitalist), there must be a class of people possessing no means of production of their own and for whom the only way to realise the value of their labour power is to sell it to the capitalist. This class – the working class – was created by the removal of the peasantry from the land and the enclosure of common land, leaving them with no means of production with which to earn a living. Present Day So, how does this compare to today? Is society still divided into two main classes: a capitalist class living on the labour of others and a working class selling their only commodity, their labour power, in order to exist? It is clear that the capitalist class still exists. The regular announcements of huge dividends given to shareholders and ‘bonuses’ paid to company directors show that there are people who live off the work of others. But, with the increase of house ownership (or, more correctly, mortgage ownership), regular foreign holidays and the shift to a service-driven economy, many would have us believe that the working class no longer exists. However, if we look at Lenin’s definition of class, we can see that this has not altered the fundamental position of ordinary people. Most people are still forced to sell their labour power in order to live and the surplus value created by their labour is still appropriated by the capitalist class. In the creation of a working class divorced from the means of production, capitalism has ensured its own destruction. Firstly, the working class has everything to gain from the overthrow of capitalism. In a society free from exploitation, the surplus value created by the labour of people could be used for the benefit of society as a whole; to raise the living standards, increase the rate of technological progress and reduce the working week. Secondly, the working class has a unique position as possessors of labourpower – capitalism’s most important resource. It can withdraw this Back 2 Basics Volume 1

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productive force, vital to the functioning of capitalism, at any time. In the overthrow of capitalism the working class will achieve what has never been achieved: the creation of a society free from exploitation. As Marx and Engles wrote in 1848, “Workers of the world unite! You have nothing to lose but your chains!�

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7. The State An important question for any Marxist is that of the relation of the state to society. What is the state and how did it come into being? What role does the modern state play in the class struggle? Back to Basics answers these questions and outlines the Marxist view of the state in capitalist society. The first question we must tackle regards the origin of the state. The modern state (government, judiciary, police force, army, etc.) appears both impartial (at times) and ever present. In reality it is neither. In early society neither the state, nor anything fulfilling a similar role, existed. The emergence of the state appeared at that time at which society became divided into classes, into oppressors and oppressed. It is then that the need for a body separated from the rest of society, apparently impartial, is first felt. However, the state itself develops during the struggle between classes which necessitates its formation. For this reason, the state represents the interests of the economically dominant class, giving this class political dominance and enforcing its will against that of the exploited class. What appears as an independent arbitrator of the class struggle is in fact “a machine for maintaining the rule of one class over another.” (Lenin, the State) The state therefore becomes a tool of the oppressing class and all of its repressive machinery: police, army, courts and secret service, can be directed against the oppressed class. We can see this functioning of the state in modern capitalist society. The state perpetuates the property relations upon which capitalist society is built. Its primary role is to defend the ‘rights’ of property. The role of politicians in all bourgeois parties is to manage capitalism, a task which they carry out with more or less success and it is upon this that they are judged. The foundation of the capitalist state is private property and anything which does not recognise this ‘right’ is in conflict with the state. Whilst, on the whole, the repressive machinery of the state is not used explicitly against the working class (for exceptions, consider the anti-union laws, the use of Back 2 Basics Volume 1

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the police and army to break the miners’ strike, etc.), its defence of private property, of the right of the capitalist class to own the means of production, keeps the working class in the position of the oppressed. In this way we can characterise the modern state, even under parliamentary democracy, as the dictatorship of capital. Contrast this with the role of the state under communism. With the ending of class society, the role of the state as an organ for the repression of one class by another is no longer necessary. The state, in as much as it remains, will be required purely for its administrative functions. Effectively, the state, as it appeared in class society, ceases to exist once the conditions which led to its existence in the first place are negated. However, there must be a period of transition between the capitalist state and communism. To suggest (as some anarchists do) that the state can simply be dismantled and not replaced with anything is misleading. In any society which immediately follows capitalism, many vestiges of the previous system will remain. These will include the concentration of wealth and property in the hands of the few. In order to ensure the success of socialism and, eventually, communism, there must be some body capable of redistributing this wealth to the people and of ensuring that it is not used to attack socialism from within. For this reason, the working class must seize the capitalist state and make use of it - the dictatorship of the proletariat. Recommended Reading: LENIN: The State The State and Revolution The Proletarian Revolution and the Renegade Kautsky ENGLES: The Origin of Family, Private Property and the State MARX: The Civil War in France

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8. Imperialism Part 1 Any clear analysis of the world we live in today requires an understanding of the current stage of capitalism, to which Marxists refer as imperialism. The term ‘imperialism’ itself is much more commonly used in the peace and antiwar movements than it was even five years ago. Despite this, it is a term which is frequently misunderstood, or only partially understood. The purpose of these series is to lay the foundations for an understanding of imperialism. The process which Marxists refer to as imperialism has also been referred to in its latest phase as globalisation. However, this term fails to characterise the key features of imperialism in the world today. Lenin argued that “the most deep-rooted economic foundation of imperialism is monopoly” and that imperialism could be briefly defined as “the monopoly stage of capitalism” (Imperialism, 1916). Under capitalism, cyclical economic crises, combined with the advantages of scale held by large companies over small- and medium-sized businesses, lead inevitably to the annexation of smaller companies by larger enterprises. This leads to the concentration of production and capital in fewer and fewer hands, causing monopolies to develop within specific sectors of the economy, first within one country (and its colonies, semi-colonies and neocolonies), then across the world market. During this process, finance capital is created by the merger of bank capital with industrial capital, creating a financial oligarchy which derives profit primarily from the export of capital from the developed capitalist world to less-developed and developing countries to invest in cheaper labour and raw materials. Much of this monopolisation occurred during the second half of the 19th century. In 1917, Lenin referred to the example of the oil industry which operated as a monopoly on a world scale. Two or three companies controlled production and distribution of most of the world’s oil and each was closely linked to national banking operations. The largest was Rockefeller’s Standard Oil, linked to the Chase Manhattan Bank (now Exxon-Mobil and JP Morgan Back 2 Basics Volume 1

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Chase), followed by Royal Dutch Shell and Anglo-Persian Oil, both linked to the City of London (now Shell and BP-Amoco). These three firms still dominate oil production and are all in the top ten of the world’s largest Trans-national Corporations (TNCs). As monopolies developed within and between the advanced capitalist countries, the race to secure control over economic ‘spheres of influence’ began. By the early 20th century, the world had been entirely divided up into colonies or other spheres of influence and each imperialist power could only expand at the expense of another. Due to the uneven economic development caused by the capitalist system, no stable re-division of the worlds resources and markets was possible, leading to constant conflict or inter-imperialist rivalry. It was this situation which led to the First World War as the fastergrowing industrial power of Germany came to challenge the economic domination of Britain. In the countries where they operate, TNCs need to protect their investments through political or military control. Key to this is the state apparatus of the TNCs ‘home’ countries, ensuring that Trans-national Corporations, whilst international in their operations, remain based firmly in one specific advanced capitalist country. As the struggle between rival imperialisms intensified, the monopolies began to fuse their economic power with the political power they exercised through the state to form state monopoly capitalism – characterised by the “closest collaboration and joint involvement of the capitalist monopolies and state apparatus in economic, political and military affairs.” (from Britain’s Road to Socialism). Today TNCs based in the leading imperialist countries account for onethird of the world’s production, two-thirds of world trade and three-quarters of international investment. This economic power is backed up by the political and military power of the advanced capitalist nations, which is used to ensure access to raw materials and markets across the world. It is this which has caused the wars and conflicts we have experienced throughout the 20th century. In the next article we will look at how, and why, this process has accelerated over the last 10–15 years.

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9. Imperialism Part 2 In the last Back To Basics, we began looking at the development of imperialism. In this article, we will look at recent developments within imperialism in what constitutes its third phase. The first phase of imperialism, up until 1945, was characterised by interimperialist rivalry and the drive to divide and re-divide the world into spheres of influence of the dominant capitalist countries. It is important to note that this was a global, not national or regional, process and that imperialism has always been a global system. The second phase of imperialism, lasting from 1945 to the early 1990s, was characterised by an increase in stability brought about by the existence of the Soviet Union and the socialist countries of Eastern Europe. The capitalist countries were forced to conceal some of their differences and subjugate inter-imperialist rivalry to the need to form a united front against the socialist countries and the threat of communism. This is not to argue that capitalism ceased to develop or developed on an even basis. Indeed, the capitalist countries continued to develop their mode of production within the capitalist sphere and the effects of uneven development continued to play a role in the relative power struggles within imperialism. However, due to the existence of the Soviet Union and its allies, substantial gains were made by the working class in the advanced capitalist countries and the growth of imperialism was slowed, though not halted. Since the early 1990s, we have faced a very different world situation. Firstly, since the end of WWII, there has been a massive expansion of nonbanking financial institutions (e.g. insurance and pension funds). Money is taken from workers via these institutions and re-invested in the stock market outside of the control of the working class. Secondly, the role of Transnational Corporations (TNCs) has greatly increased. TNCs now control more than 1/3 of world production, more than 2/3 of international trade and more than 他 of corporate investment. This process has been greatly accelerated by deregulation. Thirdly, the export of capital is of even greater significance than Back 2 Basics Volume 1

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ever before. All the advanced capitalist countries have high levels of Foreign Direct Investment (FDI), the vast majority of which is invested elsewhere in the developed world, tying the economies of the major capitalist countries closely to each other. For example, by far the largest part of British FDI is invested in the US and, similarly, the majority of money passing through the City of London financial centre is US capital. Fourthly, imperialism has become even more parasitic and moribund, with large amounts of capital being invested and re-invested in non-socially-useful sectors of the economy such as the arms industry. This attempt to stave off economic crisis through relying on the re-investment of government money, taken from the general population in the form of taxes, in the arms industry inevitably skews the national economies of the imperialist countries away from socially-useful production. Fifthly, the process of economic division and re-division of the world between TNCs has been accelerated. As cheap capital projects and cheap labour become less significant in relation to access to markets and resources, political and military means are increasingly used to gain access. Sixthly, the development of state-monopoly capitalism has accelerated, with most TNCs not only reliant on state support in the political and military spheres but also economically through a process of mass privatisation to achieve above average profits at the expense of the public sector. Finally, the role of inter-imperialist rivalry has been reasserted under the new conditions of US dominance. In an attempt to allow European TNCs to compete on a more equal footing with their US counterparts, leading capitalists within Western Europe have pushed the formation of an imperialist 'United States of Europe' - the EU - to strip away workers rights and achieve super-profits through the free movement of goods, services, capital and labour within Europe.

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