2. Dialectics of pre-capitalism and proletarian movements: new and massive sources of surplus-value

"We cannot say whether Asia will have time before the downfall of capitalism to become crystallized into a system of independent national states, like Europe; but it remains an undisputed fact that capitalism, having awakened Asia, has called forth national movements everywhere. . . . The example of the Balkans and the example of Asia prove that Kautsky's proposition is absolutely correct: the national state is the rule and the 'norm' of capitalism. . . . The best conditions for the development of capitalism are undoubtedly provided by the national state."—Lenin, 1914 (75)

Aiding the process of financial capital's international integration is a relatively favorable international situation with regard to the extraction of surplus-value. In a period where the total global or regional surplus-value is contracting, reactionary bourgeois nationalism arises and the designs of the bourgeois internationalists have to go on the back-burner. As it turns out, new sources of surplus-value have arisen since World War II and they have allowed the finance capitalists to go ahead with a relatively aggressive bourgeois internationalist agenda. This notion is contrary to that of some "general crisis" theorists who have been crying "wolf" since the Depression of 1929.(76) There are no statistics to back the idea that the global economy is continually shrinking. The growth rate of the industrial countries of the OECD has fallen 50 percent since the 1970s, but there is still economic growth. However, it is true that without the new sources of surplus-value opened up in East Asia, it is unlikely capitalism would be growing at all in the OECD. Imperialism has no dynamism of its own and has to be bailed out by pre-imperialist capitalism.

Dialectically-speaking, the success of capitalism in accumulation gives rise to its own demise. As Lenin explained so clearly, imperialism is capitalism in its decadent phase. In some countries, the bourgeoisie does not get a chance to grow strong, and remnants of feudalism persist, because of the decadence of imperialism, which coexists alongside pre-capitalist formations. As Marx predicted, in such a situation, the proletariat would have to lead the bourgeois revolution against feudalism. According to Stalin the agrarian question was at the center of the national question, so it was that nationalism and smashing the landlords went together in Asia.

It turns out that communist-led movements are almost the only ones able to drag forward societies with significant pre-capitalist remnants in the era of imperialism.(77) The single largest injection of surplus-value into the capitalist system has been in China since the restoration of capitalism there in 1976. However, before that restoration occurred, China had to go through a socialist stage in which imperialist puppet regimes defending feudalism had to be swept away. If it had not been for the communist movement, China and the rest of East Asia would still be choking under landlord rule, the way the Philippines is. The countries experienced the most violent class struggles mid-way through the 20th century are now the ones experiencing the most economic growth and greatest gains in life expectancy.

The ruling class's own presses recognize the truth of the situation in the Philippines, which is all the more striking for being in East Asia but typical of the world as a whole, unlike the handful of East Asian countries and city-states that experienced serious land reform or did not need it: "The Philippines, although geographically in East Asia has not adopted shared growth as a principle of legitimation. No government, for example, has succeeded in implementing a wide-ranging land reform. . . . The reasons are laid out in various historical accounts. . . . The gist of these is that the United States traded military and financial support of the local elite, whose wealth had always been based on land (a legacy of Spanish colonialism), for continued long-term use of the two largest U.S. military bases outside the United States—Clark Air Force Base and Subic Bay Naval Base. This in turn attracted large inflows of U.S. investments, which were likely to be lost in the event of a communist takeover. Consequently, Philippine regimes could count more reliably on the United States for support in combating communist insurgency."(78) The above statement shows that the ruling class is conscious that the change of mode of production is what causes economic growth and that U.S. military politics have sided with local landed elites. The authors of the above statement are a World Bank economist and a member of the right-wing think tank the Hoover Institution. The book was published by the ruling class centrist to center-right Brookings Institute and was partly intended to appease the Japanese for making financial contributions to the World Bank while hearing too much free market rhetoric from their Anglo-Saxon partners. In a way, the book is a consensus position of imperialism.

There is also evidence that high-ranking government officials in both Japan and the United $tates know what the hold-up is in the Philippines. The Japanese parliament member and statespersyn Shintaro Ishihara said that U.$. Congresspersyn and chair of the House subcommittee on Asian and Pacific Affairs Stephen J. Solarz asked Japan to fund a confiscation of land in the Philippines. The money would go to buy-off the landed elite so it would not oppose the land reform.

Ishihara believed that it was not possible, because of where the money would end up and he was in favor of having the Filipinos "resolve their own social contradictions." He added that "to help the Philippines, first the malefactors have to be identified: the landowners. This class, with its vast holdings and absurd privileges, plundered wealth from the people. I have no sympathy with this exploitative elite. Unless a far-reaching land reform like the one in Japan after World War II is carried out, rural desperation will spawn radical, violent agrarian movements. Without the stability of social justice and a middle class, the landlords, too, will be insecure. If the military take power and adopt leftist policies—confiscation, nationalization—that will be the end of the big landowners."(79) Hence, we can see that even though both U.$. and Japanese imperialists know what the problem is, they cannot do anything about it. They thereby justify the communists, while hoping that the imperialist-backed military does the job instead of the communists, if only to retain their own influence in the Philippines. Thus far, they have pinned their hopes on Ramos, but those proved to be misplaced hopes.

Other than the "People's Republic" of China, we should mention five other lifesavers or life-rafts afloat in the sea of capitalist failures in the world, totaling easily over 150 countries. Japan, Hong Kong, Singapore, Korea and Taiwan are the life-rafts of capitalism that we speak of. Dialectically and ironically-speaking it was the communist-led movement that made these capitalist successes possible—directly in the cases of Taiwan, Korea and China and indirectly in the cases of Hong Kong, Singapore and Japan.

Japan was one of the world's earliest industrializers, but its real contribution to the dynamism of global capitalism occurred after World War II. The reason is simple—the mode of production. In Japan, U.S. troops sought to wipe out the power of militarists who pushed Japan into war against the United $tates. This meant wiping out the landed class.(80) For the reason of an historical accident of war, the United $tates carried out a revolution in Japan, a transformation of the mode of production. Since that time, Japan's productive forces have been unleashed and Japan has taken the lead of the capitalist world, not because of the Marshall Plan, but mainly because of the improvement in the mode of production. That is proved by the fact that other Asian countries are also "succeeding" without having had a Marshall Plan.

Hence, Japan changed its mode of production under the bayonet of U.$. occupation troops, who were watching Mao in China carry out land reform movements while fighting a corrupt and military KMT (Guomindang party). In Korea, communists did the same thing. They carried out a land reform before being driven back by U.$. troops, and again, the U.$. having just witnessed what Mao did in China, essentially sanctioned what the communists did in that one area--land reform. Once defeated, the KMT in Taiwan did the same thing: it gave up its landlord outlook and carried out land reform, but there is no way that the KMT or the United $tates would have learned anything if it were not for Mao's movement creating so much pressure in East Asia.

Subsequent to land reform, statistical measures of inequality show that southern Korea and Taiwan had the lowest inequality of all developing nations. Now along with Japan,(81) they continue with that status whereby they are much closer to Mao's China in economic inequality than they are to Mexico or Brazil.(82) Contrary to the bourgeois idea that increased inequality spurs higher production, by creating incentives not to be "lazy," the truth is that when all the rewards for working go to the top, the bottom is less productive, and it is much more important to spur the many than to spur the elite few when it comes to developing an economy.

Of the remaining dynamos in East Asia, Hong Kong and Singapore are both cities, and did not need land reform, but they benefited from the pressure Mao brought to bear on landlords across Asia. Neither Hong Kong nor Singapore could have prospered without being hubs of prospering areas. Thus, to understand what dynamism there has been within the capitalist system in the latter half of the 20th century we only need to know one thing: which country carried out land reforms and broke the back of the landlord class? We do not need complicated individual cultural theories for each economic success. For example, there are those who attribute the success of modernization in East Asia to "Confucianism."(83) They neglect the countries where Confucianism did not bring modernization, but more importantly, they use a very inefficient theory with respect to time. Confucianism has been around for thousands of years, so we have to ask why it only succeeded in being associated with economic leadership in recent decades and at one point earlier in the millenium. In fact, in the countries involved, Confucianism had to be weakened before economic success occurred.

Capitalism gave rise to communist movements that in turn extended the life of capitalism by advancing the mode of production in a handful of important countries. It is time to acknowledge that the "Four Tigers" are indeed successes by capitalist standards. Certainly that success is tenuous, but regular imperialist countries have crises and problems too, so the doubts of many(84) concerning the East Asian exceptions of capitalist development should be put aside. There will not be any restoration of semi-feudalism in these countries and their success is genuine--thanks to the violent class struggles in those countries that occurred in the 20th century.

Yet, for every capitalist success there have been at least 20 failures,(85) with many more countries getting poorer than booming like the "Little Dragons." If the species survives capitalist wars and environmental degradation, it is possible that communist movements will wipe out every last bit of pre-capitalism on the earth before capitalism itself also dies. That is in some ways a worst-case scenario of incremental change. We hope to speed up history a few hundred years, so that we do not reach the end of capitalism only after the invention of Star Trek replicators and the abolition of every last speck of pre-capitalism. For now, the finance capitalists have been aided in their World Government schemes by a huge injection of surplus-value from East Asian countries that changed their modes of production through war and revolution.

In the old days of colonialism, if a country changed its mode of production and started exporting industrial goods, other colonial countries would shut their markets by force. Conversely if a country like Japan did not want to import goods, the navy of the colonialist country launched an attack and secured a trade treaty. In the imperialism that has developed since 1880, this changed very slowly, such that force used by one imperialist is almost always good enough reason for other imperialists to be involved in the plunder. In the dialectical process of struggle, it is not just the proletariat that learns. The bourgeoisie also learns to a lesser degree, for instance how to struggle within a society with a dictatorship of the proletariat.

The other major learning of the imperialists comes in connection to imperialist wars. Even bourgeois historians are often willing to admit that World War I was a matter of trade blocs and colonialism at root. The bourgeoisie also suffered its first losses, most especially in Russia with the revolution of 1917 in the midst of world war. By the end of World War II, the U.$. imperialists were determined to learn their lessons.(86) Not only did they occasionally back land reform when it was handed to them on a silver platter of war and revolution, but also the imperialists decided to push for the utopian ideas of "free trade" espoused by bourgeois economists of centuries.

"King Cotton" William Clayton was the first concrete embodiment of lessons learned by imperialism in the post-World War II era. Clayton was a bourgeois internationalist, because he had 123 warehouses scattered around the world with subsidiaries in Mexico, Peru, Argentina, Paraguay, Brazil and Egypt. He joined the Franklin D. Roosevelt administration during World War II. Truman asked him several times to become Secretary of State, but Clayton settled for organizing the ITO and the General Agreement on Tariffs and Trade (GATT), which started with 18 non-communist countries in 1947. According to him, World War I was about colonies and World War II--aside from being an extension of World War I--was brought about by trade barriers.(87) The Hawley-Smoot Tariff Act in the United $tates set the highest tariffs in U.$. history during the Depression. Already during World War II, King Cotton was arguing for the eradication of tariffs after the war. After the war, in November, 1947, Clayton had the Truman administration's support and he set about colossal global negotiations. "'If we are to bring about world peace . . . and prevent World War III' the effort 'must be based primarily on economic collaboration.'"(88) Thus right inside the ruling class we can see a clear and conscious advocacy of inter-imperialist collaboration that colored the post-World War II era. To be sure, this faction of the bourgeoisie had to beat back the protectionist faction, including its attempts to label Clayton's negotiating team infiltrated by communists.(89)

The highest theoretical expression of what the imperialists have learned from two world wars of inter-imperialist rivalry is game theory. A ruling-class author, Miles Kahler has mentioned game theory in respect to the establishment of trading blocs and tariffs.(90) The bottom line question for these bourgeois think tanks is: is there more to be gained by attacking my imperialist rivals or by collaborating with them? After World War II, the U.S. government tried to put forward an aggressive face of imperialist collusion once it achieved unquestioned dominance of England, France and Germany. In East Asia this is especially clear. After so many bourgeois and landlord governments fell, the penalty of communist revolution become too much for imperialism to bear, and it embarked on a cooperative relationship with Korea, Taiwan(91) and Japan that was not possible in the earlier years of imperialism. Instead of attacking capitalist rivals, the U.$. imperialists raised themselves to higher levels of cooperation in the name of the Cold War. Although he would have sought cooperation with Europe anyway, as time went on King Cotton's deputy chief, the Quaker economics professor Clair Wilcox also had the Cold War to point to for inter-imperialist collaboration: "It certainly is not going to be in our interest. . . to have the non-Russian part of the world split up into a lot of small units that can be picked off and communized one by one."(92)

This theme continued throughout the post-World War II era. In the Kennedy administration starting 1960, octogenerian King Cotton continued on with help from Christian Herter, who co-authored a paper with him saying the United $tates should unilaterally drop tariffs on imports from poor countries so that they do not go communist. In a similar, idea, since 1991, the United $tates supposedly has given the Andean countries a break on tariffs with the theory it would offer a substitute for cocaine exports. Another program in started in 1976 sets up a Generalized System of Preferences (GSP) that makes imports to the United $tates tariff-free. The main beneficiaries are Brazil, India, Indonesia, Malaysia, the Philippines and Thailand. One other program aimed at economic recovery favors imports from the Caribbean.(93)

In his day, Kennedy himself appears to have put forward the idea of cutting GATT tariffs 50 percent, starting with Europe, just to make sure Europe did not drift away. At the time, the head of the AFL-CIO George Meany so enjoyed the anti-communist message that he assured Kennedy and the State Department bourgeois internationalists "'1,000 percent'" cooperation.(94) It is only recently with the demise of the Soviet Union that the labor union opposes free-trade.

Merchandise exports to the world in 1990 constant dollars, billions(95)(96)

Country	1950	1973	1992
China except Taiwan, Hong Kong & Macau	6.34	11.68	84.94
Taiwan Province of China	0.18	5.76	82.21
U.$.-occupied Korea	0.11	7.89	77.80

By 1980 foreign trade amounted to 25 percent of the U.$. Gross National Product (GNP), which is quintuple the portion it was in 1960. On various occasions over the decades, the State Department, military intelligence, National Security Council or the President overruled trade war actions for the benefit of anti-Soviet political unity. (97) Despite some weakening in the Nixon and Reagan administrations,(98) the free trade ideas of King Cotton increasingly carried the day from 1947 to the administration of Bill Clinton today, which seeks free trade deals for slightly different reasons than in the past.(99)

Now with the Soviet Union gone, the question arises whether the U.$. imperialists and others will be able to maintain this cooperation and move to world government through the WTO, UN, World Bank and IMF. Fortunately for the imperialists, just as the political basis for their unity crumbles, they gain new injections from the old Soviet bloc and especially from China which came on strong in the 1980s and 1990s as an exporter of surplus-value. To get an idea of the potential surplus-value extracted from China alone, China has more than four times as many productive sector workers as the United $tates generating surplus-value, but China's income is equal to that of New York, and less than that of California. Furthermore, "the Anglo-French investor James Goldsmith has calculated that the cost of one Frenchman was equivalent to forty-seven Vietnamese. If humanity was to be measured on that rude scale, one American machinist was worth about sixty Chinese machinists." (100) Thus China alone is potentially injecting trillions in super-profits and profits into the system. It is getting paid what New Yorkers are getting paid, but it is producing more surplus-value than all of the imperialist countries put together, because it has more than twice the total manufacturing employment of the OECD nations combined and it has a higher exploitation rate. On that basis alone we could estimate realized and unrealized surplus-value at $15 trillion a year from China. As we shall see later, the imperialists desperately needed that shot in the arm in the 1980s thanks to white-collar parasitism.

In summary, there is a strong basis for imperialist world government based on the underlying integration of finance capital. The chances of bringing along the imperialist country labor-aristocracy for the ride hinged on capital's ability to offer new parasitic jobs instead of old productive sector jobs. In that regard the dynamism of East Asia's capitalism unleashed by land reform and new cooperative free trade policies based partly on the Cold War, hurt the oppressor nation industrial workers to some degree, but it also created the transfer of value that increased white-collar employment in the imperialist countries. The examples of the tiny "Four Tigers" of East Asia also gave capitalism a showcase for the rest of the developing world.

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