Imperialist Realities vs. the Myths of David Harvey

March 19, 2018

By John Smith

When David Harvey says “the historical draining of wealth from East to West for more than two centuries has largely been reversed over the last thirty years,” his readers will reasonably assume that he refers to a defining feature of imperialism, namely the plunder of living labour and natural wealth in colonies and semi-colonies by rising capitalist powers in Europe and North America. Indeed, he leaves no doubt about this, since he prefaced these words with reference to “the old categories of imperialism.” But here we encounter the first of his many obfuscations. For more than two centuries, imperialist Europe and North America have also been draining wealth from Latin America and Africa, as well as from all parts of Asia… except from Japan, which itself emerged as an imperial power during the 19^th century. ‘East-West’ is therefore an imperfect substitute for ‘North-South’, and this is why I dared to adjust the points of Harvey’s compass, drawing a petulant response.

As David Harvey knows full well, all sides in the debate on imperialism, modernisation and capitalist development acknowledge a primary distinction between what are variously termed ‘developed and developing’, ‘imperialist and oppressed’, ‘core and periphery’ etc. countries, even if there is no agreement about how this primary division is evolving. Furthermore, the criteria for determining membership of these groups of nations can validly include politics, economics, history, culture and much else, but NOT geographical location—‘North-South’ is nothing more than descriptive shorthand for other criteria, as is indicated by the fact that ‘North’ is generally acknowledged to include Australia and New Zealand. Yet, in his reply to my critique, Harvey elevates geography above all else, lumping China, whose per capita GDP in 2017 was situated between Thailand and the Dominican Republic, along with South Korea, Taiwan and imperialist Japan into a distinct East Asian “power block [sic] in the global economy.” Given the moribund state of the Japanese economy, whose GDP has grown by an average of less than 1% per annum since 1990, and cognizant of Japan’s explosive economic, political and military rivalry with China, to ask whether this ‘bloc’ is now draining wealth from capitalist Europe and North America is to ask the wrong question.

To judge Harvey’s claim that flows of wealth associated with imperialism have gone into reverse we should ask a more pertinent question: are the developed capitalist nations of Europe, North America and Japan continuing to drain wealth from China and other ‘emerging nations’ in Asia, Africa and Latin America? Unless Harvey believes that flows of wealth from Africa and Latin America to the ‘West’ are large enough to cancel the alleged flow from the West to the ‘East Asian bloc’, his answer must be no, this is no longer the case.

Some realities on the ground

In 2015, researchers based in Brazil, India, Nigeria, Norway and the USA published Financial flows and tax havens: combining to limit the lives of billions of people, which they fairly claim to be “the most comprehensive analysis of global financial flows impacting developing countries compiled to date.” Their report calculates ‘net resource transfers’ (NRT) between developed and developing countries, combining licit and illicit inflows and outflows—from development aid and remittances of wages to net trade receipts, debt servicing, new loans, FDI and portfolio investment and repatriated profits, along with capital flight and other forms of financial chicanery and outright theft. They found that in 2012, the most recent year for which they could obtain data, what they call ‘developing and emerging countries’ (which of course includes China) lost $2.0 trillion in net transfers to rich countries, equivalent to 8% of emerging nations’ GDP in that year—four times larger than the average of $504 billion in NRT transferred annually from poor to rich countries during the first half of the 2000s. When informed estimates are included of under-invoicing and other forms of rip-off and criminality that leave no statistical trace, NRT from poor countries to imperialist countries in 2012 exceeded $3 trillion, around 12% of poor nations’ GDP.

More generally, they report that “both recorded and unrecorded transfers of licit and illicit funds from developing countries have tended to increase over the period 1980-2011”. As for Sub-Saharan Africa, they report that NRT from this continent to imperialist countries (or tax havens licensed by them) between 1980 to 2012 totalled $792bn, that illicit transfers from Africa to imperialist countries as a proportion of GDP are higher than from any other region, and that capital flight from Sub-Saharan Africa is growing by more than 20 percent per annum, faster than anywhere else in the world.

In what they called “an ironic twist to the development narrative” the researchers concluded that “since the early 1980s, NRT for all developing countries have been mostly large and negative, indicating sustained and significant outflows from the developing world… resulting in a chronic net drain of resources from the developing world over extended periods of time”.

Where does China fit into this broader picture? Using sophisticated methodologies and on the basis of conservative assumptions, the researchers calculate that China accounts for no less than two thirds of the total recorded resource transfer deficit of all ‘emerging nations’ between 1980 and 2012, $1.9 trillion in all; the explanation for this high proportion being “China’s large current account surpluses and associated capital and reserve asset outflows,” and it accounted for 21%, or $2.8 trillion, of the total of $13.4 trillion in capital flight drained from all ‘emerging countries’ to rich nations during these three decades.

More realities on the ground

These facts are already enough to refute Harvey’s claim that China and its neighbours are now draining wealth from ‘former’ imperialist nations in Europe and North America. David Harvey should provide some data to back up his assertions—or withdraw them. But the case against his denial of imperialism goes far beyond what’s revealed by statistics on trade, debt servicing, profit repatriation and capital flight.

In the first place, the ‘net resource transfer’ methodology implemented in the research cited above means that South-North flows of repatriated profits are cancelled by new North-South flows of FDI. Yet these flows are different in kind. Repatriated profits unambiguously increase the wealth of transnational corporations (TNCs); FDI unambiguously increases the portion of the host economy they own and control. These flows may be in opposite directions, but each of them reinforces imperialist domination over the host economies, a fact which is ignored when they are simplistically cancelled out; and similar considerations apply to other flows, e.g. debt servicing vs. new loans.

Much more importantly, Marx’s theory of value teaches us that data on trade and financial flows provide only a highly distorted and much-diminished picture of the underlying flows of value and surplus value. For example, the only flows of wealth from China and other low-wage countries to non-financial TNCs headquartered in Japan, Europe and North America that show up in statistical data are repatriated profits from direct investments. In contrast, not a single cent of H&M’s, Apple’s or General Motors’ profits can be traced back to the super-exploited Bangladeshi, Chinese and Mexican workers who toil for these TNCs’ independent suppliers, and it is this ‘arm’s length’ relationship which increasingly prevails in the global value chains that connect TNCs and citizens in imperialist countries to the low-wage workers who produce more and more of their intermediate inputs and consumption goods.

The central conclusion I draw from this, as I stated in the blogpost David Harvey denies imperialism, is that:

The vast scale of production outsourcing to low-wage countries, whether via foreign direct investment or via indirect, arm’s length relationships, signifies greatly expanded exploitation of southern labor by U.S., European, and Japanese TNCs, legions of workers who are moreover subject to a higher rate of exploitation… [and this] implies new and greatly increased flows of value and surplus value to U.S., European, and Japanese TNCs… and reason to believe that this transformation marks a new stage in the development of imperialism.

David Harvey, in his response to my critique, treats this defining feature of the neoliberal era rather differently:

From the 1970s onwards some (but by no means all) capital went to where the labour forces were cheapest. But globalization could not work without reducing barriers to commodity exchange and money flows and the latter meant opening a Pandora’s box for finance capital that had long been frustrated by national regulation. The long-term effect was to reduce the power and privilege of working class movements in the global north precisely by putting them into competitive range of a global labour force that could be had at almost any price.

Here, Harvey completely ignores the increased dependence of US, European and Japanese TNCs on surplus value from low-wage countries, and he attempts to shift attention to the important but secondary phenomenon of financialization. The only effect of the global shift of production to low-wage countries that he thinks worth mentioning is its stifling effect on “working class movements in the global North.” And this effect is greatly exaggerated—the reduction of the latter’s power and privilege, Harvey would have us believe, has been on such a scale that they now compete with their sisters and brothers in the global South on more-or-less equal terms.

In my original critique I quoted his 17 Contradictions and the End of Capitalism (p. 170), where he said: “disparities in the global distribution of wealth and income between countries have been much reduced with rising per capita incomes in many developing parts of the world;” and I countered that this “greatly exaggerates global convergence: once China is removed from the picture, and once account is made of greatly increased income inequality in many southern nations, no real progress has been made in overcoming the huge gap in real wages and living standards between the “West” and the rest.” Harvey’s response: “I stand by the claim that the working classes within the global structure of contemporary capitalism are far more competitive with each other now than they were in the 1960s.”

It is true that ultra-low wages in southern nations are being used as a club against workers in imperialist nations, but it is preposterous to suggest that the North-South gulf in wages and living standards has been substantially eroded. David Harvey should provide some data to back up his claims—or withdraw them. He could consult ‘Global wage trends in the neoliberal era’, chapter 5 of my Imperialism in the Twenty-first Century, along with its discussion of the growth of the ‘planet of slums’ (so much for Harvey’s claim that I “ignore urbanisation”!) and other evidence supporting a rather different conclusion to the mainstream convergence hypothesis endorsed by Harvey of (p. 104):

the imperialist division of the world… has shaped the global working class, central to which is the violent suppression of international labor mobility. Just as the infamous pass-laws epitomized apartheid in South Africa, so do immigration controls form the lynchpin of an apartheid-like global economic system that systematically denies citizenship and basic human rights to the workers of the South and which, as in apartheid-era South Africa, is a necessary condition for their super-exploitation.

Why does Harvey refuse to acknowledge the enormously-expanded exploitation of Southern labour by Northern capital? Why does he deny the prevalence of super-exploitation in the low-wage rungs of global value 221? Why does he claim that the split in the international working class that so preoccupied Lenin and the communist movement when it was communist is now history? It’s simple—realism on any of these points would result in the collapse of his argument.

Harvey’s idealism

“Marx taught us that the historical materialist method does not start with concepts and then imposes them on reality, but with the realities on the ground in order to discover the abstract concepts adequate to their situation. To start with concepts, as does John Smith, is to engage in rank idealism.” Harvey offers sound advice—but he should practice what he preaches. His criticism of my analytical method as ‘rank idealism’ applies without exaggeration to his own approach, as we shall see.

It is indeed of the utmost importance to start with facts, as I stressed in my article Imperialism in the Twenty-first Century:

“Communism is not a doctrine but a movement; it proceeds not from principles but from facts,” said Frederick Engels. Wide international differences in the rate of exploitation, the huge global shift of production to where this rate is highest, and the tremendous southwards shift in the centre of gravity of the industrial working class are the new, big facts from which we must proceed. These are the defining transformations of the neoliberal era, and they are key to understanding the nature and dynamics of the global crisis… Instead of using Marx’s comments on nineteenth-century production to deny the reality of twenty-first-century super-exploitation (and of the imperialist order resting on it), we must test Marx’s theory against these new facts, and use and critically develop his theory in order to understand this latest stage of capitalism’s imperialist development.

Harvey accuses me of espousing a “fixed, rigid theory of imperialism.” He obviously hasn’t read my book. Fair enough; I’m sure he is very busy. But were he to do so, he would see that, by proceeding from the most significant, transformative fact about the neoliberal era, namely the shift of production to low-wage countries driven by imperialist hunger for super-exploitable labour, I am led not only to argue the need for a radical extension of Lenin’s theory:

… Just as Karl Marx could not have written Capital before capitalism’s mature, fully evolved form had come into existence with the rise of industrial capitalism in England, so it is unreasonable to expect to find, in the writings of Lenin and others writing at the time of its birth, a theory of imperialism that is able to explain its fully evolved modern form (Imperialism in the Twenty-first Century, the book, p. 225)…

… but also to contend that the necessary starting point for a theory of contemporary imperialism is precisely what Marx excluded from consideration in Capital; e.g. in the MR article cited above I argue:

In the third volume of Capital, while discussing “counteracting factors” inhibiting the tendency of the rate of profit to fall, Marx makes another brief reference to… the “Reduction of Wages Below their Value,” [which] is dealt with in just two short sentences: “like many other things that might be brought in, it has nothing to do with the general analysis of capital, but has its place in an account of competition, which is not dealt with in this work. It is nonetheless one of the most important factors in stemming the tendency for the rate of profit to fall.”

Not only did Marx leave to one side the reduction of wages below their value, he made a further abstraction that, while necessary for his “general analysis of capital,” must also be relaxed if we are to analyze capitalism’s current stage of development: “The distinction between rates of surplus value in different countries and hence between different national levels of exploitation of labour are completely outside the scope of our present investigation.” Yet it is precisely this that must form the starting-point for a theory of contemporary imperialism.

Harvey reprimands me for claiming that his Limits to Capital contains “just one brief, desultory mention of imperialism.” I apologise for this imprecision. His book does contain many fleeting, historical references to imperialism, and two somewhat more substantial discussions, one discussing Lenin’s theory, the other forms part of the book’s conclusion. The truth that I intended to convey is that only once (pp. 441-2) does Harvey mention that the essence of imperialism is “the reality of exploitation of the peoples in one region by those in another… the geographical production of surplus-value [can] diverge from its geographical distribution.” I overlooked another brief mention: “each nation-state strives to protect its monetary base [by] enhancing value and surplus value production within its borders or appropriating values produced elsewhere (colonial or imperialist adventures)” (p. 387). And that’s it! On all other occasions—even when reporting Lenin’s theory!—‘imperialism’ is discussed in relation to inter-state rivalry, to finance capital and to the rise of monopoly, but exploitation of subject peoples is entirely expunged, both from Harvey’s own concept and his presentation of the views of others.

In his reply to my critique, Harvey makes a similarly vague acknowledgement of this all-important phenomenon, asserting that he doesn’t “deny that value produced in one place ends up being appropriated somewhere else and there is a degree of viciousness in all of this that is appalling.” Okay, he doesn’t deny this, but he doesn’t dwell on it, either. He just wants to say as little as possible about it, and at all costs to avoid acknowledging that value produced in places like China, Bangladesh and Mexico ends up being appropriated in countries like USA, UK and Japan.

What little he does say, however, is very revealing—not about the world, but about the quality (in all the meanings of the word) of his argument. In his reply to my criticism, for example, he says, “When we read accounts of awful super-exploitative conditions in manufacturing in the global South it often transpires that it is Taiwanese or South Korean firms that are involved even as the final product finds its way to Europe or the United States.” The substantive issue in this was addressed by Judy Whitehead in the comment she posted on Harvey’s reply: “While it’s true that many local companies, e.g. Foxconn, run the factories that produce goods for the West, in China and a few other locations, Smith shows in his book that a large majority of the profits accrue to the multinationals they are contracting for, e.g. Apple.”

Two other things can be said about Harvey’s statement. First, on those rare occasions when Harvey mentions super-exploitation, he only ever uses it as a descriptive term, never as an analytical category. Second, whenever he does acknowledge its actuality—as in the above passage—he goes to great pains to deflect attention from its beneficial effect on the profits of TNCs headquartered in North America, Europe and Japan.

I conclude this discussion of Harvey’s treatment of inconvenient facts by examining another of his revealing statements. In his reply to my criticism, he stated that, “As Marx long ago pointed out, geographical transfers of wealth from one part of the world to another do not benefit a whole country; they are invariably concentrated in the hands of privileged classes.”

Invariably?? Can’t Harvey think of any instances where the imperialists have used part of the proceeds of super-exploitation to bribe and corrupt their own workers? Was Frederick Engels deluded when, in an 1882 letter to Kautsky (when the latter was still a Marxist), he said, “You ask me what the English workers think about colonial policy. Well, exactly the same as they think about politics in general: the same as the bourgeoisie think. There is no workers party here… and the workers are cheerfully consuming their share of England’s monopoly of the world market and the colonies”?

When Ernest Bevin, Labour’s Foreign Secretary in the Britain’s post World War 2 government, declared to the House of Commons in 1946 that “I am not prepared to sacrifice the British Empire because I know that if the British Empire fell…it would mean the standard of living of our constituents would fall considerably,” was he making it up?

And when in 2018 the British state collects, in VAT and other taxes, up to half the final sale price of a shirt made in Bangladesh (while the woman who made the shirt is paid a tiny fraction of this amount) and uses these tax receipts to finance the National Health Service and workers’ pensions (neither of which are available to our Bangladeshi sisters, nor to the 260 million migrant workers from China’s countryside who toil in that country’s export-oriented factories), is it acceptable for Marxists to ignore such inconvenient ‘realities on the ground’?

In Imperialism and the Split in Socialism Lenin said (and he repeated the same idea in countless other articles and speeches), “The capitalists can devote a part (and not a small one, at that!) of the super-profits [arising from “England’s colonial monopoly,” Lenin’s emphasis, here and throughout] to bribe their own workers, to create something like an alliance . . . between the workers of the given nation and their capitalists against the other countries;” and he continued, “This, in fact, is the economic and political essence of imperialism, the profound contradictions of which Kautsky glosses over instead of exposing.” Substitute Harvey for Kautsky, and these words are as true today as when they were spoken a century ago. And when David Harvey responds to this criticism, as I sincerely hope he will, perhaps he can explain why he omitted any mention of this “economic and political essence of imperialism” in his discussion of Lenin’s views in Limits to Capital, in The New Imperialism, or anywhere else.

Harvey’s use of Capital to deny contemporary imperialism

So far, we have examined how Harvey deals with facts that contradict his denial of imperialism. Now we will look at how he uses and abuses theoretical concepts drawn from Marx to the same end.

Harvey says he “acknowledges the significance of Marx’s theory of relative surplus value which makes it possible for the physical standard of living of labour to rise significantly even as the rate of exploitation increases to dramatic levels impossible to achieve through the absolute surplus value gained in the more impoverished arenas of capital accumulation that often dominate in the global South.”

Here Harvey echoes the standard argument used by many Marxists in imperialist countries (whom I sometimes refer to as ‘euro-Marxists’) to deny the prevalence of higher rates of exploitation in China, Bangladesh etc. In doing so, he provides an excellent example of ‘imposing concepts upon reality’. To use Marx’s theory of absolute surplus value to explain the abysmally low levels of consumption endured by garment workers in Bangladesh and workers on automobile assembly lines in Mexico is glib and false. That so many others do so is no excuse; to the contrary, it increases the onus on Harvey to apply his deep knowledge of Marxism to critically develop this theory in order to answer real-world questions that have remained unanswered for far too long.

As with all commodities, the value of labour power is determined by the quantity of labour required for its production, and is synonymous with ‘necessary labour time’, i.e. the time during which the s/he replaces the values consumed by her/his family. Marx’s concept of absolute surplus value refers to the extension of the working day beyond necessary labour time; the amount by which it does so he called surplus labour time, and the ratio between the two is the rate of surplus value, a.k.a. the rate of exploitation (the difference between these two terms becomes important when we take account of the distinction between production and non-production labour, but it is not relevant here). Absolute surplus value, Marx argued, may be increased by further extending the working day beyond necessary labour time. This is entirely distinct from the reduction of necessary labour time through the suppression of workers’ consumption levels. As Marx explained in many places in Vols. I and III of Capital, “pushing the wage of the worker down below the value of his labour-power” is “excluded from consider[ation] by our assumption that all commodities, including labour-power, are bought and sold at their full value.”

On the other hand, Marx’s concept of relative surplus value explains that improvements in the productivity of workers directly or indirectly employed in the production of consumption goods reduces necessary labour time without any corresponding reduction in workers’ consumption levels, and that such productivity advances can allow workers’ consumption levels to rise without increasing necessary labour time and reducing the rate of surplus value.

Neither of these concepts, taken separately or used in combination, are sufficient to explain the value relations in contemporary globalised production networks. First, Harvey’s argument is contradicted by facts—the shift in the production of so many consumer goods to low-wage countries means that the wages and productivity of workers in low-wage countries have become major determinants of relative surplus value in imperialist countries. What’s new about ‘new imperialism’ is the vast scale of this phenomena; the exceptional importance of Ruy Mauro Marini’s contribution to the dependency and imperialism debate that raged in the decades before 1980 lies, in part, in his argument that, during Karl Marx’s own lifetime super-exploitation in Britain’s colonies and neo-colonies increased relative surplus value within Britain itself (cheaper food etc. imports reduced necessary labour time without reducing consumption levels). In his Dialéctica de la Dependencia (1973), Marini argued (my translation):

The concept of super-exploitation is not identical to that of absolute surplus-value since it also includes a type of production of relative surplus-value—that which corresponds to an increase in the intensity of labour. On the other hand, the conversion of part of the wages fund into a source of capital accumulation does not strictly represent a form of absolute surplus-value production, since it simultaneously affects both parts of the working day, not only of surplus labour-time as is the case with absolute surplus-value. Above all, super-exploitation is defined most of all by greater exploitation of the worker’s physical capacity, in contrast to the exploitation resulting from an increase in her/his productivity, and tends normally to express itself in the fact that labour power is remunerated below its actual value.

Second, and even more seriously, Harvey’s abuse of the concept of absolute surplus value makes the elementary mistake of confusing the productivity of workers producing consumption goods with the productivity of workers who consume these goods. As I explain in Imperialism in the Twenty-first Century (the book, pp. 242-3),

Not only is the relation between the productivity of labor and the exchange-value created by it not direct, as asserted by mainstream economic theory and echoed by euro-Marxists, they are wholly independent of each other, as Marx emphasized (vol. I, p.137):

By productivity, of course, we always mean the productivity of concrete useful labor… Useful labor becomes… a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labor itself represented in value. As productivity is an attribute of labor in its concrete useful form, it naturally ceases to have any bearing on that labor as soon as we abstract from its concrete useful form. The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity. But it provides different quantities of use-values during equal periods of time.

Belief in a direct relation between wages and productivity is therefore founded on a confusion of use-value with exchange-value, a confusion that wrecks the very foundation of Marx’s theory and in fact responds to the semblance of the relations of production in the mind of the capitalist. In other words, the orthodox Marxists are in fact promoting bourgeois economics dressed in Marxist terminology.

If Marx’s concepts of absolute and relative surplus value are insufficient to explain the realities of contemporary global production networks, what else do we need? The short answer: a theoretical concept of super-exploitation. As stated above, Marx repeatedly, explicitly excluded both international variations in the rate of surplus value and the suppression of wages below the value of labour power from his ‘general theory’ of capital. Reduction in the value of labour power by suppressing consumption levels (or what amounts to the same thing, reduction of wages below the value of labour power) is a distinct, third way to increase surplus value, and it has attained incredible importance during the neoliberal era, being the fundamental driving force behind global labour arbitrage and the massive shift of production to low-wage countries.

The rediscovery of this third form of surplus-value is the breakthrough that provides the key to unleashing the dynamic concepts contained in Capital, and it was made by Andy Higginbottom in a 2009 conference paper entitled The Third Form of Surplus Value Increase, building on the above-mentioned work of Ruy Mauro Marini and since developed further in a series of ground-breaking papers and articles (see here, here and here). In his 2009 paper he said, “Marx discusses three distinct ways that capital can increase surplus-value, but he names only two of these as absolute surplus-value and relative surplus-value. The third mechanism, reducing wages below the value of labour-power, Marx consigns to the sphere of the competition and outside his analysis.”

As I said in my book (p. 238),

“Wage arbitrage-driven globalization of production corresponds neither to absolute surplus-value—long hours are endemic in low-wage countries, but the length of the working day is not the outsourcing firm’s main attraction—nor to relative surplus-value: necessary labor is not reduced through the application of new technology. Indeed, outsourcing is an alternative to investment in new technology. Raising surplus-value through expanding the exploitation of Southern low-wage labor therefore cannot be reduced to the two forms of surplus-value extraction analyzed in Capital—absolute and relative surplus-value. Global labor arbitrage-driven outsourcing is driven by lust for cheaper labor, and corresponds most directly to the “reduction of wages below their value.” In other words, global labor arbitrage, the driver of the global shift of production to low-wage nations, is the third form of surplus value recognized by Marx as a most important factor, yet excluded, as we have seen, from his theory of value.

The China question

Harvey asks “Is China the new imperialist power?” This is a fair and very large question to which I cannot possibly do justice in the context of this reply. China is much more than merely a very large, fast-growing ‘emerging nation’. It is a country which was transformed by a massive socialist revolution (more precisely, the 1949 revolution established necessary conditions for advance towards socialism—imperialist domination was ended, landlords and capitalists were expropriated, their state was overthrown—but further progress was stymied by the sectarian and reactionary policies of its Stalinist leaders) and which is now attempting a transition back to capitalism. Despite widespread views to the contrary, this transition is far from complete and its completion is far from certain. Imperialism is inscribed in the DNA of capitalism, and if China has embarked on the capitalist road, then it has also embarked on the imperialist road.

Seven years ago, I wrote,

I don’t believe that the sum total of transformations that have taken place in China over the past three decades yet equal in significance those resulting from China’s socialist revolution, namely the expropriation of the capitalists and landlords and the establishment of a workers’ state (albeit horribly deformed from the outset by its Stalinist leadership). There are many capitalists in China, and their number and wealth is rapidly increasing, and there is indeed a great deal of capitalist accumulation taking place in China today, but most of this capital is being accumulated by Japanese, US etc TNCs—both those whose foreign subsidiaries today produce around 55% of Chinese exports, and also by ‘lead firms’ like Wal-Mart and Dell indulging in arm’s-length exploitation of workers by independent suppliers… Capitalist development in China is still characterised by dependence on exports of low value-added goods to the imperialist economies (or, in the case of China’s high-tech exports, low value-added assembly of imported inputs), and by reliance on FDI from TNCs based in those economies….

Is China’s rise a threat to imperialist domination of Asia and the world? Yes, I believe it is. What sort of threat? That China’s rulers—whether we consider them to be a capitalist class or a Stalinist bureaucracy—will refuse to accept the subordinate, oppressed, submissive status reserved for the so-called emerging nations, that they will challenge US hegemony over Asia and develop a counterweight to the US-Japanese military alliance that rules its coastal waters, that they will wield the potential economic power reflected in their possession of trillions of dollars of US treasury bonds and other financial assets, that their emergent TNCs will muscle in on mineral resources and markets hitherto the exclusive preserve of the imperialist nations. They are already marching down this road, a road that leads to war, and the USA is responding in the way we would expect the imperial hegemon to respond: the invasion of Iraq was aimed at least as much at intimidating China as at securing US/UK control over Middle Eastern oil.

Much has changed in the last seven years. Chinese state capitalism (for want of a better term) shows signs of developing a strategic challenge to Japanese, European and North American dominance in key industries, from robotics, information technology and artificial intelligence to renewable energy, aerospace and nuclear power generation. These developments, along with sharply increasing military tensions in China’s coastal waters (which have been an American lake since the end of World War II), and the phoney proxy war taking place on and around the Korean peninsula, reinforce the verdict I reached seven years ago—the combination of spreading global capitalist depression and China’s growing challenge to imperialist domination means that we no longer live in a post-World War II world, we live in a pre-World War III world. Class-conscious workers must maintain independence from both sides in this looming conflict and prepare for the revolutionary openings which capitalism’s deepest-ever crisis is certain to produce. Right now, that means denouncing US aggression against Korea and demanding the withdrawal of its military forces and bases from the west Pacific, opposing Japan’s nuclear rearmament, and also opposing Chinese capitalist expansion and the Chinese Communist Party’s attempts to forge an alliance with reactionary capitalist regimes in Myanmar, Pakistan, Sri Lanka and other countries in the path of its ‘One Belt, One Road’.

* * *

Finally, Harvey expresses his displeasure with “the kind of polemic that Smith engages in as a substitute for reasoned critique;” in particular that I dared to mock his advocacy of a “benevolent, New Deal imperialism, preferably arrived at through the sort of coalition of capitalist powers that Kautsky long ago envisaged” (The New Imperialism, pp. 209–211). I would just point out that, so keen was I to accurately summarise his views, no less than 40 percent of David Harvey denies imperialism consists of extended quotes from his works.

Harvey defends his call for a “benevolent imperialism” on the grounds that “it would have been better for the left to support a Keynesian alternative.” But there was, and is, no Keynesian alternative; this is nothing else than a social-democratic fantasy, just as was Kautsky’s dream, shared by Harvey, of an end to inter-imperialist rivalries. And as Lenin explained, social democracy is a nothing else than a euphemism for social imperialism.

John Smith received his PhD from the University of Sheffield and is currently self-employed as a researcher and writer. He was an oil rig worker, bus driver, and telecommunications engineer, and is a long-time activist in the anti-war and Latin American solidarity movements. Winner of the first Paul A. Baran–Paul M. Sweezy Memorial Award for an original monograph concerned with the political economy of imperialism, John’s Imperialism in the Twenty-First Century is a seminal examination of the relationship between the core capitalist countries and the rest of the world in the age of neoliberal globalization. He can be contacted at johncsmith@btinternet.com.

Featured Photograph: Asian Social Forum, 2003

ROAPE Editorial: The Political Economies of the Everyday

ROAPE

March 16, 2018

Roape.net publishes extracts from the editorials of our quarterly review. In this extract from Vol. 44, Issue 154 editor Tunde Zack-Williams discusses several important papers on Kenyan politics, debt and neoliberalism on the continent, gender oppression in Egypt and the collapse of Zimbabwe’s military and the intervention in the Democratic Republic of the Congo. Specially prepared for roape.net the editorial introduces the issue in the context of the Mugabe’s fall from power, Zuma removal from the presidency and the recent elections in Sierra Leone.

By Tunde Zack-Williams

On Reading ‘The Political Economies of the Everyday’

As this editorial was being completed, Robert Mugabe was consumed by its flame following his ouster by his once zealous praetorian guard, to be followed barely three months later by the ANC palace coup, which resulted in the removal from office of the lamentable Jacob Zuma of South Africa. The struggle for democracy, economic and political emancipation for the toiling masses continues against those leaders who are prepared to utilise their position for the oppression of the masses and personal aggrandisement.

This general issue, ‘the political economies of the everyday’ deals with various issues impinging on the everyday experiences of many communities on the continent : such as neo-liberalism and its devastating impact on African economies (Carolyn Bassett), gender oppression in Egypt (Karim Malak and Sara Salem), extrajudicial executions in Kenya (Peris S. Jones, Kavita Ramakrishinan, Wangui Kimari), ‘land grabbing’ in Kenya by the political class (Jacqueline M. Klopp and Odenda Lumumba), the life of sex workers in Kenya (Egle Česnulytė), military corruption among Zimbabwean soldiers (Godfrey Maringira), state building and educational expansion in the DRC (Cyril Owen Brandt).

Bassett’s article draws attention to Africa’s growing indebtedness and warns against a new African debt crisis a short decade after debt forgiveness reduced Africa’s mountain of debt. Her concern is premised on the growing number of commodity exporters who are now beginning to experience debt servicing difficulties. Africa’s indebtedness impacted on growth as well as the welfare of the rural and urban poor, money destined for welfare relief ended up in debt repayment. For Bassett, the major source of this growing indebtedness is that African governments have increased their borrowing from several lenders, old and new, particularly from Africa’s international sovereign bonds, the focus of her article. She draws attention to the devastating sway of neoliberal thinking impelling African governments ‘down a dangerous path of higher levels of indebtedness.’ She draws attention to the conclusion of the Marxist political economists, such as Colin Leys, David Harvey and Giovanni Arrighi, who argue that African political economies have been impoverished by the nature of their incorporation into the global markets. The logical deduction from these analyses is that ‘Africa’s international sovereign bonds are but one tool developed by global financial capital to facilitate its accumulation strategies, by financing infrastructure associated with resource extraction and export, while at the same time cultivating profitable new markets of borrowers.’ She points out that ‘under the current regulatory regime, a new African debt crisis is likely to further deepen the continent’s exploitation in global markets.’

Malak and Salem’s article which focuses on civil society in Egypt, examines the confluence of neoliberalism, gender and citizenship in rural Egypt. More specifically, the authors investigate the running of a microfinance project in al-Minya in Upper Egypt, aimed at empowering a group of rural Egyptian women. In the 1980s, microfinance was recommended by the IFIs and the United Nations as a new approach to revolutionise ‘thinking about how to provide small uncollateralized loans to the poor’. They draw attention to the fact that microfinance, which was designed to ‘keep administrative costs down, reduce risks and provide incentives for repayment’ (ibid, 194), was seen as crucial for economic development in an ‘unbanked population’, creating problems for the poor as they continued to be marginalised (see United Nations 1999). The authors point out that these new forms of production were accompanied by new forms of social relations, and that agriculture was the first sector to be liberalised in Egypt’s transition to an open market economy. The rural areas were stigmatised as backwards and starved of capital, largely because of the lagging status of women. The main question the article addresses is the meaning of womanhood in the hinterland, and it seeks to do this by scrutinising the singular gendered dynamics it creates through the discourse of the ‘rural’. In their critique of neoliberalism, Malak and Salem pose the question that if techno-managerial discourse, market forces and security, which are prerequisites for neoliberalism, are lacking in the Egyptian hinterland, how useful is it then to use neoliberalism to explore microfinance theoretically? Furthermore, they ask: ‘if microfinance so often fails to fulfil its stated goals of alleviating poverty and generating growth, what happens when microfinance NGOs choose to work in the hinterland?’

If it is true as Malak and Salem have argued in their study of Al-Minya that NGOs, the modern usurpers of the functions of the African state are not interested in microfinance, and in addition that women are processed and ‘disciplined in a way to create the market through defining what it means to be a “developed” woman’, then this runs contrary to the unique quality of village life, which is the existence of several enclaves of revenue generation that are impervious both to commodification and proletarianisation. This ran contrary to the aim of the microfinance project, which invited strong resistance from the women to the charging of high interest rates and borrowing due to cultural factors. A unique quality of the village is that it had several enclaves of revenue generation that are impervious both to commodification and proletarianisation. This ran contrary to the aim of the microfinance project, which invited strong resistance from the women to the charging of high interest rates and borrowing due to cultural factors. The authors point to the fact that, on the one hand, workshops or training designed to procure a skill set to liberate these village women ‘almost always translated into bids by urban-based Cairene “experts”’.

The article by Jones, Kimari and Ramakrishnan on Kenya addresses the disturbing politics of extrajudicial executions and civil society in Mathare, a collection of slums with a population of approximately 500,000 people, constitutes a world of its own, with its own informal leadership, structures and institutions away from the central government. The focus of the article is an exploration of a particular struggle, showing how frustration with civil society is being used by social justice activists to garner ideas concerning everyday violence and to mobilise for change. The authors start off by pointing to the unacknowledged shoot-to-kill policy of the Kenyan state, in particular the continuous violence during the presidency of Mwai Kibaki, and an upsurge since 2013 marking the beginning of the regime of Uhuru Kenyatta. The violence is particularly aimed at young men in what the authors call the ‘“other” Nairobi’, i.e. its slums.

Česnulytė’s article relates to another group, namely sex workers in Kenyan society. Her main theoretical tool is Jean-Francois Bayart and Stephen Ellis’s concept of extraversion. She argues that due to the gendered nature of the Kenyan state’s extraversion processes and the resulting dual accountability to national and foreign sovereigns, the Kenyan state’s approach to gender issues is inconsistent and thus produces a situation where social movements with a gender rights agenda can be both included and excluded from the national political scene. On the one hand, sex workers are the target for state violence as well as from their clients and stigmatisation from the general public; on the other hand, in the context of the ongoing HIV/ AIDS crisis and high levels of inequality, organisations led by Kenyan sex workers are important partners working with the state. For Česnulytė, this ‘seemingly inconsistent approach to individuals selling sex, and to gender issues more widely, is a result of the dual character of the Kenyan state’s accountability and its gendered nature’. This special position of gender in Kenya, it is argued, points to the fact that the Kenyan state is accountable to two sovereigns: the citizens of the state and international donors. Thus, she observes: ‘Gender equality and engagement with sex worker groups is possible in those areas where the state has foreign donor constituents to account for and thus attempts to follow liberal values of equality and civil society inclusion.’

Godfrey Maringira’s article on military corruption in war examines the conducts of Zimbabwean soldiers during their operations in the Democratic Republic of Congo (DRC) war of 1998–2002. The author argues that Zimbabwean infantry units were engaged in corrupt activities during their tour of duty in the DRC: by stealing army rations from the trenches to be sold to civilians in neighbouring communities and to Congolese soldiers. However, the practice did not end once soldiers returned home, but continued in the barracks of Harare and other garrison towns in the country. For the author this aberration points to the collapse of discipline in the armed forces in question, which in turn could reflect on the morale and ability of the infantry to fight for the cause. The author points out that this illegal practice continued among the Zimbabwean units during their tour in the DRC, a far cry from the highly professional army that brought independence to Zimbabwe after a prolonged war of national liberation. The army was an amalgamation of the two nationalist fighting units (ZANU-PF & ZAPU) and the regular army of the white Rhodesian forces, which came together to form the Zimbabwe National Army (ZNA), which was trained by the British Military Advisory Training Team, and as such was a well-ordered fighting force. However, the author argues that in the post-2000 period Zimbabwean soldiers became deeply unprofessional as they became enmeshed in politics, violence and ‘major corruption’; this was particularly true of senior officers and was symptomatic of other public institutions, including the judiciary, local government and the state. The cost of the war (with up to five battalions deployed in the DRC), in terms of both the numbers of personnel and the expense of maintaining troops abroad, impacted heavily on the Zimbabwean treasury and society. Furthermore, the shortages caused by Zimbabwe’s presence in the DRC led to demands for Zimbabwean troops to be withdrawn from the country. More than a battalion of soldiers deserted or resigned from the Zimbabwean army, with some soldiers alleging that they had not been cared for by the army. The desertion is symptomatic of the fact that a large part of the war resources were devoured by the army top brass. Thus, Maringira observes that many of the soldiers noted that instead of being recognised as professional soldiers, they were now living like ‘militias’. The failure of the ZNA to look after its own soldiers in war and in the barracks partly motivated them to engage in corrupt practices. The ‘abandoned’ Zimbabwean soldiers turned to ‘creative’ survival via ‘military entrepreneurialism’, i.e. revenue generation and a systematic sense of deprofessionalisation, including chirenje (individual initiatives in war, including soliciting food for the commanders).

Finally, as the blogpost of this editorial was being concluded the people of Sierra Leone were preparing for what is perhaps the most important election in the country’s history on the 7 March 2018. For once Sierra Leoneans had an alternative to the two discredited political parties that have ruled since independence in 1961: the Sierra Leone People’s Party (SLPP) the country’s oldest political party; and the All People’s Congress (APC). The latter have been in power longer than any other political party, yet it has never handed over power peacefully to a civilian regime. The approach to governance of both political parties is identical, to the point where people describe the two parties as ‘Alhassan and Alusine’ (twins or, different sides of the same coin). The emergence of a third political party, The National Grand Coalition, a coalition of ‘progressives’ from the two ‘failed’ parties, under the leadership of a former employee of the United Nations, Dr Kandeh Kolleh Yumkella who unsuccessfully sought the presidential nomination of the SLPP, largely due to him being on the wrong side of the ethnic divide, as a Susu from Northern Province. The ticket was handed to Maada Bio the failed bearer of the party’s nomination last time round in 2012 against the leader Ernest Bai Koroma of the ruling APC. Yumkella managed to bring vibrancy around which he was able to rally a substantial number of the youth, including the now infamous ‘trumpism’: ‘Sierra Leone First’, ‘Change is here’, ‘put an end to the wicked twins Alhassan & Alusine’. The governing party mobilised the army to march through the capital in military fatigue, sing intimidating songs to warn the people in the capital to keep their children at home. Among the population, there was widespread fear of foreign interference in the election, mainly from the People’s Republic of China, whose citizens have been seen in the governing APC political colours in party meetings; APC supporters carrying the flag of the Peoples Republic of China, and the fear being expressed that the Chinese who had invested in in mineral extraction, road construction are partisan in their support for the governing party, and whose headquarters it is alleged to have been built by the Chinese Communist Party. [roape.net will be carrying coverage of the Sierra Leone elections next week in an extensive interview with Tunde Zack-Williams]

The full editorial and issue can be accessed on the Taylor and Francis website while some articles can be accessed for free if you log-in/register on roape.net.

Tunde Zack-Williams is Emeritus Professor of Sociology at the University of Central Lancashire. He was President of the UK African Studies Association from 2006 to 2008. His books include The Quest for Sustainable Peace: The 2007 Sierra Leone Elections (2008). He is an editor of the Review of African Political Economy and a member of the Africa Panel of the British Academy.

Featured Photograph: A woman carries water on her back as her son walks on her side in Kenya’s Mathare slum, Nairobi (20 February, 2017)

Dispossession Does Not Mean Accumulation: Capitalist Accumulation in Africa

ROAPE

March 13, 2018

By Daniel Bin

In recent decades, worldwide contemporary events of expropriations, evictions and dispossessions have come to the forefront of public and academic debates. Similar events to those that occurred in Europe at the dawn of the capitalist mode of production are now being dramatically reproduced in the periphery of the world-system. Africa, for instance, is probably the most significant area of so-called land grabs, considering just one example of dispossession. The Land Matrix (2018) shows that of the 42 million hectares of agricultural land that have potentially been converted from smallholder production to commercial use worldwide, 22 million hectares are African. Departing from Marx’s so-called primitive accumulation, scholars have claimed that such an inaugural process of capital would be an ongoing process. For Saskia Sassen, capitalism has advanced to a new phase of of primitive accumulation that arose as a result of the financialisation of the economy. For others, primitive accumulation never ceased to exist given that it is necessary to late capitalism and, for this reason, must coexist with it (see De Angelis; Hardt and Negri; Harvey).

One major problem with these and most other discussions on contemporary dispossessions is relating them to primitive accumulation without paying sufficient attention to whether the former contribute — and, if they do, how — or not to actual capitalist accumulation. For some, the simple occurrence of dispossession seems to be enough to associate it with primitive accumulation or even with capital accumulation. This is the case of the well-known and probably the most influential contemporary approach to primitive accumulation: the concept of ‘accumulation by dispossession’ which David Harvey offers as a terminological alternative given that it would be ‘peculiar to call an ongoing process ‘primitive’ or ‘original’’ (2003:144). For him, ‘accumulation by dispossession’ has ‘become the dominant form of accumulation relative to expanded reproduction’ of capital (Harvey 2003:153). First, it is important to mention the logical impossibility present in this claim, as no value can be distributed without first being produced (Mandel, 1990). The imprecision is also noticeable in the four main elements Harvey draws on to illustrate his concept: privatisation, financialisation, management and manipulation of crises, and state fiscal redistributions. He does not say why one should distinguish the dispossessions brought about by two connected elements as financialisation and manipulation of crises. Furthermore, financialisation can involve state redistributions — e.g., through public debt — and such redistributions can be brought about by privatisation. It is worth highlighting that Harvey himself suggested overlaps like these.

“Primitive accumulation was the process through which the capitalist mode of production had its foundational round of both proletarianisation and capitalisation”

To deal with such theoretical deficiencies, one distinction to be made is that accumulation and dispossession are different social processes. Unlike Marx once thought, dispossessions — I understand the term ‘primitive accumulation’ as referring only to the capital’s pre-historical events referred to by Marx — are still developing. They are signs of the times, when neoliberal ideas and their corresponding practices have become hegemonic. Contemporary dispossessions have served to counteract falling rates of profit by pushing down labour costs — Marxian variable capital — in which the social wage is included. As the latter is granted through public policies, one can see why the welfare state has been the main target of neoliberals. Neoliberalism and the dispossessions it promotes have also served to raise profit rates by pushing down the costs of constant capital. Such dispossessions, however, can also simply redistribute economic surpluses that have already been produced. Thus, a second theoretical distinction to be made is between dispossession and exploitation: the latter is the social relation that brings about capital accumulation, while the former is a condition — though not a sufficient one — for the expansion of the scale of accumulation.

The distinction between dispossession and exploitation is present in Marx’s study of primitive accumulation given that it ‘takes as its guiding thread precisely the elements which were distinguished by the analysis of the capitalist structure’ (Balibar [1968] 2009:313). These elements were those brought about by the ‘separation between the workers and the ownership of the conditions for the realization of their labour’ (Marx 1990 [1890]:874). This means that producers cannot work for themselves and therefore must work for others, which in capitalism implies labour exploitation. Primitive accumulation was thus the process through which the capitalist mode of production had its foundational round of both proletarianisation and capitalisation. They respectively turned direct producers into wage-dependent producers and means of production into capital. Looking at the Marxian rate of profit (s÷[c+v]), one can conclude that primitive accumulation created both constant capital (c) and variable capital (v) as such, thus making them available to capitalists for the extraction of surplus-value (s).

The distinction between dispossession and exploitation is even more apparent in the Marxian rate of profit. While exploitation impacts the numerator (s), dispossessions can impact the denominator of this rate, namely the costs of either constant capital (c) or variable capital (v). Departing from this and the differentiations mentioned above, I have suggested some theoretical categories of dispossessions in a study that takes into account the different forms in which they relate, contribute, or do not contribute, to the accumulation of capital (Bin 2018). The first concept is redistributive dispossession, which refers to the dispossession that does not create any condition for the expansion of the production of surplus value. It involves nothing but the redistribution of surpluses already produced. In short, I defined it as ‘an appropriation of surpluses that has no impact on capitalization, proletarianization or commodification. Translated into the Marxist formula of profit rate, [redistributive dispossession] increases neither constant capital (c) nor variable capital (v)’ (Bin 2018:82).

A clear example of redistributive dispossession is privatisation, once considered by David Harvey as ‘the cutting edge of accumulation by dispossession’ (2003:157). Through privatisations, ‘assets held by the state or in common were released into the market where over-accumulating capital could invest in them, upgrade them, and speculate in them’ (Harvey 2003:158). One of Harvey’s inaccuracies here has to do with treating state-owned assets almost as if they were a commons. There are instead numerous situations when they are deployed in the general process of capital accumulation, to which the state has always been fundamental. More importantly, a simple transfer of ownership by no means leads to the expansion of capital. ‘Accumulation of capital is [the] increase of proletarian labor with its associated constant capital’ (Zarembka 2000:223), none of which are brought about by privatisation.

“I depart from the understanding of most discussions on contemporary dispossessions which relates it to primitive accumulation without sufficient theoretical care when associating it to actual capitalist accumulation”

For the process of accumulation to expand, both labour power and means of production must also expand. That is, capital expands through proletarianisation on one hand, and capitalisation or commodification on the other. This leads to two other concepts I have begun to develop in order to deal with contemporary dispossessions and their potential impacts on capital (Bin 2018). One is expanding capitalising dispossession, which, besides proletarianisation — the transformation of direct producers into wage-dependent producers — involves capitalisation, i.e., the transformation of means of subsistence into capital. Examples can be traced from India, with peasants displaced to give room for dam constructions, to Egypt, with fisherfolks displaced by industrial fish farming, to Mozambique, with local communities displaced by mining projects, to Brazil, with urban residents evicted to make room for constructions related to events such as the FIFA World Cup or the Olympic Games.

The other concept I have suggested to deal with contemporary dispossessions and their potential impacts on capital accumulation is expanding commodifying dispossession (Bin 2018). As we have seen, expanding capitalising dispossession combines the processes of proletarianisation and capitalisation, which lead to a reduction in the costs of variable capital and of constant capital, respectively. The cost of constant capital can also be driven down by commodification, which means granting means of subsistence with exchange values in addition to the use values they already had. It is true that a commodity is capital; nevertheless, I distinguish commodification from capitalisation in the sense that the latter is the process through which means of subsistence are turned into means of production of commodities. Commodification, more specifically, is the process through which a means of subsistence that was hitherto not a commodity is turned into a commodity.

Another distinction between expanding capitalising dispossession and expanding commodifying dispossession is that only the former involves eviction. Nonetheless, both commodifying and capitalising dispossessions involve proletarianisation, which is a condition for capital to expand. In the case of capitalising dispossession, proletarianisation occurs when direct producers are evicted from the place where they produce for themselves. They are then forced to join the labour force, either as employees or as part of the reserve army of labour. In the case of commodifying dispossession, proletarianisation is brought about by denying direct producers access to means of subsistence. One example is the transformation of public into private services, such as healthcare, education or social security. Thus, besides the goal of reducing labour costs — the social wage in these cases — there is a mercantile motivation in these dispossessions. It turns out that the less the state funds healthcare or social security, the greater the potential growth in private health insurance or pension funds.

As one can see, the discussion up to this point is fundamentally theoretical. In this sense, the concepts of redistributive dispossession, expanding capitalising dispossession, and expanding commodifying dispossession are ideal types intended to guide empirically oriented studies. The first empirical study I carried out was an analysis of urban interventions in the city of Rio de Janeiro that occurred during the preparations for the 2016 Olympic Games (Bin 2017). In this study, redistributive dispossessions were seen in subsidies and fiscal exemptions granted by both the city and federal governments. The municipal government had committed to granting budget resources to acquire the properties needed to meet the demands of the Games, which included cash settlements for evictions. National government in turn exempted the organisers of the Olympics and their associates from federal taxes on all activities related to the organisation and realisation of the Games.

“Rosa Luxemburg once stated that even after the first stages of European capitalism, military power in the central countries was used to appropriate means of production from modern colonies and turn their native populations into proletarians. The periphery remains such a source, and given that capital existence depends upon its expansion, dispossessions in these areas have become even more apparent”

The above dispossessions can be considered redistribution insofar as they do not per se convert means of subsistence into capital nor direct producers into proletarians. Proletarianisation was rather connected to the actual urban interventions. One example was the construction of facilities for the Olympic rowing and canoeing competitions that threatened fisherfolks with displacement from their fishing sites. Others were evicted from sites where they had been running small businesses, or from places near to better public services, to make room for new urban projects. Capitalisation in turn was connected to the conversion of these sites into means of production, such as the land where for-profit mass transportation systems and other urban infrastructure and real estate projects were constructed. In some cases, commodification — which does not involve evictions — stemmed, for instance, from the destruction of environmental reserves to make room for real estate projects or for-profit transportation systems.

As I have said, the study of urban interventions that occurred during the preparations for the Rio 2016 Olympics was my first empirical research based on the concepts of dispossession mentioned above. In this study, the theoretical definitions were easier to associate to their historical manifestations in the case of redistributive dispossession. The latter is based on one single social process — redistribution of surpluses — while expanding capitalising and expanding commodifying dispossessions are more complex. Given that each of these involves capitalisation or commodification, respectively, and both involve proletarianisation, their potential empirical synchronicity make the analysis more difficult. This is why the section of my study on the Rio Olympics devoted to expanding dispossession — vis-à-vis redistributive dispossession — was organised under the headings proletarianisation, capitalisation and commodification. These processes provide historical evidence on the more abstract types of dispossession, whose conceptual delimitations nevertheless demand much more historical research.

To develop the argument summarised here, I depart from the understanding of most discussions on contemporary dispossessions that relate it to primitive accumulation without sufficient theoretical care when associating it to actual capitalist accumulation. By so doing, such discussions end up moving away from the original conception of Marx, for whom primitive accumulation is ‘a process which operates two transformations, whereby social means of subsistence and production are turned into capital, and the immediate producers are turned into wage-labourers’ (1990 [1890]:874). These processes are not always clearly noticeable, or worse, not even present in some contemporary discussions. Thus, my aim has been to bridge contemporary theoretical gaps with some older concepts that are nevertheless useful to better comprehend late capitalism. The objective therefore is no other than to recall that the core of Marxian primitive accumulation stands on the processes of capitalisation and proletarianisation. As such, the latter categories — besides commodification — are central to any analysis intended to relate dispossession to capitalist accumulation.

As I have stressed above, the increase of both proletarian labour and its associate constant capital provides the condition for capital to expand. In this sense, the periphery of the world-system is of paramount interest. Rosa Luxemburg ([1913] 2003) once stated that even after the first stages of European capitalism, military power in the central countries was used to appropriate means of production from modern colonies and turn their native populations into proletarians. The periphery remains such a source, and given that capital existence depends upon its expansion, dispossessions in these areas have become even more apparent. At the beginning of this blogpost, I mentioned the significance of similar dispossessing phenomena that took place in Europe at the dawn of the capitalist mode of production as being reproduced in the periphery. Among the regions of the Global South today, it is probably Africa that is the most significant place of so-called land grabs, as well as being a stage for other dispossessions of the means of subsistence, such as fresh water or fishing sites. Perhaps redistributive or expanding — either capitalising or commodifying — dispossessions can be useful categories in order to understand the political economic aspects of such social processes.

Daniel Bin is an assistant professor at the University of Brasilia. He is the author of A superestrutura da dívida [The superstructure of debt] (Alameda, São Paulo, 2017).

Featured Photo: Tanzanian activists place ‘Sold’ signs along Dar-es-Salaam’s famous Coco Beach as part of Oxfam’s Global Day of Action to stop land grabs in 2013.

References

Balibar, Étienne. [1968] 2009. “The basic concepts of historical materialism.” Pp. 223-345 in Reading Capital, edited by Louis Althusser and Étienne Balibar. London: Verso.

Bin, Daniel. 2017. “Rio de Janeiro’s Olympic dispossessions.” Journal of Urban Affairs 39(7):924-938.

Bin, Daniel. 2018. “So-called accumulation by dispossession.” Critical Sociology 44(1):75-88.

Harvey, David. 2003. The new imperialism. New York: Oxford University Press.

Land Matrix. 2018. “Agricultural drivers.” Retrieved 4 March 2018 (http://landmatrix.org/en/get-the-idea/agricultural-drivers/).

Luxemburg, Rosa. [1913] 2003. The accumulation of capital. London: Routledge & Kegan Paul.

Mandel, Ernest. 1990. “Introduction.” Pp. 11-86 in Capital: a critique of political economy (Vol. 1), edited by Karl Marx. London: Penguin.

Marx, Karl. 1990 [1890]. Capital: a critique of political economy (Vol. 1). London: Penguin.

Sassen, Saskia. 2010. “The return of primitive accumulation.” Pp. 51-75 in The global 1989: continuity and change in world politics, edited by George Lawson, Chris Armbruster, and Michael Cox. New York: Cambridge University Press.

Sassen, Saskia. 2014. Expulsions: brutality and complexity in the global economy. Cambridge, MA: Belknap.

Zarembka, Paul 2000.Value, capitalist dynamics and money. Amsterdam and New York: JAI.

Hunger in the Name of Development: Rwandan Farmers Under Stress

ROAPE

March 8, 2018

By An Ansoms

At the opening of the 15^th National Leadership Retreat, president Kagame asked national leaders why Rwanda is among the worst performers in terms of child malnutrition. A recent report – still publicly unavailable – of the National Institute of Statistics found a child malnutrition rate of 38 percent. This figure seems a weird anomaly in a country that is lauded for its ‘developmental success.’ Average yearly growth rates around 7.2 percent are among the top 10 globally. The country ranks 41^st on the World Bank Doing Business Report, and is applauded as one of the world’s most performing business reformers. At the continental level, the country is praised for the implementation of a Green Revolution and named top performer in the transformation of the agricultural sector.

However, in the past couple of years, critical voices have questioned the Rwandan development model, and particularly the Green Revolution’s beneficial effects. Some highlight the contradictions between different agricultural productivity data. They question the legitimacy of using productivity figures as a proof of agrarian reform successes.[1] Others call into question the long-term sustainability of the agricultural and land sector reform in terms of poverty reduction,[2] and point to the increasing poverty rates over the past couple of years (2010/11-2013/14). [For the on-going debate on Rwandan poverty figures on roape.net see our blogposts here and here.] Also, from within the system, there is recognition about the decrease in citizen’s satisfaction with agrarian and land policies.[3] The government presents itself as an organisation that can learn, and there is indeed increased openness to discuss on problematic policy aspects.

However, deeply embedded systemic problems within the ongoing rural transformation process remain unaddressed. These systemic problems can be linked to two features of the current model. The first is that it is implemented through a rigid top-down authoritarian system, and secondly, it is blindly obsessed with reaching performance targets. The way in which Rwandan leaders’ frame the problem of malnutrition, illustrate the lack of a broader critical reflection.

Child malnutrition is – first of all – explained as a result of farmers’ ignorance on children’s nutritional needs (from interviews conducted in January 2018). Government agents explained how ‘they [farmers] do not understand the importance of a diverse food diet’; how malnutrition is a ‘problem of farmers’ mindset.’ One interviewee also highlighted the problem of gender, referring to the male household heads consuming their family’s income for their own amusement in bars (‘they transform money into beer instead of food for their kids’). The Rwandan government’s focus on the necessity for intensified awareness and sensitisation campaigns frames the problem as a matter of making farmers ‘responsible’.

Such framing ignores the deeply problematic systemic flaws within the top-down imposed agrarian model. The set-up of the agrarian modernisation policy focuses on modern production techniques but ignores the local know-how of farmers. The Green Revolution policy package focuses on regional specialisation and increased marketization of agricultural production. This is done is four main ways. Firstly, through land consolidation and crop intensification programmes, farmers are pushed into imposed crop production schemes. They are obliged to buy predefined seeds and fertilisers (even if partly subsidised). They are then obliged to cultivate and harvest according to pre-imposed schemes. Secondly, intermediary traders can easily exploit farmers’ dependency. Cooperatives structures are not a panacea to this problem. In fact, cooperative management structures rarely involve bottom-up accountability. Thirdly, farmers – in turn – have become dependent upon a monetarised economy, whose logics clashes with the farmers’ daily struggle for survival. Most farmers do not have a financial buffer to wait for money until the end of the season. Moreover, cooperatives often take time to process harvests. Waiting for payment for crops that were harvested weeks or months before, puts farmers under severe stress. Finally, there is high food price inflation, particularly for food crops that are not locally produced. Limited market integration gives enhanced bargaining power to intermediary traders and contributes to the emergence of price anomalies. Unpredictable price fluctuations and high inflation profoundly affect farmers’ purchasing power. Government interventions to correct food price distortions often take time and are not always efficient. Taken together, these processes have a perverse impact upon farmers’ capacity to feed their families, or to diversify their diet.

Moreover, there are sincere concerns around the ecological sustainability of the Green Revolution model. Attentive observers might have noticed an increasingly present phenomenon in the Rwandan countryside: non-cultivated areas of arable land. Several reasons explain this worrying trend. Firstly, in our interviews, farmers explained how the price of the imposed seeds and fertilisers are often higher than the potential return, particularly since the subsidies have decreased. As they are not allowed to produce other crops or use their own seeds, they sometimes opt for leaving land fallow. Secondly, in several zones, the composition of soils has changed due to over-intensive or badly applied use of chemical fertiliser. Farmers refer to ‘soils having become addictive to chemical fertilisers.’ When the price of chemical fertiliser goes up and farmers are no longer able to afford them, harvest rates may significantly decline. The same may happen due to soil quality depletion as a result of consistent abuse of chemical fertilisers over several years. As a result, farmers leave land fallow.

A additional argument – brought up in relation to the malnutrition discussion – is the problem of fake reporting by local leaders, blurring the true image of local realities. At the National Leadership Summit, several speakers mentioned the problem of falsified performance statistics, rendering efficient policy planning impossible. Several of our informants highlight the ‘auto-critical nature’ of the summit, with ‘ministers under fire’ as a result of the malnutrition rate, and local leaders treated as ‘liars and even traitors’. The prime minister highlighted how ‘there is still a bad habit of falsifying statistics when they [local leaders] are working on their reports. That compromises our planning because we cannot know how the country is doing when they give us unrealistic statistics’.

However, an argument around the importance of local leaders’ responsibility ignores the systemic flaws in the administrative way of functioning. Several authors have analysed how decentralization in Rwanda has reinforced the power of the centre, while inserting ‘tightly monitored, technocratic and depoliticised local governments’[4] into a logic of imihigo performance contracts (imihigo is a Kinyarwanda word meaning to vow to deliver). [5] Whereas this has resulted in a highly responsive administrative system, there is limited space for bottom-up input in decision making.[6] Local leaders’ positions depend upon their capacity to prove results in reaching pre-imposed quantitative targets, not upon their capacity to critically assess the suitability of those targets and adapt them to local level realities. The yearly evaluation assessments and ceremonies further increase the pressure upon local administrators. As a result, there is frequent cheating in their quantitative reporting.

In fact, local leaders urged to perform in line with national development targets can even result in actions that impede development. A clear illustration is the phenomenon of unused radical terraces. Over the past five years, land terracing has been a major priority in VUP (Vision 2020 Umurenge) programmes. Many District Development Plans include specific targets in terms of hectares to be terraced. However, the pressure to perform has led to aberrations. So, the zones destined for terracing are designated by local administrators. The vulnerability of local farmers – at least temporarily losing access to their land – is rarely taken into account. Furthermore, in several zones, terracing was badly done. In certain cases, the top soil layer was mixed with deeper layers, which severely reduces the agrarian potential of the soil. In other cases, terracing was not accompanied with re-fertilisation measures in absence of organic material. In certain zones we even saw radical terraces covered with eucalyptus trees. What is more, the involvement of the Rwandan Reserve Force in the most recent terracing programmes may be an opportunity but is also a challenge (the RRF is comprised of Rwandan nationals serving in a quasi-military arm of the Rwandan Defence Forces). Several of our interviewees pointed to the speed with which demobilised soldiers deliver results. However, some pointed to the problematic lack of know-how within the militarily organised structures coordinating this process, and the limited margin for input from agrarian specialists and a complete ignorance of local farmers’ know-how in sustainable soil protection. Lastly, in January 2018, we gathered several accounts of empty terraces being offered to anyone willing to invest in agricultural production for very cheap prices, and regardless of existing land rights. The phenomenon of Lost Land testifies of systemic mistakes within a rigid top-down authoritarian administrative order in which local leaders blindly run after predefined targets.

A final issue of concern is the position of international donors. Many of the projects executed under the Green Revolution programme have been funded by major international donors, such as the World Bank, the European Union, International Fund for Agricultural Development (IFAD) and the Department for International Development (DFID) in the United Kingdom. Donors appreciate the Rwandan policy makers’ capacity to deliver results in line with clearly defined targets. However, very little reflection is carried out around whether this target-orientedness adds up to a socially and ecologically sustainable development method.

Farmers see themselves being considered as ‘rats in a laboratory’ on whom a variety of policy measures are tested. The levels of frustration are increasing. The lack of space for discussion on systemic problems risks undermining Rwanda’s economic, social and ecological future.

An Ansoms is a long-standing ROAPE contributor. She has a PhD in Applied Economics and is a Professor in development studies at the Université Catholique de Louvain, Belgium. Her focus is on natural resource conflicts and challenges for rural development in the Great Lakes Region of Africa.

Featured Photograph: Carrot farming in Eastern Rwanda in 2015.

Notes

[1] See Desiere, S., L. Staelens, and M. D’Haese (2016) “When the Data Source Writes the Conclusion: Evaluating Agricultural Policies.” Journal of Development Studies 52 (9): 1372–87.

[2] A collective of ten researchers specialised in rural development in Rwanda wrote a joint article on this subject; See Ansoms et al (2018) ‘The Rwandan agrarian and land sector modernisation: ‘Confronting macro performance with lived experiences on the ground’, Review of African Political Economy, forthcoming; see also https://roape.net/2017/06/28/evidence-mounts-poverty-inflation-rwanda/. See also Dawson, N., A. Martin, and T. Sikor (2016) ‘Green revolution in sub-saharan Africa: Implications of imposed innovation for the wellbeing of rural smallholders’ World Development 78: 204-218. Huggins, C. (2017) Agricultural Reform in Rwanda: Authoritarianism, Markets and Zones of Governance (Zed Books).

[3] Between 2013 and 2016, satisfaction with the quantity, quality and performances within the agrarian sector decreased from 57% to 48% and from 76% to 67% within the land sector. See Rwanda Governance Board (2014, 2017), Rwanda Citizen Report Card, Kigali, Rwanda Governance Board.

[4] See Chemouni, B. (2014) ‘Explaining the design of the Rwandan decentralization: elite vulnerability and the territorial repartition of power’, Journal of Eastern African Studies 8 (2): 246-262 (citation from p. 246).

[5] See also: Purdekova, A. (2015) Making Ubumwe: Power, State and Camps in Rwanda’s Unity-Building Project, Studies in Forced Migration, Volume 34, Berghahn Books. Ingelaere, B. (2016) Inside Rwanda’s Gacaca Courts: Seeking Justice after Genocide, Critical Human Rights Series, University of Wisconsin Press.

[6] See Chemouni, B. (2016) ‘Taking stock of Rwanda’s decentralisation: changing local governance in a post-conflict environment’, Third World Thematics 1 (6): 763-778.

Africa and Capital as Power

ROAPE

March 6, 2018

By Tim Di Muzio

Despite the fact that the ‘capital as power’ approach to critical political economy has been around for some time now, it is not very widely used and/or understood. Part of the reason for this, I believe, is that it is not widely taught as an approach and it is often too easy for scholars to rely on the more traditional schools of Marxism or neoclassical economics. The purpose of this blogpost is to try to summarize, in clear language, the general approach of capital as power and to highlight some advantages such a perspective may have for understanding, explaining and critiquing aspects of political economy in Africa.

Though the capital as power approach shares some points of contact with Marxist critiques, it has significant differences with a Marxist approach. Capital as power recognizes that at least since the dawn of the modern corporation in the United States (the precursors being European joint-stock companies), global political economy has largely been organized by giant firms who are capitalized on the basis of their potential future earnings. For Marxists, earnings or profit are the result of exploiting workers and there’s generally two ways this can be done: through increasing the working day and by intensifying work. So let’s take a quick look at the famous Marxist equation for surplus extraction or what is the same thing, the realization of profit:

M – C – MP/LP – C¹ – M¹ (there are more sophisticated versions but this is the core formulation)

In this equation the capitalist starts with a sum of money (M), buys commodities or raw materials (C), applies a certain level of technology or means of production (MP) to a definite level of labour power (LP) to produce a new commodity (C¹). This new commodity is sold on the market to realize more money at the end of this process than the capitalist had at the beginning of production (M¹). The caveat here is that the product has to be sold before the capitalist can realize her profit, though there is no guarantee that the item can be sold. This can happen for various reasons to do with a lack of demand for the product but also because, due to the math of capitalist accounting (which is a cost plus system), there is never enough purchasing power for all the goods and services outstanding on the market. This is a structural feature of capitalism and can only be overcome by credit as long noticed by the too often ignored C.H. Douglas and the social credit movement.

For Marxists, the crucial part of this equation in accounting for profit is labour power (LP). Only by exploiting labour power to a greater or lesser degree can profits go up or down. This is the famous and ultimately problematic ‘labour theory of value’. The capital as power approach does not reject that labour can be ‘exploited’ in the sense of being poorly paid or mistreated but it does reject that the sole source of corporate earnings is the exploitation of labour power. Instead, the capital as power approach to critical political economy sees corporate earnings as a matter of broad power processes. In order to generate greater earnings (what we call differential earnings/profits) than their corporate peers, the managers of corporations try to shape and reshape the terrain of social reproduction in their favour – from advertising and marketing to obtaining patents, laws suits, lobbying and the list could continue. In short, many factors shape the magnitude of corporate earnings. So one of the key questions the capital as power approach asks is how dominant corporations (what we call dominant capital) shape and reshape the social and political process in order to generate differential returns. Two examples should suffice to highlight what I mean here. Consider British Petroleum now known simply as BP. In April 2010 the BP leased Deep Horizon exploded and oil gushed into one of the most sensitive marine environments in the United States. Any investor in BP worth their salt would have immediately shorted BP’s stock or alternatively sold off their shares in the company. And indeed, BP lost about half its value in market capitalization over the next few months. Why? If BP’s earning were solely contingent on the labour power it exploits, it’s likely that investors wouldn’t care much since the labour power lost in the explosion could be easily replaced (at least from a corporate though not human perspective). But earnings are contingent on a number of factors as noted above and as oil continued to gush for weeks on end, investors saw red. Earnings would be jeopardized by countless lawsuits, corporate fines, clean-up costs and potentially greater premiums for insurance.

A second illustrative example is armament firms. My previous research in Carbon Capitalism considered how much the share price of major armament firms in the United States increased throughout the war on terror. The average return on the S&P 500 – a broad index that effectively measures the health of the United States economy – was 7 percent. The average return for the top 5 armament companies was 234 percent. Why? Because they were exploiting some of the highest paid, educated and privileged workers on the planet? Surely not. The astronomical rise in the share price of armament firms was a direct result of investors anticipating a long (perhaps never ending) war and war not only requires more state spending on arms, but evermore materiel. Bullets, bombs and military vehicles have to be replaced. There’s really no need to go on further as the earnings and rising capitalization of these firms are clear to the naked eye. Without a ‘war on terror’ or a credible threat of war, it is likely that the capitalization of these firms would have remained rather stagnant if not declined.

With this specific contrast on the source of profit explored we can go a bit deeper into some of the main claims made in the capital as power approach. We might do well to list them in easy to understand steps:

The dominant subject of modern capitalism is the corporation and the largest corporations by market value/capitalization are called ‘dominant capital’.
While there are certainly family owned firms, most corporations are owned by absentee owners – owners that never actually work for the corporation. Corporations can also own shares in other corporations but ultimately ownership (if it were transparent) can be traced to individuals and families.
Those individuals and families that own the most claims to future income (e.g. stocks and bonds) can be considered ‘dominant owners’ or ‘the 1%’.
The ownership of shares in corporations represent claims on future income streams or corporate earnings. The state is also capitalized through its ‘national debt’. Government bonds in their various forms are a claim on a portion of state revenues collected as taxes, fines and fees.
The firms with the largest market value/capitalization have greater power to shape the social process than their smaller peers. These firms are price makers rather than price takers.
The dominant ritual of modern capitalism is capitalization. Capitalization is the act of discounting to present value a future flow of income (also considering some factor of risk). In this sense, ‘capital’ is either money to be invested in an income-generating asset or money that will be invested in an income-generating asset. Capital is no material entity in the capital as power framework, but a symbolic magnitude measured in pecuniary units.
Discounting is done by investors because of the time value theory of money in finance. This theory holds that money invested today is worth more than it is tomorrow because we can start generating a return today. A simple example here may suffice for those unfamiliar with discounting. You might pay $250 for shares in a company today that you anticipate will be worth $300 in a week’s time – a 20 percent return if things pan out. But you’d be a bit of a fool to pay $250 for shares in a company today for the same shares at $250 in a week’s time. Worse still, you’d never pay $250 for shares in a company today in return for the same share valued at $100 next week. In both cases, you’d be a pretty bad investor/capitalist.
Earnings are never a narrow offshoot of production but result from the control of production for profitable ends rooted in ownership. Earnings/profit are contingent on broad power processes not simply the exploitation of labour power as demonstrated above. Labour is of course important, but it is a cost to business, not the source of profit.
Since earnings are a matter of corporate power, what investors capitalize when they purchase shares in corporations is ultimately the firm’s power to shape and reshape the social process in their favour. For example, the NRA protects gun manufactures in the United States through political donations, lobbying and advertising. If US legislators finally decide to ban handguns (though highly unlikely given the power of the manufacturers of hand guns), the earnings of the major manufacturers would plummet.
What this amounts to is that ‘capital’ is no material thing, but capitalized social power represented in capitalization or the value of ownership claims to future earnings measured in some unit of account (dollars, rand, rupees).

Now that we have some idea of the capital as power approach, how might it be mobilized to understand, explain and critique various aspects of African political economy? My comments are not meant to be exhaustive and I must admit my work doesn’t look at any one specific African economy.

First, there is a historical dimension that could be explored. More work could be done on how the European joint-stock corporations were involved in the African slave trade and early colonial projects. It’s not just that slavery contributed to industrial capitalism as per Williams’ original argument, but that it actually was capitalism – at least in my view. These were capitalized firms in search of earnings on the backs of Africans. Also, slaves in America (likely the Caribbean too) were used as collateral for loans. If farmers/plantation owners couldn’t pay their creditors, slaves could be taken as valuable property. So, in reality – at least in the US – an entire financial system was erected on the slave economy. Some questions in this vein might be: How far and in what ways was the capitalization and earnings of these early firms contingent on exploiting the African continent and to what effect? For instance, how did the profits of the Royal Africa Company empower English royalty and city of London merchants? How did the desire to accumulate greater wealth by the company’s owners aggravate and extend the transatlantic slave trade? Another useful study might be how the stock exchanges of Africa were set up and the early ownership of these exchanges and the firms listed on them. This would obviously be linked to the colonial and post-colonial period. Another key concern might be to investigate how various African communities became de-monetized of their original currencies and how they were re-monetized with a colonial currency. Another issue would be the creation of the ‘national’ debts in Africa and who owns those debts? How were various forms of taxation introduced in order to force Africans into the labour market and how were these practices connected to increasing public debt and the corporate exploitation of resources? How has the institution of ownership developed in various African political economies and who had to be dispossessed to create it? There are certainly additional questions to be investigated but research agendas querying the above would go a far way in illuminating the power of capital in Africa during its earlier years.

Second, there is a contemporary (and to a considerable extent, a future) dimension. A first question might investigate the ownership of publicly listed African firms. To what degree are they foreign owned? How concentrated is the ownership of the leading firms on African stock exchanges? How are they using their power to shape and reshape the terrain of social reproduction generally and public policy more specifically to generate differential earnings? Second, how do the major firms by capitalization on African exchanges relate to ongoing resource extraction and climate change? How are these resources being used and to what effect? Are everyday Africans benefiting from these resources or just a few national and international investors? What firms represent Africa’s ‘dominant capital’ (leading companies by market capitalization – say top 25) and what sectors and geographies do they operate in? How do they seek to shape public policy? How have and how do investors perceive the equity markets across Africa? And perhaps last, how far and in what ways has the capitalist mode of power been entrenched across the political economies of Africa and how has this exacerbated inequality and unequal life chances?

These are just some basic questions someone investigating Africa’s political economies might ask from the perspective of capital as power. Old traditions and perspectives still continue to have a stranglehold on political economy as a field. And while they may yield insights of their own, I think the perspective of capital as power has its own unique insights to offer that are closer to the actual practices of capitalists than traditional theories. So if we want to change the world for the better and to be rid of social injustices, it might be a good idea to have a proper understanding of what is actually going on.

Tim Di Muzio is Associate Professor of International Relations and Political Economy at the University of Wollongong in Australia. His latest book is The Tragedy of Human Development: A Genealogy of Capital as Power

Featured Photograph: Montage of the War on Terror.

Bibliography

Bracking, Sarah (2016) The Financialisation of Power. How Financiers Rule Africa. (New York: Routledge, Taylor & Francis Group).

Di Muzio, Tim (ed.) The Capitalist Mode of Power. (London: Routledge).

Di Muzio, Tim and Richard Robbins (2015) Debt as Power. (New York: Oxford University Press).

Di Muzio, Tim and Matt Dow (2017) ‘Uneven and Combined Confusion: On the Geopolitical Origins of Capitalism and the Rise of the West’ Cambridge Review of International Affairs, http://dx.doi.org/10.1080/09557571.2016.1256949: 1-20.

Di Muzio, Tim (2017) The Tragedy of Human Development: A Genealogy of Capital as Power. (London: Rowman Littlefield).

Nitzan, Jonathan (1998) ‘Differential Accumulation: Toward a New Political Economy of Capital’. Review of International Political Economy, Vol. 5, No. 2: 169-217.

Nitzan, Jonathan (2001) ‘Regimes of Differential Accumulation: Mergers, Stagflation and the Logic of Globalization’ Review of International Political Economy. 8:2: 226-274.

Nitzan, Jonathan, and Shimshon Bichler (2001) ‘Going Global: Differential Accumulation and the Great U-turn in South Africa and Israel’ Review of Radical Political Economics. 33: 21-55.

Nitzan, Jonathan and Shimshon Bichler (2002) The Global Political Economy of Israel. (London: Pluto Press).

Nitzan, Jonathan and Shimshon Bichler (2009). Capital as Power: A Study of Order and Creorder. (London: Routledge).

Woodley, Daniel (2015). Globalization and Capitalist Geopolitics. Sovereignty and State Power in a Multipolar World. (London and New York. Routledge).

Tax Avoidance and Evasion in Africa

ROAPE

March 1, 2018

By Nataliya Mykhalchenko

Tax avoidance, tax evasion, tax heavens, illicit financial flows and global tax governance are real buzzwords that have come to dominate current international political and financial domains. Tax avoidance, understood as the use of the so-called ‘loopholes’ in the tax legislation to reduce one’s tax payments increasingly tops news charts. The recent EU’s blacklist of 17 tax havens, Paradise Papers and last year’s Panama Papers are among the starkest examples. Recent waves of tax dodging scandals including those of tax evasion – the use of unlawful means to escape paying tax – pushed many governments globally towards implementing various structural changes to taxation systems. Moreover, there is a growing call towards making the ‘fight’ against the exploitation of tax regulations ‘a global effort’ and the Organisation for Economic Co-operation and Development’s (OECD), Tax Inspectors Without Borders and the Declaration on Automatic Exchange of Information are amongst the most prominent measures of this kind.

In a recent study that explored anti-fraud initiatives in nine countries on the African continent, measures to address the drainage of revenue featured strongly. What is particularly interesting is the fact that many actors, private, governmental and supranational, including those in the West, seem to be especially active in encouraging change and acting as ‘advisories’ to governments and business on the African continent. This blogpost will use the findings of the study to outline some of the interventions, paying particular attention to the actors involved. The blogpost will then look closer at the OECD’s initiative, and close with some questions and thoughts regarding the findings and the North-South dynamic that prevails.

According to one estimate, US$240bn is lost in tax revenue every year due to various forms of tax avoidance and evasion, with the majority of losses in low- and lower middle-income countries. As shortages in funding of developmental projects persist and countries struggle to meet the financial requirements needed to achieve Sustainable Development Goals (currently the investment gap in developing countries is around US$2.5 trillion), experts worldwide highlight that the tax loses are unjustifiable and if addressed, can be used to facilitate the delivery of the SDGs. In recent years, many initiatives emerged across the Global South to raise awareness of the problem, involving governments, supranational organisations such as EU, UNDP and OECD to name a few, businesses, and rights advocacy groups such as Tax Justice Network and others. Several countries in the Global South have been applauded for their efforts to keep up with the tax reform that prevails in parts of the Northern hemisphere.

Having looked at anti-fraud initiatives in South Africa, Ghana, Botswana, Nigeria, Tanzania, Kenya, Malawi, Rwanda and Zambia several trends emerge, some of which were outlined in previous blogs on roape.net. One trend that has not been discussed is the nature of the initiatives aimed at tackling various forms of tax evasion and avoidance and importantly the actors that are driving these measures. The types of initiatives aimed at addressing tax loss, range, amongst others, from education-led awareness raising campaigns on the importance of tax contributions and the harm that tax evasion and avoidance has on the health of the economy, the use of automation and digital technologies to increase tax collections and to facilitate the transfer of information on local, national and global levels, amendments in the legislation, and intercountry cooperation. The actors involved include domestic and foreign governments, businesses (consultancies and banks in particular), supranational organisations, development agencies, and advocacy and civil society groups. To explore these measures further, a number of examples will be given below, paying special attention to the actors driving and implementing such initiatives.

Who is pushing for crackdowns on tax fraud?

Private businesses, especially consultancies and banks, are active advocates for lawful taxation contributions across the studied countries. For instance, Deloitte Consulting launched the Tip-Offs Anonymous Hotline both in Botswana and Malawi aimed at deterring financial fraud, including tax evasion and tax avoidance. According to the Managing Director of the Botswana Development Corporation, ‘Tip-Offs Anonymous line is put in place as a deterrent to fraud and promotes a culture of zero tolerance towards these crimes.’ In another initiative, Tallinn-based multinational company Nortal is assisting Botswana in creating a ‘new tax management solution’ which will replace the existing system entirely. Costing around €8 million, it will provide new risk management solutions and ‘should boost overall economic growth in Botswana, reduce the tax gap and increase transparency while reducing costs.’ PricewaterhouseCoopers Ghana while commenting on the Ghana’s new 2018 budget has advised the government to implement changes to strengthen revenue collection, including, among others, the use of mobile payment technology, targeting debt management, minimising the fiscal gap, and ‘increased investment in agriculture value chains and in growth enhancing infrastructure including radical structural transformation to ensure export diversification.’

Moreover, businesses are particularly active in initiating measures to address counterfeiting and substandard produce. It is important to note that counterfeiting, tax evasion and avoidance are closely interlinked. It is more difficult to obtain the legislated amount of tax from counterfeited and unlicensed products, and in addition it has a negative impact on those brands whose products are being replicated. International firms such as Southern Graphics Systems (SGS) operating in Kenya, Sproxil in Tanzania and Bureau Veritas in all of the studied countries, offer services to business and individuals, and cooperate with governmental agencies on strengthening quality checks and identify counterfeited produce. Technology is often adopted in these measures. An interesting example is that of collaboration between the Human Development Innovation Fund, UK’s Department for International Development and the firm Sproxil. The initiative involves the introduction of Mobile Product Authentication technology to help verify counterfeit produce in pharmaceuticals and educate individuals on health risks associated with such products.

National governments have featured strongly as those pushing for strengthening of the tax regulation, so all the nine studied countries contained a government-led initiative related to taxation. To highlight the variety and scale of these initiatives a few examples provides powerful illustration: declarations of crackdowns on tax misconduct by the country’s presidents in the case of Tanzania; registering taxpayers at the district level in an effort to address the problem at grass-roots level, and the adoption of Electronic Billing Machines in Rwanda; amendments to national legislation to specifically tackle tax-avoidance as in South Africa. More aggressive measures in Nigeria whose Federal Inland Revenue Service have threated to deny access to banking facilities for those companies that don’t join taxation register.

In Ghana, measures to combat tax evasion and avoidance are initiated by a number of actors, including the Ghana Investment Promotion Council with an initiative to develop a ‘beneficiary ownership regime’ aimed at identifying owners of companies, particularly in the extractives industries. In a more recent initiative, the Ghana Revenue Authority planned to use the Point of Sale (PoS) devices to strengthen tax collection and improve monitoring of revenue. There seems to be widespread support for this measure, including from Price Waterhouse Coopers Ghana. Kenya’s efforts focused on Small and Medium Enterprises, where the Kenya Revenue Authority seeks to address the issue at grassroots level and work closely with county authorities to integrate the SMEs into the taxation system. Malawi Revenue Authority keeps up with the trend of using technology, in particular electronic payment systems to encourage tax payers and prevent evasion and avoidance.

Finally, Botswana focused on tackling tax avoidance by identifying ‘multinational tax dodgers’ and has joined OECD’s framework on Base Erosion and Profit Shifting. According to a state official, ‘Botswana is […] obliged to conform to these standards and that may mean amendment of tax legislation where necessary.’ In the words of the same official, ‘Botswana’s tax system will be put under scrutiny whether it conforms to international best practice which should in turn boost investor confidence and hence it has the potential to attract investment by credible investors.’

The involvement of foreign actors, including governmental bodies is extensive across the studied countries. UK’s DFID has been particularly active in offering assistance, having spent over £32 million on tax system improvements overseas in 2015, and £26 million in 2016. Out of the 9 studied countries, seven (Ghana, Nigeria, Tanzania, Kenya, Malawi, Rwanda and Zambia) received assistance from the British government. For example, in 2015, Ghana and the HMRC partnered with the Ghana Revenue Authority to develop their expertise on tax legislation, compliance and data privacy. This agreement is part of a wider, OECD backed ‘global standard’ for an automatic exchange of information of tax payer’s data scheduled for 2018. According to International Development Secretary Justine Greening, ‘the UK is committed to helping developing countries get their tax systems in order so that as their economies grow they are able to increasingly fund their own health and education programmes and reduce aid dependence.’

Advocacy and civil society groups are actively gaining ground in running of campaigns to raise awareness on illicit financial flows. One of the widely known organisations is Tax Justice Network (TJN) which offers research, analysis and advocacy on tax evasion and avoidance, as well as The Global Tax Alliance for Tax Justice (a spin off from TJN), which brings together civil society organisations and activists working with this issue. Numerous regional organisations such as Tax Justice Network Africa, run national and grass roots level events. Among its initiatives is the Stop Bleeding Africa Campaign which joined various stakeholders in an attempt to drive one Africa-wide response. Numerous national organisations and civil-rights activists are promoting awareness as part of this initiative, for example the recent campaign in Ghana in collaboration with Ghanaian based Integrated Social Development Centre and Tax Justice Network. Numerous international charities also do extensive work organising initiatives and raising awareness on this issue, and include amongst others Transparency International, Action Aid, and Oxfam.

As was mentioned above, OECD has been an active player in introducing measures to address leakages of tax, and some argue, has been pivotal in the setting of certain international taxation standards. Tax Inspectors Without Borders, a joint initiative with UNPD launched in 2013 is aimed at providing technical assistance to developing countries to enhance their capacity to obtain tax contribution from multinational companies. Currently, technical assistance is being offered to 18 African states, in some cases partnered with actors such as UK’s HMRC, African Tax Administration Forum, Germany’s Federal Ministry of Finance, Netherlands’ Tax and Customs Administration, the World Bank Group, the French Direction Générale des Finances Publiques (DGFiP), USAID and others.

What has come to be known as the ‘Global Forum on Transparency and Exchange of Information for Tax Purposes’ was rolled out in the 2000s and includes 148 members, both OECD and non-OECD members. The Exchange of Information on Request, and most recently the Declaration on Automatic Exchange of Information (AEOI) have been the two core initiatives. These frameworks are now regarded as the new standard and currently over 100 countries have signed up to the declaration. The core idea is to allow for easier and timely transmission of financial information (gathered by financial institutions such as banks) about a country’s residents living overseas with the aim of greater transparency and prevention of tax evasion and avoidance, while suggesting that the existence of tax heavens may come to an end. The countries can sign multilateral (there are currently 98 signatories) or bilateral agreements, as we have seen between Ghana and the Netherlands. Countries are free to chose with which countries to exchange information.

Are we on the right track?

The examples outlined above would suggest that various actors recognise the need to address illicit financial flows and implement different measures to raise awareness (even if driven by profit motives), and put in place mechanisms to prevent tax dodging and allow for greater transparency. However, what is critical to note is that a number of the actors involved in pushing for anti-tax evasion and avoidance, may themselves be culpable for similar abuses of the tax legislation. For example, Deloitte, and other accountancy firms such as PwC were acting as advisories and helped companies such as Blackstone avoid paying tax as we have seen in the Paradise Papers. Moreover, a group of consultancy firms that have become known as ‘the big four’, PwC, Deloitte, EY and KPMG, are known to use their positions to lobby for certain regulations and in some cases employees of these firms are known to take up roles at the OECD and in national governments to push for their client’s interests. Furthermore, numerous international banks were discovered to make use of tax heavens to hide their profits, such as Barclays which declared profits of €557m in Luxembourg but only paid €1m in tax.

These are just some of the examples, where the ‘advisories’, are in fact the ones making use of the loopholes in legislation, while at the same time offering advice to countries in the Global South on how to better manage their taxes (see on this phenomenon John Christensen’s analysis in David Whyte and Jörg Wiegratz’s book here). What is important to note there is that such ‘advice’ often informs policy and legislation within those countries and here, one cannot fail to notice the characteristically unequal North-South dynamic.

While OECD’s initiatives are, one might argue, an important step towards greater transparency, and have even been deemed as ‘revolutionary’, commentators are calling for scrutiny of some of the organisation’s measures. In the case of Tax Inspectors Without Borders – a joint OECD/UNDP initiative – following a review of its operation it was discovered that leadership for the three of its pilot projects in Rwanda, Ghana and Senegal originated from donor countries, which was against the original formulation of the initiative.

In terms of the AEOI (Automatic Exchange of Information) one of the main concerns is the need for reciprocity meaning that it is required for a country to be able to collect and send information if it is to receive information in return. The issue here is the lack of capacity, infrastructure and resources in some Southern countries to do this, thus this would automatically exclude them from participating in the framework at least in the immediate future. Moreover, even if a country matches reciprocity requirements, another concern within the framework is the fact that countries are able to choose with whom to exchange information and this has been compared to a dating game. For example, even if country X wants to receive information from country Y, they will only be able to do this if country Y approves. An example is the US, which is a major player on the taxation arena and a country where many tax heavens are safely hidden. The States has for a long time imposed automated exchange of information on countries where their citizens reside, without participating in turn and is refusing to take part in the AEOI.

A final aspect to mention here is the fact that the framework is reliant on financial institutions to record and verify residency information of their customers in order to transfer the requested information to the correct country. The concern is that there are ways – for example, making an investment – to gain residency in certain countries, use that information to register in a bank but not reside and conduct financial transactions in the country in question. So, fraudsters may continue to evade and hide tax in other locations without risk of being unmasked.

In this blogpost I have summarised some of the initiatives to address tax evasion and avoidance by numerous actors on the African continent and draw attention to frameworks that are presented as ‘international standards.’ The initiatives vary in type, scale, and the actors involved. It also suggests that the initiatives are underpinned by various drivers, whether commercial, political or other. There is a degree of hypocrisy on the side of some ‘advising’ actors where they are directly involved in or are facilitating financial crime. OECD’s initiative, while potentially beneficial, has loopholes and seems to disadvantage Southern countries.

While a growing body of literature is currently emerging surrounding illicit financial flows, as well as around the nature of global tax governance as a whole, there is not enough evidence to suggest that the ‘global fight’ is indeed not a ‘global flight’ driven by certain powerful entities and interest groups to avoid paying tax. Given that the issue has universal significance and undermines the development of many countries in the Global South, more research (and campaigning) is needed in order to understand the nature of these initiatives, the forces behind them, and the unequal North-South dynamic that prevails.

Nataliya Mykhalchenko graduated from the University of Leeds in 2016 with a BA in International Development. She now works in London for a company that helps education, research, healthcare, non-profits and civil society institutions. Nataliya started researching anti-fraud initiatives on the African continent in 2015 as part of a funded five week Leeds University Summer Research Internship Scheme. In 2016, supported by ROAPE, she continued her research. To date she has looked at anti-fraud measures in South Africa, Ghana, Botswana, Nigeria, Tanzania, Kenya, Malawi, Rwanda and Zambia. Nataliya’s research was linked to the ongoing work of ROAPE’s Jörg Wiegratz at the University of Leeds on the political economy of anti-fraud measures in the Global South.

Featured Photograph: HMRC offshore evasion poster February 2014.

Pan-African Panther

ROAPE

February 26, 2018

By Olúfẹ́mi O. Táíwò and LaKeyma Pennyamon

I. Black Panther

Black Panther is set in Wakanda, a fictional African country set somewhere near actual Uganda. The name ‘Black Panther’ is also a title given to the warrior that serves as the champion of the nation, a title held by the film’s protagonist T’Challa (Chadwick Boseman), son of the recently assassinated King of Wakanda T’Chaka and heir to the throne. Wakanda is thought to be an impoverished Third World nation by the outside world but is secretly the most technologically advanced nation on earth, made possible by its virtual monopoly over a mysterious metal known as vibranium which powers its technologies.

Wakanda guards its vibranium – and the advanced science driven by it – behind a strictly patrolled and camouflaged border and an isolationist and non-interventionist foreign policy that helps maintain the secret of vibranium and prevent foreign powers from attempting to backward engineer its technologies and use them to gain global dominance over the rest of the world. Wakanda jealously guards its riches and many of its ancient cultural religious practices and political institutions behind its wall of camouflage. However, T’Challa’s uncle, Prince N’Jobu, betrays Wakanda’s secrets to a South African mercenary who later attempts to sell vibranium to the CIA. Prince N’Jobu is killed in the attempt to arrest him for his crimes, leaving behind an orphaned son N’Jadaka, who later adopts the moniker Eric Killmonger in recognition of his impressive record of kills in the US military. Killmonger returns to Wakanda to contest T’Challa for the throne and, more importantly, to contest Wakanda’s centuries long isolationist policy – demanding that Wakanda arm Black people worldwide to fight their oppressors, so that he can establish a global Wakandan Empire on which the ‘sun will never set.’

The tension between T’Challa as protector of Wakanda’s isolationist history and the larger Black world becomes part of the central conflict of the movie. Importantly, for both the movie and the soundtrack, Black people are the major players on both sides of the conflict; sometimes the sides clearly arrange themselves into moral right and wrong, while at other times the conflict seems more about perspective.

One of the many merits of the film is its reignition of interest and debate on the questions of African sovereignty versus African solidarity. The film itself steers debate toward the struggle between two ‘opposed’ views as represented by T’Challa/Black Panther and Killmonger. T’Challa and his family represent African sovereignty that is made possible only through self-protective isolationism. Killmonger, on the other hand, stands in for a kind of bellicose Black internationalism; he calls T’Challa’s isolationism ‘cowardly abandonment.’

Many think-pieces responding to Black Panther in the US have tried to map the ideological struggle in the film onto historical struggles in the US, such as ones between violent and non-violent resistance and Black nationalism vs. integrationist approaches to Black liberation. Besides the fact that Wakanda is a warrior-led nation, troubling the non-violence vs. violence framing of the movie’s conflict, the fact that Wakanda controls its national resources is a crucial and decisive context for the ideological conflict in Black Panther. It means that the outcome of the struggle between T’Challa and Killmonger will decide the political trajectory of an entire nation, not of an activist movement – that is, it will move armies, policies, and resources on a massive scale.

While the stakes in the film are not those of the Black movement in the United States, they do reflect the history of struggle between ideologies and political actors in many anti-colonial movements on the African continent and elsewhere in the diaspora. For the continent, there is nothing hypothetical about the dangers posed by putting the wrong person in power, as the continent has had no shortage of real world Killmongers, some who participated in the anti-colonial struggle. The ideological conflict of the movie is less Malcolm X vs. Martin Luther King and more Nkrumah vs. Lumumba. The struggle in Black Panther is, first, over whether to have a Pan-Africanist orientation at all and second, over what the demands of a Pan-Africanist orientation would be.

Less explored by many of the think-pieces written in response to Black Panther is the Pan-Africanist stance embodied by Nakia, T’Challa’s love-interest. This is a shame: Nakia’s emphasis on genuine solidarity illustrate a politics which has served well the liberation efforts of Africans. Overlooking Nakia’s vision is also odd: after all, the film introduces us to our hero, T’Challa, through Nakia’s covert mission to infiltrate a group seemingly styled after Boko Haram and save their women captives. This mission fills out Nakia’s larger practical pan-Africanist vision, which is in fact the alternative to Killmonger’s global Wakandan empire of blood that T’Challa struggles to accept, though the movie’s final scenes show him ultimately taking timid steps towards this vision ed. It is Nakia and the Queen Mother who bridge the divide between the Jabari, Wakandan ethnic outcasts, and the rest of Wakanda. They discuss who to empower and why, with purpose and responsibility rather than rage and pride, which generally inform the decisions of the film’s more prominent male characters. Finally, Nakia is openly acknowledged as the savior of the country by T’Challa in one of the film’s important final moments.

II. Black Panther and Pan-African History

A review of the recent history of anti-colonial struggle shows clear parallels with the conflict in Black Panther. In 1945, World War II ended in defeat for the Axis powers: Germany, Italy, and Japan. This cataclysmic global war shifted the global balance of power away from ravaged Europe. The new political reality presented opportunities. Africans felt the colonial grip loosen and got to work prying it off completely: most African nations gained formal independence within thirty years of the end of the second World War (and many within fifteen years). But it also presented opportunities for the new dominant global powers: the United States and the Soviet Union. International relations began to organize themselves around the diplomatic, political, and military arms races set-off by the Cold War.

As formerly colonized nations achieved formal independence, some national governments resisted this bi-polar trend. Through a series of meetings, declarations, and conferences in Indonesia, Egypt and Zambia, a Non-Aligned Movement was formed of nations that wanted to remain neutral in the Cold War. This movement is the reason for the term ‘Third World’ – while today it is just a shorthand for ‘poor’ (or, euphemistically, ‘developing’), its original meaning was a political one – it differentiated non-aligned nations from nations aligned with the US (the First World or the Western bloc) and with the USSR (the Second World or the Eastern bloc). The Third World would eventually include much of Central and South America, as well as the majority of the African continent and much of Asia (with notable exceptions like China and North Korea). Together, these nations accounted for a majority of the world’s population, and the clear majority of the world’s poor people. Many figures often remembered for their radically liberatory politics, like Kwame Nkrumah and Patrice Lumumba, embraced the strategy and ethos of the non-aligned movement.

The principles agreed upon in the Non-Aligned Movement were about maintaining distance from immensely destructive global conflict: mutual non-interference and non-aggression, and non-participation in formal military alliances like NATO. While not quite as isolationist as Wakanda, the same basic ethos applied.

The principle of non-alignment was in tension with a more interventionist, cross-national political ethos that had developed in anti-colonial struggle. African nations had no problem ‘meddling’ in each others’ affairs to remove colonial forces from the continent. Freedom fighters of the Zimbabwean African Nationalist Union (ZANU) found refuge in Mozambique; Pan-Africanist and Pan-Arabist President Gamal Abdel Nasser of Egypt was a strong supporter of Algeria’s National Liberation Front, for example. While Algeria, after its independence in 1962, would serve as a training ground for freedom fighters from the continent’s other struggles. Finally, the anti-apartheid struggle in South Africa received aid of various kinds, from training to refuge, from outside its borders: whether from allies on the continent in Angola and Mozambique to allies in the Second World, including Cuba and notably the Federation of Cuban Women (FMC).

So, at least some countries, in some situations, aligned themselves with the continental struggle against colonialism. Debate about the costs and risks acceptable for these countries were a constant source of contention between political actors in this period, from states-people to activists, from governments to unions and political parties.

The struggle between Killmonger and T’Challa isn’t an exact parallel, but there are dramatic similarities. Wakanda wanted to remain isolationist to preserve its technological advantage over bellicose countries, not as a strategy to manage a technological disadvantage. It also took isolationism to an extreme that the Non-Aligned Movement did not – aid, trade and diplomatic alliances were still options for Non-Aligned nations. But the basic contours of the conflict between Non-Aligned rule and interventionism mirrors the one between T’Challa and Nakia: between security for one’s people and responsibility to justice on a world scale.

III. Black Panther and Future of Pan-Africanism

It is precisely these questions which concerns Nakia as she urges T’Challa to participate more in Black global affairs. At the beginning of the film, Nakia is participating in small-scale mutual aid projects: hunting ivory poachers and human traffickers, yet she remains dissatisfied with the limited impact of her efforts. One woman can only do so much. By the end of the movie, T’Challa is moved enough by Nakia’s influence – and elements of Killmonger’s criticism of Wakanda’s isolation – to invest in large-scale improvement projects in Oakland, California, which signals his readiness to engage with the world. Wakandan engagement with the world moves from small-scale, individual covert operations to large-scale, state-backed ‘outreach.’ However, in the film’s conclusion the initiator of these ventures shifts from Nakia to T’Challa.

At the end of the movie, T’Challa seemingly coopts and dilutes Nakia’s more radical vision of what mutual assistance could be, in revealing his plan for Wakandan outreach centres whose functioning and organization remain unclear. Moreover, mere outreach, however large the scale, is not enough. In order to effectively relate to Black populations, it had previously hidden itself from, Wakanda will need to engage in the multi-scale efforts to liberate Black peoples.

In the real world, aspects of Pan-Africanist internationalism created or invigorated by anti-colonial struggle remain. At the level of national and international government, there are already multinational institutions set-up for the purpose of facilitating cooperation between African-descended peoples across borders: from regional institutions like ECOWAS, CARICOM, and SADC to larger bodies like the African Union (formerly OAU). Some of these are even pursuing politically promising initiatives: the creation of an all-African Union passport and the renewed call for global reparations (to African descended and indigenous peoples) justice spearheaded by CARICOM and a UN Working Group.

But, like T’Challa’s vision, these efforts are not yet enough, and the stakes are quickening. As the effects of climate change worsen, it will be the Third World that bears the brunt of the costs and burdens, from literal destruction due to rising sea levels to a continued disproportionate burden to take in the world’s climate refugees. Any serious Pan-Africanism will need to do more than get actors that look like us in films (even ones as great as Black Panther) – there will need to be a serious, structural, and permanent alteration to the distribution of resources and political power on a world scale.

Outside of the Marvel universe, pan-Africanist struggle will need to operate on all scales of politics. Nakia-style interventions into hot zones of conflict will continue to be necessary. But we will also need to contest structural aspects of the global political order head on: the current function of multinational institutions like the World Bank, IMF, development banks, to finance desperately needed infrastructure projects and manage the dangerous and exploitative effects of international finance. We will need to advocate for reparations at a global level, and to organize support for land redistribution programs broadly, including the one proposed in South Africa to redistribute land currently owned by white South Africans to poor Black South Africans. We must expect and act to anticipate and counter the effects of violent First World opposition to both, in the event that there’s an attempt at follow through.

At lower institutional levels, concerted groups of individuals can create durable links of transfer of material and epistemic resources between institutions like universities, laboratories, and other institutions in the First and Third World. This would ensure that at least some of the vast research, political infrastructure, and other resources made possible in the final analysis by wealth accumulated in the first world returns to the hands and control of indigenous and African descended peoples – as co-owners, not as objects of study. T’Challa wasn’t entirely off the mark with the job he entrusted to Princess Shuri.

Finally, either the African Union, or another suitable multinational body, should expand to include the African diaspora outside of the continent itself, including nations of primarily African-descended peoples in the Caribbean and South America, or there should again be a global alliance of indigenous and other colonized peoples on the scale of the one represented by the Non-Aligned Movement. Activists and organizers should likewise cultivate personal relationships to groups in the Third World – not token ties for the sake of providing PR cover for their ‘hot takes’, but substantive alliances laying the groundwork for revolutionary intercommunalist struggle.

Olúfẹ́mi O. Táíwò is a PhD candidate at UCLA. His research focuses on ethical and political theory, anti-colonial thought, and the Black radical tradition. (Chelsey) LaKeyma Pennyamon is an undergraduate philosophy major at Morgan State University. Her interests include political aesthetics, Black radical traditions, and poetry.

Featured Photograph: Black Power Demonstration in London (August, 1970)

Cape Town Water Musings: the Politics of Environmental Crisis and Social Inequality

ROAPE

February 21, 2018

By Heike Becker

Cape Town has been facing a severe and aggravating water crisis for the past year. Currently legal impositions by the city government restrict Capetonians to a maximum of 50 litres per day domestic water consumption. In late January 12 April was announced to be a probable ‘Day Zero’ when most household water taps were to be cut off, and residents would have to queue at 200 points across the city of four million to collect a daily allocation of 25 litres per person. This would make Cape Town the first major city to face dry taps. After an amount of agricultural dam water was redirected into the city’s dams and according to the municipality domestic water consumption has been halved over the past few months, the date when the taps might be cut off has been pushed back several times, and now stands officially at 9 July. While ‘Day Zero’ has thus been turned from a probability into a possibility and may be avoided if the winter rains arrive reasonably early, a ‘national disaster’ has been declared as a result of the drought. This means that the national government, now under new South African President Cyril Ramaphosa, will be responsible for delivering relief unlike earlier when the situation had the status as a regional Western Cape issue.

The reasons for the disastrous situation have been widely debated. First and foremost the grim drought has been due to a global environmental crisis. Clearly, over the past three years Cape Town’s winter rains have been sparse, only amounting to about one third of what the Western Cape usually receives during the expected heavy downpours between June and September. Most commentators, engineers and environmentalists agree that this is connected to the effects of global warming, with Southern Africa in general, and its coastal regions in particular being among the worst affected. Secondly, it seems equally clear that there has been a long-time mismanagement of Cape Town’s water provisions. Warnings that the city may run out of water within the near future were raised as early as 1990, yet little additional technical solutions were developed to complement a decaying system of ancient dams located in the winter rain catchment areas. Political blame needs to be laid squarely at the feet of both the former ANC and the current opposition Democratic Alliance (DA) run city governments. Only now during this pressing crisis are expensive and relatively small desalination plants being completed that may, or may not, provide the much-needed additional water resources.

The Cape Town water crisis is arguably caused by both global environmental politics and local mismanagement. It is also a matter of social inequality in neoliberal post-apartheid South Africa. People respond to the crisis with a baggage of past and present experiences in a city as painfully unequal as Cape Town, complete with its violent history of social and spatial division – before and after 1990. Some among the city’s affluent minority have hailed the adjustments and moved to an eco-friendly lifestyle, enforced by the current crisis and its accompanying doomsday panic. This eco-friendly frenzy among the privileged minority has had little resonance among those of the majority to whom an abundance of clean potable water flowing from a private tap has always been a far-off dream.

The suspicion of each other, feeding on the very real experiences of life may even prevent much-needed changes towards a more sustainable resource usage. The following poignant personal observations were written at the time of the rising ‘Day Zero’ panic at the end of January 2018.

Cape Town Doomsday Jitters

I had been away from the city for six weeks. When I returned on a flight packed with German tourists it was the height of summer. On the approach to Cape Town the cheerful pilot promised comfortable summer temperatures and wished the airline’s ‘guests’ (what happened to ‘passengers’?) a wonderful stay. Looking into the sun-starved Northern European faces I wondered whether any of those coming to enjoy a holiday in the sun had heard of the drought that held the city in its grip. After all, Cape Town’s water shortages had even made it to the mid-morning programme of the local Berlin radio station I had been listening to in my small kitchen in the Prenzlauer Berg neighbourhood of the city.

My fellow passengers seemed not to notice the water-wise banner displayed prominently in the terminal, nor the announcements in the baggage hall that greeted the visitors with the message that Cape Town was at the moment experiencing a severe drought and asked the visitors to help save water. The male voice from the airport’s sound system sounded cheerful and serene, and wished those arriving for the overseas tourism season that they should ‘enjoy their stay.’

**A photograph of a poster issued by the Western Cape government in 2017 calling for people to conserve water (19 May, 2017)**.

Little had the arrival prepared me for the shock I experienced over the next few days. Colleagues at the university and almost everyone else I spoke with seemed to have only one topic, the impending ‘Day Zero’ when in just over two months the taps would run dry. The City had just announced that from 1 February residents were only permitted a daily 50 litres of municipal water consumption. Newspaper articles and the municipality’s spokesperson were not particularly clear as to what exactly was going to happen when from mid-April water was only going to be available from 200 collection points across the city. How they would provide for the city’s four million people in this way no one said. How one was expected to carry the daily allowance of 25 litres of water no one said. How people were supposed to carry on with their life and work if they had to spend long hours queuing for water collection again no one said. Few people even asked such questions.

Instead people spoke about what they did to save water in ways that rose to a decidedly hysterical collective (and individual) mood. I began to feel it in my bones, and a few days after my return I, too, began to stockpile water from the supermarket in 5 litre plastic containers, something I had never before considered. But now I couldn’t escape the daily rising hysteria. Articles on various websites and the updates on Facebook friends’ timelines triggered a rising fear of the unknown, the impending disaster they suggested. The party was over in parched Cape Town one widely shared article foretold. The most worrying pieces had been penned by some friends who posted long write-ups about water-saving tips. The days of practical reminders to shower briefly and flush the toilet less frequently were long gone. More peculiar personal behaviours now took the top slot. One Facebook friend elaborated on how she had started urinating into yoghurt containers and emptying them into the garden, another announced with a peculiar sense of pride that ‘gone are the days of luxurious bath towels’, which she had replaced with smaller, thinner towels to save on laundry space. Someone declared with palpable pride that she had ‘mothballed’ the washing machine and how when going out she carried bottled water to public places to save on municipal water for hand washing. A colleague from the humanities faculty posted that she had stopped taking her vitamin supplements to avoid her urine taking on an intense yellow tint, which she thought might be offensive in the unflushed university toilets. Several women used public online forums to contemplate in an entirely serious tone cutting their hair short in order to save water by not have to wash their hair. Others boasted how long it had been since they had last washed their hair. Or how they had changed their meals, having taken pasta completely off the menu and replaced it with water-neutral food.

Coming home with another 5 litres of bottled water, I made a cup of tea, sat down at the kitchen table and thought about these posts. They were, I felt, highly disturbing. Not only did they add to the sense of impending disaster and the pungent hysteria gripping the city, they make me feel threatened in unprecedented ways. After all, for almost a decade I had lived in Namibia where drought and water restrictions were a normal part of life. These posts were pretending to share water saving best practices, and they made me feel exceptionally queasy. It was not only that some suggestions were rather eccentric, it was the tone of these messages that produced unease. The tone suggested that those who posted them were at the forefront of the battles to save the city from the ravages of climate change, incompetent politicians and their fellow residents who lack public spirit. They were the vanguard warriors, or amazons to be precise since they were all women – white women. White women of the educated middle classes, who, as good conscientious lefties paid a nod or two to those of the city’s majority who had never had the luxury of water flowing from a private tap in their home, and who had never had access to more than twenty litres of water a day. Yet the manner in which they presented their new practices left me feeling deeply uneasy; the way in which they wore their oily hair and dry toilet practices as badges of honour seemed to suggest a holier-than-thou attitude.

The students of the mostly black, mostly working-class university where I teach certainly did not have much understanding for the white middle-class women whose newest campaign seems to promote dry toilet practices, who publicise their pee-in-the-yoghurt container, dirty linen and oily hair, I thought. As students returned for the new academic year, and when challenged about such practices some plainly laughed it off. Crisis, what crisis? The water taps are still open! To them the water saving practices propagated on those water amazons’ Facebook timelines are just another white foible, like veganism, or driving small cars of ancient build.

How far we continue to be removed from each other, I thought as I took the empty mug to the sink for a minimal water-saving rinse. How awfully the terrible crisis that has engulfed the city shows up, once again, South Africa’s deep cracks, how insurmountable are its ridges and divides.

Heike Becker is a regular contributor to the www.roape.net. As a writer and scholar. she directs research and teaching on multiculturalism and diversity as Professor of Anthropology at the University of the Western Cape in South Africa.

Tsvangirai’s Greatest Moment

ROAPE

February 16, 2018

After the death of Zimbabwean opposition leader Morgan Tsvangirai, we republish an article from our archive. Writing in 2000 Peter Alexander describes the election that almost toppled Mugabe’s ZANU-PF (Vol. 27, No. 85). Arguably this was the pinnacle of Tsvangirai’s career. He rose to prominence in Zimbabwe as a grassroots trade union leader who went on to head the powerful union federation, the ZCTU, and eventually became Zimbabwe’s most prominent opposition politician.

In this fascinating account from 2000, Peter Alexander wrote about the first time since independence in 1980, that the country’s then president, Robert Mugabe, faced a serious opposition movement. In the elections, held in June 2000, the worker-backed Movement for Democratic Change (MDC) won 57 out of 120 elected seats, with Mugabe’s party, the Zimbabwe African National Union – Patriotic Front (ZANU-PF) securing 62. The MDC’s success included all 27 contests in the three most populous urban areas (Harare, Bulawayo and Chitungwiza), and all the fully urbanised constituencies in the next six largest centres.

Alexander argued that there could be little doubt that, had the election been free and fair, the MDC would have won more constituencies than ZANU-PF in 2000. Since the party had only existed for 16 months, this was a remarkable achievement. The article concluded that in 2002, when Zimbabwe was due to hold its presidential election, the MDC’s leader would have been well placed to mount a victorious campaign. Tragically that did not happen; the MDC followed a different course.

Zimbabwean Workers, the MDC & the 2000 Election

By Peter Alexander

To read the full article click here

Capitalism, Change and Fraud in Uganda

ROAPE

February 13, 2018

By Yusuf Serunkuma Kajura

Jörg Wiegratz, Neoliberal Moral Economy: Capitalism, Socio-Cultural Change and Fraud in Uganda (New York and London: Rowman and Littlefield, 2016)

At the core of this book is the question: What explains the prevalence of fraud in contemporary capitalist societies? This question seeks to respond not to a single event but to a “socio-cultural” shift. The author’s question is based on the observation that fraud (theft, corruption, trickery etc.) has become wide spread in contemporary capitalist societies in most businesses and other forms of interactions. In Uganda it is has spread to that point that artistes and dramatists use the subject of fraud in their creative work highlighting its rather normalized status. The claim in the book is that there has been a major shift as the condition seems rather new.

Wiegratz juxtaposes two moments in Ugandan business history. The period before the World Bank and IMF enforced structural adjustment programmes (SAPs), and the period after the SAPs were introduced, which also occurred at the same time as the government of President Museveni and his National Resistance Movement (NRM) came to power. Interested in providing empirical data in the study on neoliberal moral economies, Wiegratz conducted fieldwork in Uganda’s Bugisu region in the east and Kampala, and focuses on coffee and cotton farming and trading. In these areas, the author held several interviews and reviewed newspaper reports and carried out ethnography.

The business environment, he argues, before the SAPs was characterised by cooperative unions, which provided among other things, price regulation, credit facilities, produce transportation, and warehousing, to farmers. Wiegratz focuses on Eastern Uganda’s Bugisu Cooperative Union (BCU), which, out of 41 others, is the only one still standing in the post-SAPs period. SAPs had been pitched to African economies (and other formerly colonised countries) as liberalising and freeing the market from undue regulations by government/cooperatives, which had been deemed as constraining the free flow of the market forces of demand and supply. Without seeking to idealise the period before SAPs, Wiegratz – based on interview findings – notes that business dealings then were defined and shaped by ‘notions of friendliness (sometimes feelings of affection for one another) mutual respect and trust, diligence, patience, honesty and discipline (e.g. not to give in to the temptations of harm and disappoint another close person by lying, stealing or breaking promises) and other related notions of good manners’ (p. 187). The people often saw themselves as connected to one another and doing business meant enhancing their collective livelihoods. Wiegratz continues that ‘trade was supported and enforced by a local community in which social interaction were taking place between people who generally knew each other and their families…who needed each other to sustain their livelihood.’ Although the author struggles to explain the genealogy of this moral locus – an issue to which I will return below – the sections narrating the radical shift in norms that happens after structural adjustment are brutally lucid (and many cases incriminating of the NRM government).

To explain these changes in norms and values, the author points at two centres of power, which seamlessly reinforced each other: The World Bank and the NRM leadership. If the World Bank was simply criminal in its actions, the NRM leadership took SAPs to an entire new level as they sought to materially benefit from the processes of restructuring themselves. Page after page, the author narrates how the NRM elite, took their cue from the World Bank and presided over corruption and theft that continues today. Firstly, to make the argument that cooperatives were unsustainable, the World Bank had to forge the evidence. Wiegratz cites a state official, ‘Cooperatives were forced to sell their business to the private sector’ through manufactured bank statements that declared them indebted and unsustainable. To do this, ‘accountants were sent into cooperatives to check their books. In the end the accountants made sure the cooperatives were on a loss on paper: cooperatives were told, you have to sell to cancel your debt [that was created on paper in the first place]. Also cooperatives were not regarded credit worthy by respective banks’ (p 99).

Starting with this incidence of criminality by the World Bank, the NRM leadership, fresh from the struggle in the bush, saw an opportunity to enrich themselves by sharing the resources of these cooperatives as well as state assets generally – directly free of charge, through proxies, fake Indian/foreign investors, and through privatisation and the Private Public Partnerships (PPPs). As Wiegratz writes:

Uganda’s privatisation was riddled with corruption, crime, trickery and self-enrichment schemes of political elites and their business allies. It involved a range of irregularities and trickeries: selling public entities at an undervalued price to cronies of the government, misdeeds regarding payment (for instance, no, incomplete or late payment) or bank asset manipulations. Many factories were acquired by connected people and they quickly resold them to make a substantial cut in the process…privatisation aided the process of a number of key NRM leaders becoming (large-scale) capitalists rather than sustained revolutionaries (pp.101-102).

Wiegratz notes that in addition to often well-publicised scandals of theft and egregious corruption at the top, people at the bottom learned that all that mattered was their self-interest, which they had to meet by any means necessary – including violence. In an imagery of a rotting fish—which often starts to rot from the head, Wiegratz notes that a key shift in norms and values occurred. The corruption-ridden privatisation, the author notes, ‘helped to reframe and normalise deceiving and thieving’ (p. 103). But privatisation did not only benefit the rich, something else happened. The coffee industry for example, opened-up to more opportunistic deals than could ever have been imagined. More and more opportunistic ‘entrepreneurs’ joined the business to cash in. They had no concern for quality or already established business practices. Instead, they harvested unripe beans, added stones into the beans and even participated in outright theft. Economic liberalisation condemned farmers to the mercy of merchants and middlemen who were mostly ruthless and remorseless.

The author also tells the story of a European company that he calls K, which, benefiting from support of powerful members of the government (who would deploy the security services in case of any protests), turned coffee-farming and trading in Eastern Uganda (Bugisu region) into a sort of Machiavellian colonialist business arrangement. Through several dubious means (including cheating, deceiving, inventing ‘quality’ issues etc., as they bragged about liberalisation and free markets), the company creamed off profits from Ugandan coffee farmers with reckless abandon! Wiegratz terms this phase as one where neo-liberal reforms became the ‘weapons of the powerful’ to exploit and impoverish the weak. As society’s leaders publicly bragged about their wealth despite having acquired it fraudulently, socio-cultural reprogramming took place as people came to believe that ‘the best way to live your life and be successful: be egoistic, with low other-regard and dishonest’ (p. 107). A quote from a social scientist the author spoke to summarises the conditions on the ground:

Uganda is about shamelessness and cheating nowadays. But remember a child learns from the father: if you steal while carrying your child on the back, your child thinks stealing is no problem. In the population theft is now seen to be normal. The leadership is not accountable; it is not punished for wrongdoing. Corrupt politicians are censored but then reappointed. Those who engage in corruption are protected [by the leadership]. The leadership promotes corruption and stealing; so people will say ‘why [should we] not also start stealing (p. 102).

However, Wiegratz is able to reveal that the shift in norms and values was not simply a product of SAPs, but a function of the people in power. At several points in the text, one is struck by the possibility that if another group of people had been in office, the story would be different. For example, in the case of the BCU’s struggle to recover its former glory and fight the excesses of neoliberalism, the government conducted a witch-hunt of the BCU leadership under Nathan Nandala Mafabi, who had implemented fruitful reforms to revive the cooperative, demonstrating the responsibility of the people in power for the continuation of the economic and political crisis hampering small producers and thus the reproduction of the neoliberal moral economy of the coffee trade dominated by local middlemen and foreign companies. Instead of focusing on pro-poor reforms, i.e. help revive the vitality of the cooperative (which would endanger the position of foreign buyers like K), the government viewed Mafabi (who has been a leading national opposition figure for years) as a threat to their power and thus suspended his leadership plunging the cooperative into further chaos.

However, it is the theoretical foundations of this book where the author flounders. We are confronted with two key conceptual questions. The first relates to the genealogical roots of morality (selfless, honest and pro-social values in business) and the second relates to whether neoliberalism/capitalism has any moral underpinnings. In some sort of enlightenment discourse, Wiegratz notes that neoliberal reforms were about ‘freeing or disentangling the actors and arenas of social interaction from established (traditional) moral norms and connotations, imposing a single rationality – self-interest, profit maximisation, efficiency -and making the self-interest principle the overriding or hegemonic moral code in the economy’ (p. 37). He then continues that ‘a core pillar of the moral code of the neoliberal doctrine is: maximise your own self-interest (utility) in every situation and you will maximise social welfare…do not in principal consider pro-social moral obligations, or other-than-gain imperative. Your moral obligation is gain maximisation’ (p. 38). Firstly, Wiegratz does little to explain the genealogy of morals. Why do people act fairly to each other? Where does the yearning for fairness come from? The author does not engage in a Nietzschean theorisation of “good” and “bad,” which might have told us that morality is a function of power and thus a form of violence itself, after all these terms often seek to protect specific interests. [Friedrich Nietzsche in On the Genealogy of Morals argues that the common sense we attach to notions such as “evil” “good” and “bad” have a specific history of power behind them, and what constitutes “good” or “bad” tended to shift depending on the time, and actors and interests behind the naming]. If the author had done this, then we would have reached a point where neoliberalism is believed to produce its own morality and thereby judge it on its own terms. Instead, we are left to read and judge neoliberal reforms through terms such as “pro-social,” “emotion-less,” or “emotion-full” “friendly,” and “honest” which seem to belong to an entirely different moral history or tradition. Even when the author seems to read from Adam Smith’s Theory of Moral Sentiments, which would be more appropriate to his moral-economy project, as Smith claims an innate natural inclination towards fairness common in human beings, the treatment is rather superficial and secondary. One would then think that Wiegratz has an alternative genealogy, which however remains unsaid. Secondly, I am not convinced that capitalism produces its own morality in the definitions that Wiegratz offers above. Interestingly, Wiegratz concludes that morality and neoliberalism cannot co-exist. He writes:

for an economic actor to operate, in part at least on the basis of other-regard, empathy, fairness and honesty, or to build trust and long-term relationships requires stepping out of the neo-liberal conceptual and ontological realm and engage with or commit to other NVOPs [norms, values, orientations, and practices]. This entails a different agency, reflexivity and action logic that is beyond the neoliberal model. It is difficult to imagine how such NVOPs could be incorporated into the neoliberal actor model without analytical and practical tensions, and neo-liberal reform losing its distinct imperative and character (p. 48).

This section introduces us to the author’s view of a difficult marriage between morals and neoliberalism, which he characterises as ‘difficult to imagine’ – a mild way of saying impossible. Besides these theoretical gripes, this book is extensive on the violence that structural adjustment and selfish politicians have meted out on African peasant communities as they forced them into fully-fledged market economies that they were unsuited to.

SAPs helped undermine cooperatives across Africa (while cooperatives remained active in Western Europe and North America!), advancing a brutal wave of re-colonialization of the continent. On the downside, the book is rather repetitive. In several cases, the author makes a single point in many paragraphs, using too many examples. This could read like an attempt to give the point more backing, but sometimes feels like some sort of uncertainty on the part of the author. It also can make reading the book tiresome. The book would also have benefited from a decent editor, who could also have checked local facts and spelling as certain names of places and persons were mixed up.

Yusuf Serunkuma Kajura is a graduate candidate at Makerere University Institute of Social Research (MISR) and a 2015 African Studies Association Presidential Fellow. Yusuf has a Bachelor’s degree in Literature and English Language and an MPhil in Social Studies [Cultural Studies] both from Makerere University. In his free time, Yusuf moonlights as a columnist in Uganda’s newspapers, and as a playwright. In 2014, Fountain Publishers published his first play, The Snake Farmers and it was received with critical acclaim in Uganda, Kenya and Rwanda.

Featured Photograph: Billboard of a campaign to prevent corruption in Nouakchott (Mauritania) in 2007.

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