Mr. King is the author of a long, interesting article entitled Lenin's Theory of Imperialism: A Defense of its Relevance in the 21st Century (h/t Socialist Action). It suffers from the flaw common to most Marxist theory: it's principally concerned with a rabbinical exegesis on some ancient text. In this case the text is Lenin's Imperialism: The Highest Stage of Capitalism, published in 1900. His major claim is summarized in the final paragraph.
Far from having become antiquated, the framework provided by Lenin’s Imperialism: the Highest Stage of Capitalism is still able to cast light on even the most modern developments in world political economy – as I have tried to show in relation to China. If this article provokes even a handful of serious people to go back and study or re-study Lenin’s thesis, then it has done its job.I think this is nutty--a study of modern economics starting from a political polemic written more than a century ago by somebody inexpert in the discipline is not worthwhile. But before Mr. King can analyze the modern economy, he has to dispense with some modern-day Marxists who have apparently lost their way. Specifically, he takes on the deceased Chris Harmon, late of the International Socialist Tendency (IST).
For example, he attributes the following to Mr. Harmon (footnotes deleted for clarity).
Harman argued, “Most of the Third World, including nearly all of Africa and much of Latin America outside Brazil and Mexico, is of diminishing economic importance for the dynamic of the system as a whole. Profits and interest payments from such regions are the lettering on the icing on the cake for world capital, not even a slice of the cake itself”, while “the major sources of surplus value in the world are in the advanced countries”. Lenin is evoked in support of this position.Mr. Harmon's opinion seems right to me--a proper description of the modern world. Mr. King almost admits as much, but no matter.
Whatever the truth of Harman’s position on the unimportance of exploitation of the poor countries for imperialism, it cannot be said to have anything in common with Lenin.In other words, reality sucks. Facts that don't conform to Lenin's theory, however creatively interpreted, must be studiously ignored. And so Mr. King spends the rest of the article strenuously pounding square pegs into round holes, trying to fit the modern world into Lenin's theory.
Like Biblical exegesis, the Marxist sort also has moral consequences. Mr. King does not fail to point out the long reach of class collaboration (emphasis mine).
Leaving aside that Harman is arguing here not what Lenin said, but what his “phraseology” seemed to suggest, it is easy to find categorical refutation. Lenin called it a “petty bourgeois reformist point of view” to believe it “possible, under capitalism to separate” out “‘productively’ invested capital (industrial and commercial undertakings) and ‘speculatively’ invested capital (in Stock Exchange and financial operations)”.Lenin's theory of imperialism revolves around two concepts: monopoly and unequal exchange. The latter depends on the uniquely Marxist understanding of value. There is the market price of labor, aka the wage, which is easily measured on the market. Then there is the value of labor, which is some kind of spiritual quantity that depends on what a worker's time is actually "worth." The difference between the value and the price represents unequal exchange, i.e., the degree of exploitation of the proletariat. Since labor's value cannot be measured, these numbers are just made up and estimated. This is why Marxist polemics never contain any actual data.
Mr. King gives numerous examples of where, in his opinion, value and wage substantially diverge. Consider, for example,
...your computer. One study gives a breakdown of revenues for iPods sold in the US for $300. US-based retailers got $75. Apple secured $80. Chinese workers and bosses got $2.61 between them. How would it be possible to imagine the workers who did most of the work are exploited, not by the capitalists who get most of the profits, but only by some middlemen and subcontractors?Of course the factory workers did not do most of the work (as Mr. King admits later in the article). The vast majority of the effort was done by designers, engineers, entrepreneurs, salesmen, and brand managers in the United States, Taiwan, and Israel. Chinese factory workers probably contributed about 1% of the value. So this is no example of unequal exchange.
Capitalists can capitalize on unequal exchange only if they have a monopoly. Otherwise (as Mr. King does not mention) the benefits go entirely to the consumer. Mr. King describes two kinds of monopolies. The first is held by multi-national corporations, of which Nike and Apple are two examples. And these do have a monopoly of sorts. While sneakers are a commodity product (i.e., no monopoly), branded Nike sneakers are a monopoly of Nike. Indeed, as any sophomore microeconomics student learns, brands create "artificial" monopolies--Crest toothpaste, McDonald's hamburgers, Nike sneakers, etc.
Where do Nike’s profits come from? Nike does not produce anything; it outsources all its production. Are Nike’s profits then produced by Tiger Woods, Shane Warne and its small group of advertising, design, sales and financial staff in their offices in the US? The Marxist answer is “no”: production workers create the value realised as profits.Actually, yes, Tiger Woods, et al., contributed significant value to the brand. As did the designers, stylists, and advertisers in the US. It is simply not true that production workers created all the value. Only a small bit of it.
The other monopoly is "financial capital." Despite spending seven years as a card-carrying Commie, and an additional thirty as a student of economics, I still have no idea what that term means. It's a boogeyman, like neoliberalism. So I can't do Mr. King's argument justice, but he seems to claim that "financial capital" is increasingly monopolized. Really? Today we have not just banks, but commercial and investment banks, hedge funds, venture capital, mutual funds, pension funds, exchange-traded funds, shadow-banking systems, all kinds of derivatives, along with many financial instruments I've never even heard of.
I don't understand the half of it. And neither does Mr. King. For that matter, neither does anybody else. The whole thing is so complicated and so interlocked that nobody has a clue what will happen when something goes wrong. But one thing is certain: it is definitely not a monopoly! So on that Lenin is just wrong.
One more claim by Mr. King is worth examining.
Indonesian textile workers receive wages around one-thirtieth of the Australian minimum wage. They must work a full work day to earn what an Australian worker gets in the first minutes of a shift.A similar discrepancy occurs on the US-Mexican border. Workers can increase their wages by a factor of 10 just by moving from Juarez to El Paso. Why? It is not, as Mr. King rightly states, because American textile technology is so superior. Indeed, he remarks that such low-tech manufacture is comparably productive around the world. And it's not that Americans are more skillful--the Mexican gets the pay raise on his first day in the USA.
Instead it has to do with good institutions. I count the following advantages of El Paso over Juarez.
- Low crime. Crime adds a significant cost, and the crime difference between El Paso and Juarez is significant.
- Secure property rights. Factory owners in El Paso have secure title to the land going back several centuries. There is no doubt who owns it. The government is (generally) not able to simply expropriate it. Nobody will invest very much if property rights are not secure.
- Rule of law. American courts and the American legal system have a long tradition in both common law and constitutional law. They will get it right most of the time. That's not true in Mexico: the common law tradition does not exist, and the constitution is not awarded the same authority. Legal outcomes are much less predictable.
- Economic freedom. Entrepreneurs in the USA are free to fail. Nobody goes to jail for going bankrupt (unlike, e.g., China). Conversely, American businesses can keep the proceeds of their efforts, even if in a narrow sense it's unfair. The biggest correlate for a country's standard of living is the measure of economic freedom.
Lenin understood none of this, though in 1900 perhaps we can't blame him. Sam King, on the other hand, really should know better.
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