Henryk Grossman as dependency theorist

Robert Brenner wrote an article titled “The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism” for the July-August 1977 New Left Review that repeated his thesis that capitalism originated in the British countryside and had little to do with 17^th and 18^th century colonialism. In the name of defending classical Marxism, he also downplayed 20^th century neocolonialism–his reaction to the perceived Third Worldist excesses of the 1960s. My comrade, the late Jim Blaut, saw it this way:

Robert Brenner is one of the most widely known of Euro-Marxist historians. His influence stems from the fact that he supplied a crucial piece of doctrine at a crucial time. Just after the end of the Vietnam War, radical thought was strongly oriented toward the Third World and its struggles, strongly influenced by Third-World theorists like Cabral, Fanon, Guevara, James, Mao, and Nkrumah, and thus very much attracted to theories of social development which tend to displace Europe from its pivotal position as the center of social causation and social progress, past and present. Euro-Marxism of course disputed this, and Euro-Marxists, while strong in their support of present-day liberation struggles, nonetheless insisted as they always had done that the struggles and changes taking place in the center of the system, the European world, are the true determinants of world historical changes; socialism will rise in the heartlands of advanced European capitalism, or perhaps everywhere all at once; but socialism will certainly not arrive first in the backward, laggard, late-maturing Third World.

Brenner took aim at “dependency theory”, an analysis of the imperialist system developed by Paul Sweezy and Paul Baran in “Monopoly Capital”. Other writers associated with this school included Immanuel Wallerstein, Andre Gunder Frank and Samir Amin. Basically, the theory stressed the division of the world into core and periphery nations and described the role of capitalism in the Third World as the “development of underdevelopment” to use A.G. Frank’s words, an idea that seemed uncontroversial to me after visiting Tanzania and Zambia in 1990.

Brenner’s article starts out by repeating some of his ideas on the origins of capitalism and then proceeds to a slashing attack on the dependency school whose ideas allegedly grew out of their failure to understand that capitalism owed nothing to slavery, colonialism and other forms of primitive accumulation in Latin America, India and elsewhere. From not understanding the key role of British lease farming in the 17^th century, you end up tail-ending the Third World bourgeoisie. It must be understood that fears over scratches turning into gangrene were very pervasive in the 1970s, even in the academic left.

One of the key elements of the dependency school is “unequal exchange”, an idea generally associated with Samir Amin. Basically, it is just another way to describe the phenomenon of super-exploitation. Through their control of markets and natural resources and their superior technology and productivity of labor, as well as their military superiority, imperialist nations are able to extract profits that would not ordinarily be available from more industrialized countries. Brenner will have none of this, as should be obvious from his discussion of Immanuel Wallerstein:

Wallerstein seems to have two modes of explaining the putative transfer of surplus from core to the periphery: one directly ‘economic’, the other ‘political’. Thus, he states: ‘The division of the world-economy involves a hierarchy of occupational tasks, in which tasks requiring higher levels of skill and greater capitalization are reserved for higher ranking areas. Since a capitalist world-economy essentially rewards accumulated capital, including human capital, at a higher rate than “raw” labor power, the geographical maldistribution of these occupational skills involves a strong trend toward self-maintenance. The forces of the marketplace reinforce them rather than undermine them’. At the same time, Wallerstein argues that the system of labour control/rewards to labour gives rise to strong states in the core and weak ones in the periphery. As a consequence, the strong states are able to assure, ultimately by force it appears, an unequal economic relationship between the core economies and those of the periphery. ‘In [the core] states, the creation of a strong state machinery . . . serves . . . as a mechanism to protect disparities that have arisen within the world system’. ‘Once we get a difference in the strength of the state-machineries, we get the operation of “unequal exchange” which is enforced by strong states on weak ones, by core states on peripheral areas. Thus [agricultural] capitalism [of the early modern period] involves not only appropriation of the surplus-value by an owner from a laborer, but an appropriation of surplus of the whole world-economy by core areas’.

Last March, in conjunction with a discussion of “crisis theory” on the Introduction to Marxism mailing list on Yahoo, I read Rick Kuhn’s biography of Henryk Grossman—winner of the Isaac Deutscher Prize last year—and Grossman’s most important work “The Law of Accumulation and Collapse of the Capitalist System”. While most of the scholarly attention, including Kuhn’s, is focused on Grossman’s attempt to develop a theory of crisis out of Marx’s examination of the organic composition of capital, there is a very important discussion of the role of imperialism in mitigating the impact of crisis. It appears in part two of the final section of Grossman’s book, titled “Restoring Profitability through World Market Domination.”

After having read it the third time at this point, I am struck by its affinity with dependency theory. I am also struck by Grossman’s ability to ground his ideas in Marx’s Capital. Ironically, despite the tendency to see Lenin’s writings on imperialism as a fountainhead, I find Grossman’s ideas more grounded in basic Marxist theory and a useful rejoinder to Brenner’s claims on orthodoxy.

Robert Brenner to the contrary, Grossman regards Karl Marx’s scope as far wider than the British countryside.

Yet Marx himself repeatedly underlined the colossal importance of foreign trade to the development of capitalism; in 1859 he proposed a six-book structure for his investigations of the capitalist economy and intended the ‘world market’ to be one of the six. Although the structure of the work was later changed, its object of inquiry remained basically the same. In Capital we find the ‘creation of the world market’ listed as one of the ‘three cardinal facts of capitalist production’ (1956, p. 266). Elsewhere Marx writes: ‘Capitalist production does not exist at all without foreign commerce’ (1956, p. 474).

Grossman also pinpoints a highly revealing passage in chapter 21 of Marx’s “Theories of Surplus Value” that establishes foreign trade as a sine qua non for capital accumulation:

But it is only foreign trade, the development of the market to a world market, which causes money to develop into world money and abstract labour into social labour. Abstract wealth, value, money, hence abstract labour, develop in the measure that concrete labour becomes a totality of different modes of labour embracing the world market.

“Thus”, according to Grossman, “the limits on the production of surplus value are extended; the breakdown of capitalism is postponed.”

Brenner seems to have problems with Wallerstein’s assertion that “The division of the world-economy involves a hierarchy of occupational tasks, in which tasks requiring higher levels of skill and greater capitalization are reserved for higher ranking areas.” You can find exactly the same analysis in Grossman:

Due to mass production British industry, which was the workshop of the world down to the 1870s, could carry through a division of labour, increases in productivity and cost savings to a level that was unattainable elsewhere. Whereas weaving and spinning were originally combined, later they were separated. This resulted in geographical specialisation. Burnley made the traditional calico prints, Blackburn clothed India and China, Preston manufactured fine cottons.

In the subsection titled “Foreign trade and the sale of commodities at prices of production deviating from values”, Grossman makes a strong relationship between the ability of the capitalist system to extract super-profits from the colonial world where the organic composition of capital is lower. In other words, he is calling attention to the presence of the production of absolute surplus value (lengthened work-day, child labor, etc.) in countries such as India or the Congo. In industrialized countries, the production of relative surplus value is facilitated by the wide-scale use of advanced technologies which enables the imperialist countries to dominate the markets in Asia, Africa and Latin America. This advantage is described in language startlingly similar to the “unequal exchange” referred to by Brenner:

International trade is not based on an exchange of equivalents because, as on the national market, there is a tendency for rates of profit to be equalised. The commodities of the advanced capitalist country with the higher organic composition will therefore be sold at prices of production higher than value; those of the backward country at prices of production lower than value. This would mean the formation of an average rate of profit of 18.5 per cent so that European commodities will sell for a price of 118.5 instead of 116. In this way circulation on the world market involves transfers of surplus value from the less developed to the more developed capitalist countries because the distribution of surplus value is determined not by the number of workers employed in each country but by the size of the functioning capital.

To establish his consistency with Marx’s writings on this topic, Grossman cites chapter 20 of “Theories of Surplus Value” which states: “The relationship between labour days of different countries may be similar to that existing between skilled, complex labour and unskilled, simple labour within a country. In this case, the richer country exploits the poorer one…” You will note that Karl Marx writes, “the richer country exploits the poorer one…”, something that is anathema to Robert Brenner who understands exploitation strictly in terms of the relationship between capitalist and worker.

Grossman continues:

In effect price formation on the world market is governed by the same principles that apply under a conceptually isolated capitalism. The latter anyway is merely a theoretical model; the world market, as a unity of specific national economies, is something real and concrete. Today the prices of the most important raw materials and final products are determined internationally, in the world market. We are no longer confronted by a national level of prices but a level determined on the world market. In a conceptually isolated capitalism entrepreneurs with an above average technology make a surplus profit (a rate of profit above the average) when they sell their commodities at socially average prices. Likewise on the world market, the technologically advanced countries make a surplus profit at the cost of the technologically less developed ones.

This paragraph is about as succinct a definition of imperialism as you are going to find. And once again, Grossman finds support for his analysis in Marx’s writings—in this case Volume 3 of Capital:

Capitals invested in foreign trade can yield a higher rate of profit, because, in the first place, there is competition with commodities produced in other countries with inferior production facilities, so that the more advanced country sells its goods above their value even though cheaper than the competing countries. In so far as the labour of the more advanced country is here realised as labour of a higher specific weight, the rate of profit rises, because labour which has not been paid as being of a higher quality, is sold as such … As regards capitals invested in colonies, etc, on the other hand, they may yield higher rates of profit for the simple reason that the rate of profit there is higher due to backward development, and likewise the exploitation of labour, because of the use of slaves, coolies, etc.

You will note that Grossman refers to backward development, a contradiction in terms. How can there be “backward development” unless of course you agree with A. G. Frank’s characterization of imperialism as the “development of underdevelopment”. And to cinch the connection with the dependency school, Grossman refers to “unequal exchange” in the very next paragraph:

In the examples cited above the gain of the more advanced capitalist countries consists in a transfer of profit from the less developed countries. it is irrelevant whether the latter are capitalist or non-capitalist. It is not a question of the realisation of surplus value but of additional surplus value which is obtained through competition on the world market through unequal exchange, or exchange of non-equivalents.

Finally, Grossman has no use for the idea that capitalism can be a source of modernization and progress in the colonial world, stating:

Kautsky sees the essence of imperialism in a striving to conquer the non-capitalist agrarian parts of the world. He therefore sees imperialism as merely an episode in the history of capitalism that will pass with the industrialisation of those parts of the world. This conception is totally false. Imperialism must be understood in the specific form that Luxemburg gives to it in her theory of the role of the non-capitalist countries. Imperialist antagonisms subsist even among the capitalist states in their relations to one another. Far from being merely an episode that belongs to the past, imperialism is rooted in the essence of capitalism at advanced stages of accumulation. Imperialist tendencies become stronger in the course of accumulation, and only the overthrow of capitalism will abolish them altogether.

As I have stated in previous articles on the Brenner thesis, it had the unfortunate effect of fostering Kautskyist tendencies in the left academy which took the form of looking for the kind of dynamic growth associated with 18^th and 19^th century Europe. Colin Leys is just one example of this. Starting out as a dependency theorist, Leys was converted by the brilliance of Brenner’s 1977 NLR article:

Brenner, correctly in my view, stresses the centrality of the class relations which [Adam] Smith took as given. On this view, what is decisive for the development of capitalist production relations is the prior configuration and character of classes–for instance, the availability or otherwise of ‘free’ labour, the respective political power of non-landed and landed classes affecting the possibility of capital investment in land, and so on.

Applying the Brenner thesis to Kenya, Leys came up with some startling observations. He said that “Passenger road transportation was also in African hands by 1977 as were tour companies, laundries and dry cleaning, and a rapidly growing share of the hotel and restaurant sectors.” This exciting development led Leys to endorse comments made by an unidentified Kenyan state official, “In 15 years, if the political climate of Kenya and the world economy stay stable, 90% of manufacturing will be Kenyan owned.” All this rapid growth in the dry cleaning and tour business will amount “an example of a ‘systematical combination of moments’ conducive to the transition to the capitalist mode of production.”

Such rubbish was quite common in the 1980s as a left academy revolted against the dependency school which supposedly had gone astray from classical Marxism. My response has been to react against the reaction in keeping with Grossman’s insight that “Imperialist tendencies become stronger in the course of accumulation, and only the overthrow of capitalism will abolish them altogether.”