As the global struggle of imperialism to control sources of raw materials — above all energy sources — steps up in tempo, it becomes increasingly a central question of world politics. Since 1973, the Imperialist press has been flooded [illegible] own natural resources. At the same time the imperialists harp on the theme of the need for 'self-sufficiency' of the industrial nations.
Parallel with this process, Marxist analysis of the latest phase of the relations of the imperialist states and the struggle for raw materials have developed. One of the most influential of these is that advanced by Ernest Mandel in Late Capitalism* and other works. The aim of the present article is to outline some differences with the positions advanced by Mandel on imperialism and raw materials, and at the same time to present some of the latest data on this question.
I
In approaching the position advanced by Mandel in Late Capitalism, and the practical significance of the debate, a useful starting point is an earlier article of his entitled 'Imperialism and National Bourgeoisie in Latin America' that was republished in International in Spring 1976 and which originally appeared in 1971. In this article Mandel focused attention on a debate that was raging in left circles at the time, and is no less important today, on the character of the new military regimes on that continent that use populist demagogy to pretend to an 'independent' nationalist coloration. Do they express revolutionary nationalist currents? Mandel's answer stressed that these regimes have not broken ties to world imperialism. Quite the opposite. 'The essential social function of the military reformist regimes is... not to mobilise the masses in order to modify the relationship of forces with imperialism', Mandel wrote, 'On the contrary, it is to contain the mass movement, in association with imperialism and with its support, offering its reforms and a vaguely anti-imperialist socialising phraseology' (p. 26).
This valid observation was associated with a view that has proven to be mistaken: Mandel also sought to establish that the imperialists do not oppose nationalisations of raw materials carried out by the neo-colonial regimes because the imperialists themselves have shifted investments into manufacturing industries and are less concerned with monopolising raw materials. For Mandel, 'The constant fall in prices of primary products relative to manufactured products has provoked a [illegible] capital confronted with such a fall is to switch investment' (p. 23). The new regimes constitute 'a new alliance, an association of "imperialist capital — national industrial capital" with an interest in weakening the oligarchic sectors — not only the big landowners and exporters, but even traditional mining capital' (p. 25). Consequently, foreign imperialism, no longer tied to investment in primary materials, is less concerned about the increasing nationalisation of its interests in this sector. 'It is necessary', Mandel wrote, 'to look to this modification of imperialist interests for an explanation of the strange complacency that American imperialism has so far shown in relation to the nationalisations by General Velasco, by General Ovando, and even those being prepared by Salvador Allende.' Mandel sought evidence for this hypothesis in the 'Rockefeller report', a white paper on US relations with Latin America released in 1969 by the then governor of New York, Nelson Rockefeller. 'The most intelligent representatives of imperialism have fully understood the political and social implications of this modification of their own interests in Latin America', Mandel said (p. 25).
Nevertheless subsequent events have not borne out Mandel's view. Far from being indifferent to the nationalisations of 'their' sources of raw materials, the imperialists since 1973 have spared nothing in attempting to counteract semi-colonial control of raw materials. Washington was not complacent about events in Peru, Bolivia, or Chile, as Mandel thought. Only this spring the Carter administration admitted Washington's long-suspected complicity in Allende's overthrow. This was in addition to the attempt to strangle the Allende regime through economic boycott. Peruvian General Velasco was ousted in 1975 by generals standing close to Washington.
The real attitude of US imperialism towards Latin American investment has been indicated by Business Week magazine. 'There is good news coming out of Latin America for the hundreds of US and other foreign companies with a stake in this vast region', a special report in the 9 August 1976 issue stated.1 'Multinational executives who have been watching one Latin American country after another pull back from the radicalism of the early 1970s today consider the region to be one of the world's major investment opportunities', said Business Week. 'It is all there — protein, minerals, forests, water', William D. Rogers, US Under Secretary of State for Economic Affairs, told the magazine. 'For perhaps the first time in modern history', Business Week added, 'virtually all of Latin America seems to be moving simultaneously in the same direction — to the right.'
Militarism is indeed on the rise in Latin America, but its roots are primarily political, not in a decline of imperialist interest in primary materials. Neither the US bourgeoisie as a whole nor any significant wing of it looks with favour on expropriations of raw materials holdings.
Late Capitalism clarifies the frame within which Mandel viewed the shift away from raw materials investment. Such investment, he writes, led in the 1930s and 1940s to a 'fundamental upheaval in technology, organisation of labour and relations of production' in the semi-colonies. For the imperialists, however, 'This meant the disappearance... of one of the most important motives for the traditional concentration of raw material production in the underdeveloped countries. It was now less of a risk to use expensive machinery in the metropolitan centres than overseas, and the declining share of wage-costs in the total value of raw material commodities made it less attractive than before to utilise the cheap labour-power of the colonies instead of its dearer counterpart in the metropolitan countries. The production of raw materials was therefore shifted on a massive scale to the metropolitan lands (synthetic rubber, synthetic fibres), and in cases where for physical reasons this was not immediately possible (e.g. the oil industry), there was growing pressure for the preparation of this shift in the long term' (pp. 62-3).
Taking into account the sudden upsurge of raw materials prices that occurred after the 1972 edition of Late Capitalism had been written, Mandel wrote in the revised chapter on 'Neo-Colonialism and Exchange' that, 'since 1972, a new rise in primary commodity prices has occurred — determined in part by the short-term speculative and inflationary boom of 1972-73, but also partly reflecting real relative scarcities, caused by the slower rate of capital investment in the primary producing sectors than in the manufacturing sector during the previous long-term period. This new upswing in prices will not be entirely cancelled by the 1974-75 world recession; it will enable the semi-colonial bourgeoisie to ameliorate their position as junior partners of imperialism, not only politically but financially and economically. The increasing dependence of US imperialism on a whole series of raw material imports makes the largest imperialist power more vulnerable to such changes than in the past (when the USA was itself the main world exporter of primary products) and could induce major new military conflicts' (p. 371).
The last sentence is certainly a more correct estimate of the real relations between US imperialism and semi-colonial, raw materials producing countries than Mandel's 1971 belief that American imperialism would take a complacent attitude towards Allende. Imperialism is tied both to manufacturing and to raw materials production in the semi-colonial world. The latter ties are so vital a part of the world organism of imperialism that disruption of them threatens to ignite military intervention.
Mandel's analysis can be stated in bare outline as including the following phases:
1. A cyclical relative rise of raw materials prices takes place (as occurred, for example, in the period leading up to the Korean war).
2. [illegible] penetration of the temporarily more profitable sectors. At the same time it produces new resources (synthetics, substitutes) in order to lessen the dependence on semi-colonial sources.
3. But the lower value of the new products pulls down the prices of the raw materials still being produced with the old technology. Furthermore there is now an abundance of resources because new production techniques have been introduced; prices are driven down all the more.
4. In [illegible] falling prices can only encourage a further retreat of investment from semi-colonial raw materials. But this will inevitably once again produce shortages, sudden price leaps, and the cycle will begin anew.
If we add that further advances in the technological revolution aimed at lessening imperialist dependence on particular raw materials must take place on an ever-expanding scale — even a colossal scale, as it is evidently the case in any attempt to shift petroleum technology away from OPEC nations and towards the metropolitan centres — then we come to perhaps the most important message of Late Capitalism: leaving aside all other features, the only solution for the periodic crises of world capitalism is the higher profits that must form the basis of any technological revolution. No matter what else the authorities might say (or think!) the world crisis of imperialism is in fact a crisis of profit rates. The objective character of any imperialist policy aimed at resolving this crisis is intensified exploitation of the world's working masses. We will come back to this point. First it is necessary to take into account certain economic, historical and political developments not covered in Mandel's presentation.
***
Everywhere in the semi-colonial world, nationalisations are underway. Brazil's state-owned Companhia Vale do Rio Doce accounts for more than 10 per cent of Brazil's exports. It is the largest exporter of iron ore in the world and is also engaged in shipping, reforestation, marketing, engineering consulting, geological prospecting and mining. The Chilean dictatorship is compensating the US copper firms Anaconda and Kennecott for the nationalisations of their huge copper mines, but these properties have not been put up for sale in international markets. So far the Chilean government itself promises to operate and modernise Chilean copper production.
Next to outright nationalisation there are scores of companies jointly owned by the state and foreign corporations. And at the same time there is increasing imperialist investment in corporations that remain wholly owned by the imperialists themselves. Dow Chemical Co. plans ultimately to complete a $700 million petrochemical complex in Bahia, Brazil, which would become the largest privately owned petrochemical installation in Latin America. In absolute terms the value of semi-colonial investment in manufacturing and imperialist investment in this semi-colonial sector is rising in comparison to investment in raw materials, as Mandel emphasises. The Brookings Institute study Setting National Priorities: The Next Ten Years concluded that semi-colonial exports of manufactured and processed products are rising faster than exports of agricultural raw materials, ores and minerals. According to Brookings: 'From 1959 to 1973 the developing countries increased the volume of their exports of manufactured goods by almost 13 per cent a year .... Manufactured goods, as a proportion of total non-oil exports, grew from 18 per cent in 1959 to 41 per cent in 1973. Even so, these exports in the boom year of 1973 were less than 8 per cent of total world exports of manufactured goods' (p. 181).
The figures reflect the agonisingly slow, yet real, development of manufacturing throughout the colonial world. Here we must emphasise, as Mandel does, that there is unevenness in the discussion of imperialist exploitation of the semi-colonies. Among the semi-colonial nations stand countries like Brazil, Korea and Mexico, which have achieved comparatively rapid rates of expansion and are by far the most favoured arenas for foreign aid and investment. The total US investment in Brazil and Mexico in 1975 constituted 47 per cent of all US investment in Latin America for that year.2
But three-fifths of the people in the semi-colonial world live in the four countries located in South Asia: India, Pakistan, Bangladesh and Sri Lanka, where growth rates are small at best and industrial development is stagnant. Another one-fifth of the population live in Africa south of the Sahara, where industrialisation has barely begun. Total US investment in Brazil is twice as large as it is in all of Africa (except imperialist South Africa) and twelve times as much as in India.
At the same time, the deposits of raw materials are striated across these unevenly developing nations in an equally uneven pattern. It is undoubtedly as risky to make blanket statements about raw materials as it is to make them about semi-colonial development as a whole.
With this proviso it must be argued that in presenting the ebbs and flows of imperialist investment in semi-colonial raw materials, Mandel tends to minimise the import of the main historical factor in the shifting patterns of imperialist investment, namely the mighty upsurge of the colonial revolution touched off by World War II. As the former colonial subjects increasingly seized control of their own resources monopoly profits were reduced — although not to the degree the imperialists claim. Precisely because of the ultimate threat to their profits the imperialists have fought nationalisation at every step, whether by open counter-revolution, economic and financial boycott, tariff obstacles, CIA subversion, intervention in semi-colonial wars, a combination of these, or otherwise. The techniques depend upon the political forces at play.3
There are three interrelated ways in which Mandel's approach to the question of raw materials in Late Capitalism ends up by not taking due account of this critical historical factor.
1. He pays too little attention to imperialism's growing global needs for raw materials. The paragraph already cited is the main reference in Late Capitalism to the dependence of imperialism on raw materials imports. Even here an earlier footnote seems to cut across the point. 'In 1971', Mandel states, '80 per cent of the raw materials imported by the USA, but only [!] 60 per cent of those imported by Japan, 50 per cent of those imported by Britain and Italy, and 42 per cent of those imported by Western Germany and Belgium, derived from the semi-colonies' (p. 370, footnote 65).
These figures are hardly negligible. But, just as important, it is not only the United States' dependence on raw materials that is growing. In fact, one of the central considerations in the 1971 'New Economic Policy' of the Nixon administration, signalling that as the world economic crisis deepened, Washington would more and more take the offensive in international trade and finance, was concern about sources of raw materials.
In the white paper circulated to corporations explaining why the administration took these steps, Nixon's top economic adviser, Peter G. Peterson, declared: 'Our imports have been rising not only in response to our consumer appetites, but because our industry buys an increasing share of its raw materials abroad. Our imports of crude oil, iron ore, and copper are growing and we import most or all of our natural rubber, tin, nickel, and chrome. Long-range projections indicate that by the year 2000 we will import 30 to 50 per cent of our mineral requirements, including oil. In doing so we will be competing with other industrialised nations, such as Japan, which are even more dependent on imported raw materials than we are.'
Interestingly, the NEP white paper paid special attention to the latter fact by returning to it in the appendix: 'Japan is already the world's largest importer of iron ore, coking coal, copper ores, and crude oil and ranks second only behind the United States in imports of bauxite. It is also the world's most dynamic growth market for raw materials and will likely continue so at least through the mid-1970s... The Japanese are undertaking steps to assure adequate future supplies. Long-term contracts with foreign mineral producers — including many US firms — are being concluded. Japan is expanding its fleet of super-sized ore carriers and tankers to keep shipping costs down. Tokyo's long-term economic plans indicate that greatly increased investment in raw materials will be one important use of their rapidly growing international reserves' (p. 72).
In reading this white paper one is reminded of the secret documents exchanged between Tokyo and Washington in the years and months leading to World War II. In those papers control of raw materials sources in Asia and the Pacific was also a central theme. But then Japanese imperialism could ultimately plan to go to war with US imperialism to settle the matter. Both could dream that in the impending war it would gain control of the vast riches of mainland China — and not only China.
Today a third inter-imperialist war is highly unlikely. The military balance of power favours the United States against any combination of its imperialist rivals. In addition there is the sobering thought that the main beneficiary of another inter-imperialist war would be the workers states. On top of this the ownership of raw materials is increasingly passing into the hands of the semi-colonies themselves.
Inter-imperialist competition for raw materials consequently takes place in a far more circumscribed context than four decades ago. But this does not mean that the need for raw materials is any the less. On the contrary, the drive of capital accumulation has not ebbed among rival imperialist firms no matter how difficult it becomes to obtain the raw materials, machinery, plants and labour that capital accumulation requires. In fact the shrinking sources of cheap raw materials, principally under the impact of the spread of colonial revolution, is one of the ingredients of the deepening crisis of world imperialism. In considering the propaganda about depleted sources of raw materials, it is always necessary to ask: Don't you mean depleted, or even potentially depleted, monopoly profits?
Mandel maintains that the development of synthetics constitutes one of the main ways in which raw materials production has shifted away from the semi-colonies to the industrial nations 'on a massive scale'. However, no such massive shift has taken place. To be sure, it is possible that Mandel's analysis holds true for certain synthetics. The development of synthetic fibres lessened the need for the wool, silk and cotton (although raw cotton is itself a source of the cellulose used in synthetic fibre production) produced in semi-colonial countries. Furthermore, the synthetics are themselves cheaper, thus driving down world textile prices. This development gives rise to an important further dynamic. With lower textile prices the manufacturers in the metropolitan centres must increasingly flee from the old unionised, higher-wage textile-producing regions. This promotes the massive flight of textile-producing capital from the northern United States to the South — and to South Korea, Taiwan and other Asian sources of cheap labour power.
Furthermore the technology of synthetic rubber and plastics was developed in World War II, supporting an important theme of Late Capitalism: the role of war-primed technological advance in paving the way for the post-war capitalist upward curve of expansion. In the case of rubber it was not natural rubber production in the colonies that had suddenly become unprofitable. It was that the war closed off access to natural rubber. Costly synthetics had to be developed.
In any event, all of the important synthetics developed up to this time (synthetic fibres were developed prior to World War II), that is, synthetic rubber and all of the plastics, are constructed out of hydrocarbons. This process had a contradictory consequence. It helped elevate petroleum to its pivotal role in world economics and politics. The discovery of this substitute weakened the prices and dependence of imperialism on certain commodities produced in the semi-colonies only by increasing its dependence on others.
In Marxist Economic Theory (1962), Mandel wrote that, 'The high profits of colonial companies are often the combined result of colonial super-profits and monopoly super-profits (monopoly rent, cartel rent, etc.) This is in particular true of the super-profits made by the oil companies in the Middle East and in Latin America.'6 This thought needs to be carried through in the present examination of imperialism and raw materials. For as long as the imperialists could maintain vertical monopolies, owning raw materials from their sources to final production, and controlling international markets as well, they were able to extract a significant super-profit from rents that is diminished once the properties are nationalised.
The example of Middle East oil is instructive. For this oil was developed almost entirely in the period Mandel describes in Late Capitalism, a period of tremendous technological penetration of the extractive industries of semi-colonial lands. The technology of oil extraction is capital intensive and the wages of oil workers in the Middle East have always been considerably higher than the norm for such impoverished countries.
The main source of the super-profits of the 'Seven Sisters' in Middle East oil was both the absolute and differential ground rent the oil cartel appropriated by owning oil resources so near to the surface, so abundant and so near to crucial world markets. It is true that the development of Saudi Arabian oil resources was originally followed by a period of relatively low world oil prices. But these were artificially depressed prices and they did not mean that the oil trust itself was losing profits. 'The obstacle to further penetration of this sector by the other imperialist interests was not, then, lower profits but the strong monopoly position of the cartel buttressed by a whole series of secret agreements on the highest levels of world imperialism and respected by the ruling semi-colonial bourgeoisies.
[illegible] Countries now operate as monopolist sellers of [illegible] while the [semi-colonies] have lost their [illegible] from one zone to the other via the deterioration of the terms of trade for the semi-[colonies] [illegible]. In the [earlier] edition, Mandel continued: 'One could add that this [illegible] monopolies. This is certainly true; but just precisely to the extent that it is true, the monopolies begin to transfer their [profits] from the "pure" raw materials sphere to the manufacturing sphere; raw materials sources are nationalised, that is, the burden of unequal exchange is shifted to the semi-colonial nations and not to their ruling classes.'7
But in a whole series of critical raw materials, not only oil, the origin of the low prices was the monopolistic manipulation of prices. Where the imperialists owned the raw materials from the ground to the final markets, selling raw materials to themselves below value allowed them to reap extraordinary profits when they sold the finished goods at monopoly prices on world markets. The profits in [illegible] and aluminium do not appear on the level of bauxite mining but at the level of aluminium production, copper profits appeared in the sales of refined copper, just as petroleum profits appeared in the marketing of refined oil and chemical end products. This was accompanied by Mandel's transfer of capital 'from the "pure" raw materials sphere to the manufacturing sphere'. [illegible] it permitted this [illegible] prevented other competitors from entering into the production of these raw materials, avoided considerable local taxes for the foreign imperialist firms, and undermined the ability of the semi-colonial bourgeoisie itself to [illegible]. When such strong monopoly positions have been broken, prices have risen towards the more costly production prices of raw materials in the metropolitan centres. This, as we have already seen, is why the imperialists themselves favour higher petroleum prices no matter what their propaganda seems to say. The imperialists' answer to nationalisation is to develop alternative sources with which to club the semi-colonies into line on the economic battlefront if either tanks or the CIA haven't already done it on the military front.
It is true, as Mandel emphasises, that the imperialist monopoly on capital goods continues to be the source of unequal exchange that confronts semi-colonial nations as an imposing barrier to development along capitalist lines. But this takes place in the context of a weakened world imperialism in which there will be sharp fluctuations of raw materials prices and in which the demagogic appeal of the semi-colonial bourgeoisies towards cartel formation, as the solution to poverty of the over-exploited, will carry more weight, at least when prices are up.
3. In Late Capitalism the analysis of post-war imperialism is confined too much to economic categories separated from the momentous political forces of the time. Mandel's laudable intention is to show that the movement of the profit rate remains today, as in Marx's analysis, the central determinant of the capitalist economy. A sharp increase in profit rates stemming from increased rates of exploitation, coupled with technological advance, forms the basis for capitalist expansion. The inevitable decline of the profit rate stemming from the rising organic composition of capital leads to crisis. Mandel's reaffirmation of these central Marxian concepts against all the 'neo-Marxists', whether of American or European vintage, who have all but abandoned Marxian value theory is a needed corrective and welcome contribution. Its most important goal, as I have already indicated, should be to focus attention on the fundamental production problems confronting world imperialism, especially how to continue production on the expanded scale of the two post-war decades when this very expansion has undermined the profit rates it was based on.
But the presentation of this process in Late Capitalism should be broadened to include political developments. Lenin and Trotsky emphasised that at least since 1914 the production problems of monopoly capitalism must be viewed in the context of the inter-imperialist struggle for world markets.9 In this context two main dynamics characterise the epoch of 'late capitalism': the weakening of world imperialism in face of a rising colonial revolution (plus the victory of socialist revolutions on a third of the globe); and the meteoric rise followed by the relative decline of US imperialism in relation to its other imperialist rivals since World War II.
The international political context of the oil question shows how this has worked out. For example, Franklin Roosevelt exerted immense pressure on Winston Churchill into giving [illegible] Arabia — in return for assurances that the United States [illegible] consequently World War [II left] Britain in full control of Iranian oil as well as with access to the oil of Iraq, and Washington in control of the potentially most valuable prize of the war, the oil of Saudi Arabia. These monopoly positions were critical factors in the world balance of power in the post-war period. They gave US industry access to cheap energy and at the same time permitted the oil trust (United States, Britain, Netherlands) to squeeze other European and Japanese consumers.
Since 1973 the United States has been able to increase its strength vis-a-vis Europe and Japan although the oil cartel lost ownership of Middle East oil. This is because [on the one] hand the oil trust continues to monopolise 'downstream' oil facilities, so that it can pass on higher Middle East oil costs to its consumers and on the other hand because it can now [illegible] sell domestic oil at profitably higher prices. And it is seeking higher prices still.
Mandel writes in Late Capitalism, in a passage already partially quoted: 'It was now less of a risk to use expensive machinery in the metropolitan centres than overseas ... The production of raw materials was therefore shifted on a massive scale to the metropolitan lands ... and in cases where this was not immediately possible (e.g. the oil industry), there was growing pressure for the preparation of this shift in the long term. This is, of course, already beginning to bear fruit (the massive outlay on oil-drilling in Western Europe and the North Sea and the search for European natural gas) and is accompanied by the continual refinement of production techniques' (p. 63).
A different explanation is more plausible. So long as the British and Dutch sectors of the oil cartel had easy access to cheap Middle East, Libyan and Nigerian oil there was no compulsion to develop the immensely more costly resources of the North Sea. Not a decline in the profitability of foreign oil, but the break-up of the oil monopoly under the pressure of rising anti-imperialist sentiment in the semi-colonies and in the context of sharply increased inter-imperialist rivalry, explains the drilling rigs in the North Sea.
***
The campaign of the oil trusts to drive up world prices is itself eloquent testimony to the anarchic character of declining world capitalism from its own standpoint. For, as Marx stressed, rising raw materials prices directly drive down profit rates: 'A rise in the price of raw materials can curtail or arrest the entire process of reproduction if the price realised by the sale of the commodities should not suffice to replace all the elements of these commodities. Or, it may make it impossible to continue the process on the scale required by its technical basis, so that only a part of the machinery will remain in operation, or all the machinery will work for only a fraction of the usual time.'8 Precisely this contradiction lies at the heart of the imperialist struggle to monopolise raw materials sources. In the post-war heyday the raw materials sector could enjoy super-profits from its global resources even though prices were relatively low, consequently also permitting other sectors to thrive on this access to cheap raw materials. Today this contradiction breaks into the open when one sector is pitted against the other in the scramble for profits, when the President of the United States propagandises for a shrunken scale of production, and notwithstanding the fact that in most cases the firms in both sectors have identical owners!
II
If we now turn from the precise examination of Mandel's position to a closer examination of the relation of imperialism and the fight for raw materials, a starting point on the most crucial sectors may be taken as the move of the new Democratic administration in Washington to undertake higher [illegible] in the United States. The 'experts' who advise Jimmy Carter view higher domestic energy prices as a weapon against OPEC. 'What happens in the United States will be the key to future control of OPEC's market power', a 1976 publication of the Brookings Institution states.10 'Without higher prices to restrain consumption and encourage domestic production and without additional tax incentives, tax penalties, and regulatory measures to supplement market forces, US imports will gradually rise ... Then prospects for coping with the market power of OPEC would be poor' (pp. 197-8).
The Brookings Institution is one of the 'think tanks' that have supplied Carter with some of his top officials, and this particular study [illegible] head of Carter's Council of Economic Advisers. Only three months after taking office, Carter launched precisely the kind of campaign to drive up energy prices these and other experts recommended.
Although the main focus of attention is on oil, the substantive issues under discussion — the fact that imperialism no longer directly monopolises sources of raw materials around the globe, the real or presumed shortages of these primary commodities that have periodically appeared in the last five years, and the conception increasingly popularised in the 'northern' industrial centres of 'going it alone' and making the sacrifices necessary to chart the new course — clearly have reference beyond petroleum.
The Brookings study divides primary commodities into three categories: oil, food, and other raw materials. 'Oil', state the authors, 'is in a class by itself ... In one year, oil exports as a percentage of total world exports rose from 5 per cent to 13 per cent' (p. 193). Furthermore, oil accounted for 39.5 per cent of all exports of semi-colonial lands in 1973 as compared to 24.8 per cent in 1955 (p. 181).
The paramount place of oil in the global trade of the semi-colonies corresponds to its increased centrality in the economies of the industrial countries. Barry Commoner, a leader of the American ecology movement, tells us that oil 'is the dominant source of energy for most of the world. In the United States, together with the closely related fuel, natural gas, it provides three-fourths of the national energy budget. Oil is the basis of the two industries — automotive and petrochemical — which, together with petroleum itself, make up nearly one-fifth of the total US economy.'11 Commoner makes the telling observation that 'the intensive use of petroleum-based fertilisers and pesticides has nearly transformed the farm from an outpost of nature into a branch of the chemical industry'.
A [further] set of statistics underlines the fact that [oil is the] [illegible] major industrial product in the [capitalist] world. This point is obscured by the Carter [illegible] energy propaganda. For the White House [illegible] the necessity of cutting crude oil imports the administration also claims that it [illegible] diminish oil and natural gas production [illegible] it is propaganda largely aimed at [driving up prices of] imported oil, the most lucrative and most powerful sector of imperialist [monopoly].
Of the ten largest industrial companies in the capitalist world, eight produce petroleum. Of the top fifty industrial companies, eighteen produce petroleum. The sales of these eighteen are [illegible] per cent of the sales of the group of fifty biggest capitalist industrial corporations (see Table 1).
TABLE 1 — Ten Largest Industrial Companies in the Capitalist World (sales, $ billions): 1 Exxon, New York, $42.1; 2 Royal Dutch/Shell, London/The Hague, $33.0; 3 General Motors, Detroit, $31.5; 4 Ford Motor, Dearborn, Mich., $23.6; 5 Texaco, New York, $23.2; 6 Mobil, New York, $18.9; 7 British Petroleum, London, $16.3; 8 [illegible], San Francisco, [illegible]; 9 [illegible]; 10 [illegible], Pittsburgh, [illegible]. Source: Fortune, August 1975 (p. 163). Figures are for 1974.
[The Brookings] Institution [does not] view energy self-sufficiency [as a] realistic prospect [for the] United States. [It would do] well to recognise the implications of American energy independence for the rest of the world. If this country were able to withdraw from the world energy market gradually, that alone would tend to depress world oil prices. In due course energy costs in the United States would probably diverge quite widely from those in other industrial countries, becoming higher perhaps by a factor of 2' (pp. 199-200).
Exxon, Texaco, Mobil and Standard Oil of California remain owners of the notorious Aramco syndicate in Saudi Arabia. Even if Saudi Arabia now owns its own oil and takes a cut of the profits of Aramco, Aramco distributes this oil internationally and this global distribution of oil remains a source of vast monopoly profits that the oil trust has no intention of relinquishing. Thus we face the hypocritical stance of the oil trust, which unrelentingly blames 'the Arabs' for higher oil prices and moans about the need for diminishing imports and going it alone, while higher oil prices are the central objective of the oil trust and this trust has no desire to end OPEC imports.12
The second category of primary products in the Brookings classification is food. Here the decisive aspect is that world food exports are overwhelmingly dominated by imperialist countries. More than two-thirds of the calories consumed in the world come directly or indirectly from cereal grains — wheat, rice and coarse grains. Yet only the United States, Canada, Australia, New Zealand, South Africa, Argentina and Thailand produce grain in excess of domestic consumption. The other countries must rely ultimately on importing food from these few nations, especially the United States, as the figures in the Brookings study reproduced in Table 2 make clear.
TABLE 2 — Net average annual trade surplus (or deficit) in grains, in millions of metric tons: United States [illegible]; Canada [illegible]; Australia & New Zealand [illegible]; Central & S. America, Africa, Middle East, Asia -35; (South Asia) (8). Source: Brookings, op. cit., p. 184.
According to Brookings: 'The United Nations Food and Agriculture Organisation estimated in 1974 that the total cereal deficits of the developing countries would increase from 30 million tons in 1974 to 87 million tons in 1985 .... The projected 1985 grain deficit divides about equally between the nations with very low incomes — principally in South Asia and Africa south of the Sahara — and the better-off developing countries, most of which have prospects of being able to finance their imports on commercial terms. In the best of circumstances, the low-income countries will have difficulty earning enough foreign exchange to pay for their growing needs. And it is of course these countries that have the lowest levels of nutrition; if per capita caloric intake could be raised to more acceptable standards, their prospective requirements for imports would also increase' (p. 187).
But these experts have little to offer as a remedy. 'US policy toward the world food problem will have to take a more useful course', they say. 'This country can use its influence to promote increased cereal production in the developing countries; if it can once again pick up its fair share of development aid, that influence will be greater ... And it will have to take the lead in negotiating an international system of reserve stocks' (p. 192). These are nothing but pious wishes.
In Late Capitalism, Ernest Mandel emphasises the seriousness of the food problem for semi-colonial countries: 'The fate of the semi-colonies under the international imperialist system assumes its most tragic form in the growing under-nourishment of these nations. In the '30s they were still able to export 14 million tons of grain products annually. By the '60s they had to import 10 million tons .... and the volume of these imports risks becoming much larger during the second half of the '70s. This is due neither to demographic explosion nor lack of foresight, but to the socio-economic structures imposed by imperialism. Increasing areas of land are being converted to export crops, catering to the needs of the metropolitan countries and not those of the local populations ... Increasing dependence on imperialist food exports is monetised on the capitalist world market via higher prices, if necessary by artificially induced shortages. The famines of 1973-74 were directly related to decisions to restrict output by the major grain exporters in the late '60s and early '70s' (p. 375).
There is no doubt that in actual political fact the United States continues to wield the 'food weapon', as former agriculture secretary Earl Butz described it during the Nixon administration.
US imperialism's central concern in relation to the remaining raw materials, constituting Brookings' third category, is that the semi-colonial countries do not attempt to duplicate OPEC in any other commodity: 'When oil and food are set aside, commodity questions take on an entirely different dimension. Trade in all other primary commodities taken together is comparatively small, fits no clearly defined pattern, and makes fears that raw material cartels will spread and become a growing source of economic disruption unrealistic ... No item in this other group is overwhelmingly large. In 1973 combined exports of the seven largest — copper, cotton, iron ore, wool, rubber, tin and phosphate rock — accounted for about half of the total group. The other half was spread over twenty-five to thirty additional commodities for most of which world exports were under $500 million a year. Possibilities for substituting among these raw materials are considerable and shifts occur between primary and secondary sources according to price' (p. 201). (See Table 3.)
TABLE 3 — Structure of exports, semi-colonial countries / industrial countries: [Raw] materials 9.2 [illegible] / [illegible]; [illegible]; Manufactured and [semi-manufactured] 50.0 / 298.0. [Values largely illegible.]
The Brookings authors also underline that industrial countries account for most exports of primary commodities other than oil. Only 30 per cent of the exports of non-fuel primary commodities originate in the semi-colonial countries. [Industrial countries have greater] export interests in agricultural commodities than in non-fuel minerals. More than four-fifths of their primary commodity exports in 1973 consisted of food (principally oil seeds, coffee, sugar, cocoa and bananas) and agricultural raw materials (raw cotton, natural rubber, and hard fibres). Mineral ores (copper, bauxite, tin, and phosphate rock, for example), which are often cited as materials that lend themselves to cartelisation and market manipulation, account for a comparatively small proportion of the commodity trade of these countries .... When it is further recalled that the developing countries concerned usually have small financial reserves and are not drawn together by shared political aims, the outlook for more OPECs can be seen in proper perspective. Cartel experiments among the primary commodity exporters will be few and most of those attempted will be short-lived' (p. 202).
These experts don't pass up a chance to complain about nationalisation of imperialist interests and to make threats about its supposed consequences: 'Hostility to foreign investment in natural resource industries, a phenomenon not wholly restricted to developing countries, is cause for concern. It will not necessarily halt development or expansion, for investment funds will still flow to areas that are or appear to be politically safe. But second-best investment choices mean higher real costs for commodities. And to the extent that resistance to foreign investors slows down the growth of commodity output, bottlenecks will appear earlier in the next boom' (p. 203).
The 'trilateralism' of these conceptions should be explained. It is the tendency of imperialism to view global social problems openly and admittedly in 'North-South' dimensions: the industrialised northern hemisphere versus the semi-colonial countries of the southern hemisphere. Long gone is the rhetoric of Kennedy's 'Alliance for Progress', 'aid and development' programmes and funds for the semi-colonies as a strategic priority. Now, even in their public utterances, the imperialists stress the theme that the major imperialist centres — Japan, the United States, West Europe — must seek their own 'trilateral' solutions, in the first place independently of what the semi-colonies may need.
The concern that semi-colonial countries may duplicate OPEC reveals that world imperialism has not lost its need for other resources besides petroleum.
III
Now let us take an even closer look at the question of monopoly profits in the extractive industries — especially those corresponding to Brookings' third category. In 'Imperialism and National Bourgeoisie in Latin America', Mandel offered some statistics on foreign investments in Latin America in 1966 (see Table 4).
TABLE 4 — Foreign Investment in Latin America, 1966 (in millions of dollars): Oil industry [illegible] $11,897 [illegible]; Miscellaneous (incl. plantations, banking, insurance, public service) $3,828; Total $16,064.
[illegible] 52.2 per cent [illegible] of the total economy. Imperialism does not [let investment] opportunities pass by, especially in a period of glutted world [markets, when] the reaction of capital confronted with such a fall is [to switch] investment'.
Although I have not been able to find the publication from which Mandel took his table, figures provided by the US Survey of Current Business for the same year (1966) are instructive, although they refer only to US investment, comprising roughly 73 per cent of the total shown in Mandel's table (see Table 5). These are figures for [subsidiary corporations].
TABLE 5 — US Investment in Latin America, 1966 (in millions of dollars): Investment / Earnings / Rate: [Manufacturing] $3,312 $337 10.2%; [Mining &] smelting $1,481 $360 24.2%; Total $11,473. Source: Survey of Current Business, September 1967, p. 45.
[These figures are for] subsidiary corporations in which the parent US corporation owns 10 per cent or more of the subsidiary stock, usually close to 100 per cent. The earnings are the total profits of the subsidiary corporations, some of which are reinvested and the bulk of which are returned to the parent corporation in dividends and interest on the stocks and bonds that the parent corporations own. Such figures, completely at the disposal of the firms themselves, should not be given too much weight. Nevertheless they indicate that while the mass of investment in manufacturing is higher than in petroleum, [the profit rate in the extractive] industries is higher.
The Survey of Current Business for August 1976 (pp. 48 and 56) presented figures for US investment in Latin America in 1974, eight years later, showing big developments (see Table 6). Investment in manufacturing surged ahead and now finance, listed under 'Other', showed an investment position of $3,400 million with an 18.7 per cent return for the year. Of total US manufacturing investment in Latin America, $3,100 million, 41 per cent, poured into Brazil; another $2,400 million, 32 per cent, went to Mexico.
TABLE 6 — US Investment in Latin America, 1974 (in millions of dollars): Investment / Earnings / Rate: Manufacturing $7,541 $912 12.1%; Mining and smelting $1,131 $321 28.4%; Petroleum $3,564 $762 21.4%; Other $7,255 $1,150 15.8%; Total $18,491.
But petroleum and mining investments, at the same or lower figures, reflected the nationalisations that swept the [region]. By 1974 Peru had become the major source of US mining investment in Latin America and these holdings remained important sources of monopoly profits, especially since the copper trust 'suffered' nationalisations elsewhere. The big US-dominated copper firms in Peru are Southern [Peru Copper] (52.2 per cent owned by Asarco Inc., 21.2 per cent by Cerro-Marmon Corp., 16.2 per cent owned by Phelps Dodge Corp. and 10.4 per cent owned by Newmont Mining Corp.) and the Compania del Madrigal, 57 per cent owned by Homestake Mining. In 1975 alone US firms poured some $300 million into Peruvian investments to accelerate its mining capacity.
[These figures underline] the importance of imperialist monopoly in extracting super-profits from the ownership of primary commodities. These two minerals and four others (cobalt, chromium, manganese and tin) are frequently listed as the six critical minerals produced mainly in 'The South' but consumed mainly in 'The North'. [The US produces] copper in Peru and Chile and [bauxite] in Jamaica, Guyana, Surinam and Brazil. [Italo?] produces tin in Bolivia, manganese in Brazil, and cobalt in Cuba.)
Table 7 shows the eleven largest producers of copper and bauxite in the capitalist world in 1973. The total capitalist world production for 1973, on which the percentages are based, was 5,617.2 thousand metric tons of copper and 56,833 thousand metric tons of bauxite.
TABLE 7 — Largest Copper / Bauxite Producers in Capitalist World: 1 United States (27.7%) / Australia (25.9%); 2 Canada (14.5%) / Jamaica (23.7%); 3 Chile (13.3%) / Surinam (11.8%); 4 Zambia (12.6%) / Guyana (6.1%); 5 [illegible]; 6 [illegible]; 7 [illegible]; 8 Australia (3.5%) / United States (4.1%); 9 [illegible] / Dominican [Republic] [illegible]; 10 [illegible]; 11 Mexico (1.4%) / Indonesia (2.2%). Source: United Nations Statistical Yearbook (United Nations, 1975), pp. 184 and 186.
There are two noteworthy similarities in the lists which the experts stress when they inveigh against semi-colonial cartel formation: some of the largest producers are themselves imperialist nations; production takes place in many countries, not only leading to inevitable surpluses but also leaving open the possibilities of pitting one country against another when the crunch comes.
Thus, in response to the Jamaican-led International Bauxite Association, which has imposed higher government taxes on bauxite, Fortune magazine points out: 'Since the world is literally choking with aluminium ores, there are also obviously limits beyond which the IBA cannot go. Already, in fact, Brazil and Cameroon, which are not members of IBA, are planning very substantial development of their bauxite reserves. Australia, which is an IBA member but has elected not to raise its taxes, is also expanding its output' (p. 150).
Australia (bauxite, manganese), Canada (cobalt, copper) and South Africa (chromium, manganese) join the United States in the gambit of exploiting local resources to compete against the semi-colonies. But it is also evident from these lists that the imperialist nations do not produce sufficient raw reserves themselves either to supply their own physical needs or — from a purely supply standpoint — to command prices on world markets.
In 1973 the United States produced 2,085.1 thousand metric tons of refined copper, 31.4 per cent of the production in the capitalist world. But US consumption of refined copper was an even higher 2,400 thousand metric tons requiring imports above the substantial level of US production. US copper imports came mainly from Canada (37 per cent), Peru (24 per cent) and Chile (14 per cent). That same year the United States produced 4,109.2 thousand metric tons of primary aluminium (recovered by the electrolytic reduction of alumina from domestic and imported ores), 41.1 per cent of the production in the capitalist world. The United States imported bauxite from Jamaica (56 per cent), Surinam (23 per cent), Dominican Republic (8 per cent), Guyana (4.3 per cent) and Australia (3.2 per cent).14
These statistics vividly underline the parasitic character of imperialist monopoly. The United States produces 31.4 per cent of the copper and 41.1 per cent of the aluminium in the [capitalist world]. [When we add the] additional imported refined copper that is consumed, the total figure for US copper consumption comes to 36.2 per cent. But the question immediately before us is the profitability of this US exploitation of world resources and here we will deal not only with the production of firms [based in the United] States but with their overseas [holdings].
Both the aluminium and copper trusts face semi-colonial cartels. The Jamaican-led IBA has already been mentioned. Chile, Zambia, Zaire and Peru formed a copper exporting organisation in 1967 — CIPEC, which is the principal copper supplier to Western Europe and Japan.
But the US-Canadian aluminium trust is a considerably stronger vertical monopoly than the copper trust. Without their former holdings in Chile, the US copper firms wield much less clout than they did a decade ago. The five largest [illegible]. [The four] largest US aluminium firms (Alcoa, Reynolds, Kaiser) [plus] the giant Canadian-based Alcan Aluminium — the big four of the US-Canadian aluminium trust — produce about [illegible]. As shown on the list of major copper producing nations shown above, Chilean copper is completely nationalised. The copper of Zambia is produced by the British-South African mining firms, Roan Consolidated Mines and [Nchanga] Consolidated Mines, with the Zambian government holding a 51 per cent interest. Most of Zaire copper is government-owned although there is a joint Japanese and Zairean government consortium producing some copper, and there has been talk off and on about a new international consortium building a major copper refinery in Zaire. Philippine copper is largely owned by a variety of small Philippine corporations. The US copper trust, as has already been mentioned, owns two major firms in Peru which produce most of Peruvian copper, although the government is in the process of expanding its own nationalised copper operations. Asarco (formerly the American Smelting and Refining Company) also has major holdings in Mexico and Australia. Newmont is a major participant in the South African O'okeip Copper Company Limited and Palabora Mining Company Limited. These two firms account for roughly 80 per cent of the copper production in that country.
It is obvious that we are still dealing with international monopoly in the case of the US copper firms, whose holdings stretch from British Columbia to South Africa. Nevertheless, 30 per cent is not the 43 per cent that obtained so long as the famous Chuquicamata and Salvador mines were held by Anaconda; and El Teniente, the largest copper mine in the world, was held by Kennecott. Not only have these Chilean holdings been 'lost' but the US firms face such powerful imperialist competitors abroad as Pechiney (France) and Rio Tinto Zinc (Britain).
The toll is apparent from the figures in the books. In 1969 Anaconda reported an income of $323 million on sales of $1,389 million, a profit rate of 23 per cent. For 1973 Anaconda's income was $93.7 million on sales of 1,343.1 million, a profit rate of 7 per cent. Kennecott, whose Chilean operations were smaller as a percentage of its world operations than Anaconda's, still suffered a profit drop from 15 per cent in 1969 to 11 per cent in 1973.
Keeping in mind that copper prices were higher in 1973 than in 1969, we see a similar phenomenon in this industry as in petroleum, although not on the same grand scale: prices will rise toward the more costly production prices in the metropolitan centres; the profit rates in the latter are lower than in the semi-colonies. Moreover, by contrast with petroleum, copper is a labour-intensive industry, so that the exploitation of semi-colonial labour clearly remains a source of potential monopoly profits side-by-side with rents.
[There is also a] push for ownership in the aluminium combine, where so far the government has mainly raised its taxes and is not a major 'co-participant' in production itself. But that has not happened yet. Of the major bauxite producing nations [drawn] on by the US-Canadian aluminium trust, only Guyana has nationalised its firms. The bauxite of the other [major producers, and the bauxite of the United] States, accounting for 65 per cent of the capitalist world's supplies — is parcelled up by the US-Canadian firms with Australia serving as a junior partner.
These different monopoly positions must be an important factor affecting commodity price swings. According to The Economist of 23 October 1976: 'Copper production fell by only 20 per cent from its peak in October 1974 to its trough in mid-1975, while prices dropped by nearly two-thirds (in dollar and sterling terms) from the April 1974 peak of £1,400 a tonne to under £500 a tonne in January 1975. By contrast the slump in demand left the aluminium producer — or list — price unchanged (although unpublished price discounts [emerged in] 1974' (p. 26).
In any event, the effect on prices is evident. Value Line, a Wall Street publication, has listed the annual rates of earnings increase per share in the past ten years (see Table 8).
TABLE 8 — Average Annual Rate of Earnings Increase per Share in Last Decade: Aluminium / Copper: 1 Alcan 6.5% / Kennecott 4.5%; 2 Alcoa 6.0% / Asarco 9.0%; 3 Reynolds 6.5% / Phelps Dodge 5.0%; 4 [Kaiser] 9.5% / Anaconda -3.9%. Source: The Value Line Investment Survey, Part 3, Edition 8, 25 [illegible] 1977.15
Two final notes concerning this table should be added: Asarco, with the highest profit average over a decade, is the major holder of Southern Peru Copper as well as of significant Mexican interests. The figures for Anaconda are through 1976, because this firm has been bought up by Atlantic Richfield Petroleum — additional evidence, if any is necessary, of the increasing strength of the oil trust.
IV
If we now reconsider the position argued by Mandel, his partial misreading of Nelson Rockefeller's 1969 Report on [Latin America] is [worth] returning to [in the] first place to review Washington's actual policies over the last decade; in the second place to clear up misunderstandings that have arisen about the character of the American ruling class.
Watergate prompted a spate of writings about contests between Eastern 'Yankees' versus Southern and Western 'Cowboys', the latter supposedly being Nixon's backers. The Carter election sparked up interest in the 'North versus the South', a controversy that so far as the United States itself is concerned was settled in 1864. Further, eccentric figures like H.L. Hunt, Howard Hughes and John Paul Getty have always gotten a bigger play in the press than the less colourful sectors of American capital that control the press.
In reality the concentration of industrial and banking capital in a few Eastern sectors has never been greater in American history than today. Suffice it to point out that of the ten biggest capitalist industrial corporations in the world, the third largest, General Motors, is controlled by the Du Pont family of Delaware. The Du Ponts control a host of other major US monopolies including Phillips Petroleum and E.I. du Pont Chemical, which, with Britain's ICI (Imperial Chemical Industries), forms the most powerful chemical combine in the world. The fourth largest industrial firm is controlled by the Ford family of Detroit. The first, [fifth] and eighth largest capitalist firms — that is, Exxon, [illegible] the Rockefellers, who also control one of the world's largest [illegible] cover of Anaconda, is another one of the numerous enterprises in the Rockefeller sector. And the tenth largest firm on the list, Gulf Oil, is controlled by the Mellons of Pittsburgh, who also control, among dozens of other firms, Alcoa Aluminium.
There are no significant differences in global strategy among those powerful interests, all of whom base their power on worldwide US auto, petroleum, minerals, chemical and banking trusts.
A salient measure of the influence exerted by the Rockefeller sector, which is unquestionably the most powerful, comes from the leading personages making up Carter's administration. No less than fourteen of the top officials in the new Democratic administration have served in the 'Trilateral Commission', a think tank funded by David Rockefeller. This institution, as its name implies, was founded in 1973 in response to the [deepening] crises of world imperialism, precisely to search out United States-[Japanese-]European solutions. Despite [illegible] semi-colonial nations, who would only be token members in any event.
The graduates of the Trilateral Commission in Carter's administration include Carter himself; Vice President Walter Mondale; Zbigniew Brzezinski, Carter's top foreign policy adviser; Cyrus Vance, the secretary of state; Harold Brown, the secretary of defence; Michael Blumenthal, the secretary of the treasury; Paul Warnke, the chief negotiator in SALT; and Richard Gardner, who has been dispatched to Italy to serve as US ambassador in this politically sensitive arena of Europe.
[The Trilateral Commission] and the Brookings Institution are the main formulators of imperialist policy. Where they have differences — generally [on a small scale] — these are hashed out in secret.
One should not be taken in by the demagogic liberalism that often pervades their public utterances. The most important content of the 1969 Rockefeller report was not its appeals to open trade and selective US investment in manufacturing but its heralding of the military establishments as the primary social groups the US would rely on to maintain the status quo. 'For many of these societies', Rockefeller proclaimed, '... the question is less one of democracy or lack of it than it is simply of orderly ways of getting things done.' The 'military leaders' are 'searching for ways to bring education and better standards of living to their people while avoiding anarchy or violent revolution'.
Gone from Rockefeller's report was the rhetoric of the Alliance for Progress calling for land reform, tax reform and income redistribution. Even in its rhetoric the Rockefeller report marked a retreat from the 'American dream' perspective for Latin America that the Democratic administration of the early 1960s had held up in response to the Cuban revolution.
The urgings of the Rockefeller report for elimination of trade barriers between Latin America and the United States must be put in the context of intense resistance to such liberalisations from US firms that would be affected — for example, textile firms, which could not compete with textiles produced by super-exploited Latin American labour.
The 1976 Brookings Institution study, written seven years later, also appeals to trade liberalisation, but what is more significant, it documents the existing barriers. According to the Brookings study, average tariffs on imports of all raw materials into industrial countries in 1971 stood at 1.5 per cent; tariffs for semi-finished manufactured goods were 6.6 per cent; and for finished manufactured goods, 9.4 per cent. 'Tariffs', said Brookings, 'not only rise with the degree of processing, but their application also becomes wider. In 1971 [tariffs applied on illegible per cent of raw] materials, on 65 per cent of semi-manufactured goods, and [illegible]. Furthermore, there are much higher duties on such manufactured products as textiles, footwear, toys, plastic articles, and plywood. 'For these', says Brookings, 'duties average between 15 and 20 per cent. Their protective impact, moreover, is commonly greater than the nominal rates imply. This is because the materials or components that make up a manufactured product typically are not themselves subject to tariffs, which means that the tariff on the finished product is actually effective for the value added in manufacture rather than for the total cost of production.'
Fortune, in the article on commodity cartels already cited, adds that, 'On a finding of injury to American industry, a US President can reduce even the present level of imports from the poor countries. Indeed, the new system of US preferences could conceivably discourage American investment in labour-intensive manufacturing in the poor countries, since access to the US market is now a more chancy business than it used to be' (p. 147).
V
To summarise these conclusions, US imperialism has responded to the world economic crisis and the rise of colonial revolution by attempting to apply an even harsher policy toward the semi-colonies. In the international radicalisation of the late 1960s and early 1970s, especially under the impact of Vietnam, the imperialists were forced to stage tactical retreats including losing direct control over some primary commodities. Moreover this is an irreversible process. Despite setbacks, the movement towards total liberation of the semi-colonies from imperialism cannot ultimately be thwarted by an imperialism that is itself ever more deeply divided in the face of spreading political and economic turmoil within the metropolitan centres themselves.
But the strategic imperatives of imperialist monopoly, including the need to control sources of raw materials, have not changed. On the contrary the accumulation drive is itself reinforced by heightened competition which all the more intensifies this need. Far from aiding the semi-colonies to gain control over their own resources and to utilise these to help the process of manufacturing development, the response of the imperialists is captured in 'trilateralism': even in their most benevolent frame of mind, the imperialist power centres will form inter-imperialist trade and financial blocs — without consulting the semi-colonies.
When all of the rhetoric is taken out of the Rockefeller reports, the Brookings Institution studies, etc., we are left with the sludge of propaganda against raw materials cartel formation in the semi-colonies, in favour of selective investment in manufacturing in countries where the risk is considered minimal (hence the frequent collaboration of imperialism with the most reactionary military regimes abroad). Meanwhile protectionist measures, far from being lessened, are increased, so that one of the historically greatest obstacles to economic development in the semi-colonies — tariffs and import duties — become all the more severe.
One side of this process has been accentuated by what Business Week calls Latin America's 'moving simultaneously to the right', thereby improving investment prospects. But there is another side, as Business Week itself admits. Dow Chemical's sales in Latin America have increased from $47 million in 1967 to between $400 and $500 million this year: 'Nevertheless, the investment strategy is a traditional one: selling into local markets with imported products, trying an end-products manufacturing venture on a small scale to uncover opportunities that match its technological resources, and then moving into basic, large-scale production. This cycle is now complete in Brazil, where Dow is building one of its major world operations. The company is at mid-cycle in Argentina, Colombia, and Mexico, with smaller manufacturing facilities, and still in the initial stage in Peru, where the outlook is more uncertain' (p. 42).
The profit outlook is still the main consideration, and in countries which have massive poverty and unemployment, relatively low technological levels, stormy and not always predictable political outlooks, there is not going to be any rush of imperialist investments. From Paris, on 15 October 1976, New York Times reporter Clyde Farnsworth wrote: 'A wave of disenchantment over investments in the third world is spreading in the board rooms of multinational oil corporations and is already leading to a cutback in private capital flows. In recent months, there has been growing evidence of investments being diverted from developing to developed countries, where, as a Munich executive puts it, "Results are more predictable". The trend reflects political and financial risks in developing countries, poorer business conditions the world over and the shortage of capital.'
Even in the Middle East, interest has slackened. What a few years ago was expected to be an investment boom of fabulous proportions has now for some companies become a nightmare.
How helpful will semi-colonial production of primary commodities be in getting economic development off the ground? Events in the three and a half years that have elapsed since the 1973 oil embargo provide the groundwork for at least a preliminary estimate.
In that time the OPEC cartel has broken down twice. In 1975, when oil prices and profits dropped, OPEC members cut their prices at different rates in the hopes of cornering larger shares of the market. In the same year, Iran, which in 1973-74 was touted in the imperialist press as the future world superpower, entered international money markets as a borrower, having by this time dropped a number of its grandiose development schemes. The cartel broke down a second time in January 1977, when Iran attempted to push through a 15 per cent price hike in oil but was blocked mainly by Saudi Arabia.
Meanwhile these nations have been simply unable to put to significant use the funds that have flowed in. First of all, rampant and uncontrollable inflation with all the graft that automatically accompanies it has been unleashed by the inflow of funds. This can sharply exacerbate the polarisation between the semi-colonial bourgeoisie and the proletariat and peasantry, but it does little to help the oppressed classes. There stubbornly remains the low level of technology, which simply cannot absorb the influx of goods that have been purchased. Ports and highways are clogged; commodities spoil before they are unloaded; prices gyrate while goods are in transport. The result already has been, on one hand, a major scaling down of development plans (and of the imperialist excitement over getting a share of these markets) and, on the other, a massive investment of OPEC funds in imperialist banks abroad as well as in the military hardware imperialism produces.
If OPEC is the 'best case', the situation with other commodities is all the more discouraging. A 30 June 1975 issue of Business Week attacked CIPEC, the copper exporting organisation formed by Chile, Zambia, Zaire and Peru. The author listed four reasons in addition to those we have already considered why this attempted cartel will run into difficulties:
1. 'Copper consumption rises sharply in periods of prosperity and dips sharply when business falters. This sensitivity to business cycles arises from copper's dependence for its markets on durable consumer goods, construction, and industrial capital investment.'
2. 'Once consumed, oil is not recyclable, with the exception of minor quantities of oil used in lubrication. Copper's uses, on the other hand, lend themselves to a high degree of recycling. Scrap currently accounts for roughly 40 per cent of total US supply.'
3. 'The production of copper is more labour-intensive than that of oil. Thus, copper exporting countries are not so free to restrict supplies by cutting back production because to do this to any significant extent could cause serious unemployment and social unrest.'
4. 'Equally important, the financial position of the governments of the copper-exporting countries is such that they must produce, export, and sell copper or face severe fiscal problems.'
The author of these 1975 lines was not aware that OPEC is also vulnerable to world price fluctuations and that these swings can weaken the financial positions of the oil-producing countries in the same manner, a fact that was clear later in the same year. More recently, the 10 May 1977 issue of the Wall Street Journal reports: 'Iran is in somewhat of a bind. It is so heavily dependent upon the revenues from crude oil exports that these can't be reduced sharply unless prices are increased dramatically. It is for this reason that Iran is the leading price hawk within OPEC, continually pushing for higher posted prices for crude.'
The important point here is that for all of the primary commodities, nationalisations do not free the given country from the negative vicissitudes inherent in a 'one crop' economy, even if the 'crop' is not vegetable but mineral. Price fluctuations, depending on the world market, cannot be erased, and there is good reason to believe that these fluctuations will be sharper, and the troughs more devastating, as the world crisis of imperialism deepens.
Moreover, it cannot be emphasised too often that the semi-colonial nations face the most powerful imperialist nations as direct competitors in every single one of the commodities they produce. The effect of price gyrations will be to improve the position of the imperialist nations against those of the semi-colonies in a given sector.
There is a more fundamental point which Mandel himself has argued more cogently than any other contemporary Marxist. This is the decisive role that the miserably low living standards of the mass of unemployed and low-wage workers plays in perpetuating semi-colonial economic underdevelopment, a situation that is itself the result of global imperialism.17 A rather long excerpt from Late Capitalism summarises this aspect of the situation in the semi-colonial countries:
'... the beginnings of industrialisation and the ensuing increase in the average social productivity of labour allows the cost of reproducing labour-power to fall significantly, even if this fall in value is not always expressed in its money-price as a result, among other things, of continuing inflation. At the same time, however, this increase in the average social productivity of labour does not lead to a growth in the moral and historical cost of reproducing labour-power; in other words, new needs are not incorporated in wages, or only to a very limited extent.
'This phenomenon can in the first instance be attributed to the fact that the secular trend in the semi-colonies is for the industrial reserve army to increase because the slow beginnings of industrialisation cannot keep pace with the accelerating separation of poor peasants from the land. The gradual switch of foreign capital to the production of finished goods further reinforces this trend, for the latter are capital-intensive while the production of raw materials was relatively labour-intensive. Thus the share of wage-labour in the working population of Latin America remained constant at 14 per cent between 1925 and 1963, while the share of industrial production in the gross national product doubled from 1[illegible] per cent to 23 per cent.
'Secondly, an unfavourable relationship of forces on the labour market, due to a growing industrial reserve army, may make it impossible effectively to organise the mass of the industrial and mining proletariat in trade unions. As a result, the commodity of labour-power is in its turn not only sold at its declining value, but even below this value...
'The existence of a much lower price for labour-power in the dependent, semi-colonial countries than in the imperialist countries undoubtedly allows a higher world average rate of profit — which ultimately explains why foreign capital flows into these countries at all. But at the same time it acts as a limit on the further accumulation of capital, for the extension of the market is kept within extremely narrow confines by the low level of real wages and the modest needs of the workers in the Third World' (pp. 67-8).
A striking confirmation of this central tenet of Marxian analysis is a United Nations study of urban populations in Latin America reported on by New York Times correspondent Jonathan Kandell from Sao Paulo on 6 November 1976: 'From Mexico City to Bogota, through Lima and Santiago and down to Buenos Aires, Latin America's rural poor are moving to the cities in one of history's great migrations. Already 19 Latin American cities have populations of over a million. By the end of the century, three — Mexico City, [illegible] the world. All will have over 15 million inhabitants, with Mexico City, according to United Nations projections, topping the list with more than [30] million.' The figures given for the year 2000 by the UN were: Buenos Aires, 14.1 million; Santiago, 6.7 million; Sao Paulo, 24.7 million; Rio de Janeiro, 17.6 million; Lima, 9.2 million; Caracas, 6.5 million; Mexico City, 31.7 million.
Kandell continued: 'With one of the highest birthrates in the world, Latin America almost tripled its population from 1930 to 1970. The urban centres, which accounted for fewer than 40 per cent of the area's inhabitants in 1950, accounted for 56 per cent in 1970. By 1990, two-thirds of all Latin Americans will be living in cities — the great majority in slums or other sub-standard housing.'
Semi-colonial manufacturing development and the funds obtained from selling primary commodities on the world market will be left far behind by the exponential growth of needs — and misery — of these urban masses. Where big injections of funds into the narrow strata of semi-colonial bourgeoisie do take place the result will be to sharpen class divisions. This does not stabilise the economic and political position of the semi-colonial bourgeoisie; it is destabilising. The tendency towards strong military regimes is all the more enhanced. OPEC surpluses are not pouring into the coffers of Boeing and General Dynamics in order to 'recycle petrodollars'! Their massive outlay on arms is itself the sharpest testimony to the utterly reactionary character of the regimes who are receiving the funds, the clearest proof that these regimes cannot and do not have any intentions of improving the lot of the masses.
***
Workers in the industrialised countries will have to take a closer look at these matters. For it is an increasingly shrill theme of the imperialists as the world economic crisis deepens, to 'sacrifice', 'tighten the belt', 'go it alone'. Their deceitful propaganda has only one aim, and that is to improve the profit positions of the imperialist monopolies. This must be clearly understood in order not to be taken in by their public relations campaigns.
The strategy of the oil trust is to drive up world prices in order to enhance the flow of profits. In this scheme there is no visible limit to the cost of oil that would be required for such a massive revolution of technology. But this scheme does not only originate in protecting monopoly profits that might be threatened by semi-colonial nationalisations. It also springs from the needs of competing monopolies that jostle against each other not only internationally but also within each imperialist centre. Texaco's biggest competitor isn't a nationalised firm in OPEC nor even Shell or British Petroleum. It is Exxon.
When the manager of a Ford plant, let us say, tells workers that they will have to accept a wage-freeze, speed-up and layoffs because of the 'Japanese threat' abroad, the workers would do well to look around to see if there isn't a Chevrolet plant, a Buick plant, or a Chrysler plant, for these are the most powerful corporate competitors for the same markets.
When the trilateralists invoke inter-imperialist cooperation as a remedy they suppress the fact that imperialist competition has landed us in the present global maldistribution of access to raw materials. They don't intend to put an end to that situation — and indeed, according to the laws of the imperialist stage of capitalism described by Lenin, they cannot.
* London: New Left Books, 1975.
1. 'Reversal of Policy: Latin America Opens the Door to Foreign Investment Again', pp. 34-50.
2. Survey of Current Business, August 1976, p. 49.
3. 'Today, political factors — such as the rising colonial revolution — [illegible] increasingly combined with fundamental economic characteristics to give capitalism its particular outlines and behaviour', Germain (Mandel) wrote in August 1955 in 'The Marxist Theory of Imperialism and Its Critics' (Two Essays on Imperialism, published [illegible]). [illegible] For Marx there is, of course, a sharp distinction between the physical use-value needs of the industrial powers and the profit-oriented exchange-value needs, a distinction that is always blurred in bourgeois treatments of the subject. [illegible] Import figures don't always reveal the story because many raw materials are imported into the industrialised powers in order to re-export the refined [product]. [illegible] Economic Perspective by Peter G. Peterson, Assistant to the President for International Economic Affairs (distributed in mimeograph), p. 11.
6. [Marxist Economic Theory,] Volume Two (London, Merlin Press, 1968), p. 456.
7. Der Spätkapitalismus: Versuch einer marxistischen Erklärung ([Frankfurt]: Suhrkamp Verlag, 1973), pp. 341-342. Instead of the paragraph beginning 'However, since 1972 ...', p. 371 of Late Capitalism.
8. [Marx,] Capital, Volume III ([Moscow]: [Progress] Publishers, 1962), p. 108.
9. [Lenin defined imperialism by five] distinguishing features: (1) the decisive role of monopolies; (2) the interpenetration of banking and industrial capital [illegible]; (5) the 'territorial division of the whole world among the greatest capitalist powers' (Imperialism, New York, International Publishers, 1939, p. 89). The imperialist struggle to control raw materials [displays] all these features. [Oil is] dominated by monopolies that have formed international cartels, dividing up the capitalist world among themselves (1, 4 and 5); capital exports frequently play a big role (3); and raw materials monopolies are central in the strongest [monopolies] [illegible]. Lenin declared in Imperialism (1918): 'The principal feature of modern capitalism is the domination of monopolist combines of the big capitalists. These monopolies are most firmly established when all the sources of raw materials are controlled by the one [group] [illegible] we have seen with what zeal the international capitalist [combines make] it impossible for their rivals to compete with them; for example, by buying up mineral lands, oil fields, etc. Colonial possession alone gives complete guarantee of success ... against all risks of the struggle with competitors ...'
10. 'The United States in the World Economy', by Edward R. Fried [illegible] (Brookings Institution, 1976).
11. [Barry Commoner, The Poverty of] Power: Energy [and the] Economic Crisis (New [York] [illegible]).
12. This was explained in some detail in my article, 'Do Mideast Oil Billions Threaten the World?', in Capitalism in Crisis (New York: [Pathfinder] Press, [1975]). [illegible] Senate's Subcommittee [illegible] would be [traceable] to decontrol' ([US Government Printing Office], No. 56-992 O, 1975, p. vii). [illegible] oil trust hopes that [decontrol] will be more [acceptable in the] United States than [under] anti-labour presidents Nixon and Ford, who proved to be incapable of taking this unpopular step. Oil price decontrol is the main target of Carter's energy campaign.
13. [illegible] Fortune [article,] 'Commodity Power' [is a delusion] [illegible] [claims the semi-colonies] are deluded [if they hope to form cartels and] mini-OPECs to force a redivision of the world's wealth' (p. 147).
14. The figures in this paragraph come from the United Nations Statistical Yearbook 1974 and the Minerals Yearbook 1973 of the US [Bureau of Mines].
15. These [profit] estimates are based on the corporations' annual reports and on The Value Line Investment Survey, a widely used Wall Street directory.
16. [illegible]
17. 'The low wages which follow from a vast industrial reserve army and enormous underemployment are ... a function of the damming-up of capital accumulation, and can only be explained by [it]' (Late Capitalism, p. 353).