Imperialism & the Working Class

 

 

Discovering Imperialism: Social Democracy to World War I is an anthology put together by Richard Day and Daniel Gaido, in which they translate many articles not previously available in English.[1] They also give valuable introductions to the authors and the political times in which they lived. Their book raises many issues arising from contemporary imperialism, and shows the political consequences of the different ways in which imperialism was understood. Lenin’s Imperialism: the Highest Stage of Capitalism, written in 1916, is not included in the book, but it is clear that this work, although the best, was just one of a large number of publications on the question.

Many articles and debates the book covers, from the 1890s up to around 1916, remain relevant today. This is especially true for those relating to nationalism and imperialism, even though the forms taken by imperialism have changed a lot in the past century. However, the book’s articles, and its editors, do not explore a critical feature.

How was it that the anti-imperialists often had the better arguments – and sometimes even won – but they were nevertheless beaten by social forces, both inside and outside the debating forums of social democracy? A devastating, murderous war was the result, in which the working classes of the major powers fought alongside their rulers. Only in Russia was there a practical, political and successful response to the outbreak of war – led by the Bolsheviks in the 1917 Russian Revolution.

Here I want to focus on one issue that arises from a quotation the book provides from Friedrich Engels in 1885:[2]

“The truth is this: during the period of England’s industrial monopoly the English working-class have, to a certain extent, shared in the benefits of the monopoly. These benefits were very unequally parcelled out amongst them; the privileged minority pocketed most, but now and then even the great mass had at least a temporary share. And that is the reason why, since the dying-out of Owenism, there has been no socialism in England. With the breakdown of that monopoly, the English working-class will lose that privileged position; it will find itself generally – the privileged and leading minority not excepted – on a level with its fellow-workers abroad. And that is the reason why there will again be socialism in England.”

Here, Engels notes the absence of any socialist movement in England, sensibly disregarding the largely irrelevant, small socialist groupings that were around at the time. Both Marx and Engels recognised that this absence needed to be explained, since England was the most capitalistically developed country in the world and had a large proletariat. Why was this proletariat not drawn to socialism by their experience of capitalism? Comments from Marx and Engels elsewhere did note the bourgeois politics of the English ‘labour movement’, but here Engels here pins down the cause.

The monopoly of England in the world economy went well beyond industry. It was also heavily backed up by domination in the areas of international commerce and finance – shipping, warehousing, trade finance, insurance, loans, etc. For example, from 1874-193, Britain actually had a deficit on its balance of trade amounting to around 5-6% of GDP per year: exports of goods were well below imports, though the latter were principally raw materials and foodstuffs. Massive revenues from services, particularly financial ones, and from foreign investments, offset this big deficit, and gave Britain a current account surplus of around 5% per annum.[3]

All these revenues, not industry alone, gave England its economic fortune and allowed relatively favourable conditions for the working class. While Engels notes that it was the more privileged sections of workers who benefited most from this, the benefits also extended to the mass of people. This is not to say that they were always having a great time. The point was that these – even potential – benefits acted as a dampener on anti-capitalism.

This is the critical issue. The usual argument from the left is that it is the trade union or labour movement/party leaders who corrupt the masses, compromise with the bosses and back capitalism. While the practice and political outlook of these leaders support such an assessment, it also ignores how the masses themselves can be open to being politically ‘corrupted’. Workers were not ignorant of wider developments in the country or where their immediate economic interests lay. In Britain, especially, the popular press was full of stories about the colonies, foreign markets and Britain’s status in the world.

The political problem is not this so-called labour aristocracy (though this mistaken argument was also used by Lenin); the problem instead is far more fundamental. It is one where the political and economic experience of the mass of people makes them see benefits in being loyal to the rich capitalist state to which they ‘belong’.

Popular loyalty to the state is expressed very directly whenever that state is under threat or challenged by others. That is because those threats or challenges are also threats and challenges to ‘our way of life’. People may not go on a march to call for war, but they will almost always agree with potential military action, overwhelmingly support military spending and extol ‘our boys’ when they go to fight.

Getting a popular endorsement for military aggression is fairly easy when there seems to be little risk involved. In the 2001 invasion of Afghanistan, that country was not in a position to fight back. The 2003 invasion of Iraq was a little trickier for popular opinion, given stories that the evil dictator might have had ‘weapons of mass destruction’. If the opponent is a major country, then the build up of popular opinion in favour of action takes a bit longer. Still, as shown by the example of the British-German naval arms race in the early 1900s, there was enough support on both sides of the conflict-to-come to continue an escalation into war.

I would excuse Engels for his attempt in 1885 at revolutionary optimism, thinking that a future breakdown of England’s monopoly would once again lead to socialism in Britain. At least he took proper account of the current situation. If we did the same, we would be able to recognise what has happened to the mass of people in many richer countries – especially in the US, the UK and in the rest of north west Europe. It has not been a move towards socialism as their privileges in the world economy are challenged. Instead, a nationalist and pro-imperialist mentality has become more aggressive in defence of those privileges.

 

Tony Norfield, 13 September 2021

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[1] Published by Brill in 2012. The book is over 950 pages; while the hardback is on sale for a ridiculously high price, the paperback edition is much cheaper.

[2] This text is taken from an article by Engels in the German Social Democratic Party’s Die Neue Zeit in June 1885, ‘England in 1845 and in 1885’. That article was originally published some months earlier in the English paper, Commonweal. The article is available in Marx & Engels’ Collected Works, Volume 26, p301.

[3] See P J Cain and A G Hopkins, British Imperialism: 1688-2000, Pearson 2002, p165.

Politics & the Imperialist Grinding Machine

On 5 April in London, I gave a talk for the ‘Great Moving Left Show’ on the world economy and political responses to how it works. The projector was not working, so I had to conjure up some images verbally. One was of an imperialist grinding machine. Readers will have to excuse my less than expert ability to create exciting graphics, but this is shown below in the first image. It highlights how dominant global economic and political structures – the grinding machine – stop the world’s resources from benefiting humanity. Below that are copies of several slides giving the background to key features of contemporary politics.

The British Labour Party was one topic in this talk.[1] Like many other parties that (sometimes) give the impression of wanting to change things, Labour just ends up oiling the imperial machine or tinkering with it. But if you don’t want to end up in the machine’s output tube, you have to get rid of it. Destroy the power of the machine and you are more likely to get closer to achieving the output society needs from the inputs that are available.

It is difficult to capture the principal aspects of imperialism today in one simple image, or even in several. Among other things to include are the hierarchy of power, the economic and political forms of that power, and the social and political structures that legitimise the system and keep it ticking over.

The image I most often use is my own Index of Power chart, derived from data for around 200 countries and usually given showing the top 20 or so. However, although it is implicit that the big guys will have a much bigger say in running the system as a whole, it does little to map out the connections between countries.

As one way of showing connections, I made a separate table of international trade relationships for the top 20 countries. But this does not directly indicate which ones write the rules for those relationships.

Political dimensions are even trickier to summarise. It is not only that political influence reaches beyond an individual country. Also within a country there must be an allowance for the political deal between the ruling elite and the mass of people. Unless there is sustained state repression, something like a ‘deal’ has to exist in order to make the economic and social structure legitimate, or at least tolerable and able to work without continued political turmoil.

All such things change over time, but the stains of history can remain evident in contemporary life even when the circumstances that brought them about might have disappeared. For this reason, assessing the historical backdrop is critical. This is particularly so in a time when people in the richer countries react to unwelcome changes. They are informed by their political heritage. When this rests on what they think is a deserved privilege in dealing with the rest of the world, they react by demanding that their state restores the status quo ante, rather than seeing that the game is up and putting the legitimacy of the capitalist/imperialist system in question.

The imperialist grinding machine

 

Politics today

 

 

 

 

 

Tony Norfield, 8 April 2019

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[1] I have published a number of articles on this blog about British Labour Party politics, for example here. Use the search option on the right hand side of the page and look for Labour Party, Corbyn, welfare state, colonialism, Zionism, immigration, etc.

Liberals, the Populist Right & the Politics of Imperialism

Roger Eatwell and Matthew Goodwin, National Populism: The Revolt Against Liberal Democracy, Pelican Books, October 2018

How to respond to the rise of national populism? The phenomenon is evident not only in Trump’s US but throughout Europe, as shown in this book’s comprehensive review of changes in mass opinion. The book also attempts to provide a solution to the problem, one that will defend democracy, but in doing so it inadvertently highlights the bankruptcy of the liberal outlook. They detail how, over the past two decades and more, new political forces have undermined support for the traditional political parties in the West, and especially for the social democratic parties of western Europe. Yet their ‘solution’ is to make concessions to reactionary views in order to ‘engage with’ the concerns people express in opinion polls. Like many liberal commentators, on the face of it they will have no truck with racism. But they seem to be fine with the nationalist mentality and an anti-immigration stance, and they persistently raise the question of ethnicity in national politics.

The book’s real value is in documenting how pervasive are reactionary opinions in the West. They show how the success of Trump, et al, cannot be put down to ‘angry old white men’, who will all die soon anyway, or simply to those who have lost out economically with ‘globalisation’, and who may then be attracted to a left-wing party’s plans for economic reform. The political problem in the West is far deeper, and more depressing. As they put it: ‘people who support national populism are not merely protesting: they are choosing to endorse views that appeal to them’ (p 39).

Four D national populism

Eatwell and Goodwin organise their work along the lines of what they call the Four Ds. This is how the ‘elitist nature of liberal democracy has promoted distrust of politicians and institutions’, how ‘immigration and hyper ethnic change are cultivating strong fears about the possible destruction of the national group’s historic identity and established ways of life’, how ‘neoliberal globalised economics has stoked strong feelings of what psychologists call relative deprivation as a result of rising inequalities of income and wealth in the west and a loss of faith in a better future’, and finally, the ‘weakening bonds between the traditional mainstream parties and the people, or what we refer to as de-alignment’ (pp xxi-xxiii).

If you are already finding your blood beginning to boil with a phrase like ‘immigration and hyper ethnic change’, then I recommend taking a few deep breaths because things get worse. Worse because of the reality they describe, not because the authors are closet racists hiding behind academic language – although in some of the things they write, they will come close to readers interpreting them that way. Towards the end of the book, they sum up the argument as follows:

“The ‘Four Ds’ have left large numbers of people in the West instinctively receptive to the claims being made by national populism: that politicians do not listen to them, even treat them with contempt, that immigrants and ethnic minorities benefit at the expense of ‘natives’, and that hyper ethnic change and in particular Islam pose a new and major threat to the national group, its culture and way of life.” (p 272)

I will deal with these D issues a little later, but first it is worth covering some of the characteristics of voters that the authors set out. In the end, these are the decisive people in a democracy.

Having paid a lot of attention to the social dimensions of voting, they note that the unemployed and those very dependent on welfare payments tend to vote less than average, that the youth vote also tends to be below par and that, at least in the past, white workers without degrees were under-represented in samples taken of popular opinion, which helped lead to the poll surprises of Trump and Brexit. In their view, it is the ‘middle educated’ who are most open to national populism – those who are not uneducated, but who do not have university degrees.

This middle group also tends to feel more vulnerable than others, being above the unemployed but below the middle class economically. In the UK, it was the group focused upon in the Conservative Party’s term ‘just-about-managing families’. However, this is not to say that better off workers did not vote for Trump or Brexit, or for populist causes in general, or that support only came from white (male) workers. They show that national populism also gets significant, if usually minority support from younger people, women and ethnic minorities.

One reason is that the national populists also address welfare issues. This helps undercut the traditional capitalist state-dependent approaches to national politics of more left-wing parties and groups. For example, the leader of the conservative, populist Sweden Democrats argued that ‘The election is a choice between mass immigration and welfare. You choose’ (p71).

Immigration, racism and nationalism

The authors are clear about their perspectives, which should help readers also to clarify what they think about these issues. Take the question of racism. I raise this question, because, when the authors do talk about racism, they appear to cross the line into endorsing what a United Nations Convention would call ‘racial discrimination’.[1] The UN defines such discrimination as being on the basis of ‘race, colour, descent, or national or ethnic origin’ and, in discussing popular political views, the authors write:

“We do not think that the term ‘racism’ should be applied solely because people seek to retain the broad parameters of the ethnic base of a country and its national identity, even though this can involve discriminating against outside groups” (p 75).

Unless the word ‘broad’ somehow lets them off, ‘retaining the broad parameters of the ethnic base of a country’ would indeed be racial discrimination according to the UN!

Are they only describing how such views exist, rather than endorsing or advocating them? I found the focus on ethnicity to be a strange one for these UK academics to spend much time on since, in the Brexit debate, for example, it was clear that race and ethnicity had little or nothing to do with the anti-EU case. Instead, popular views were much more concerned about competition in the jobs market from low wage, white East European workers – the ‘Polish plumber’. Of course, the coverage in this book is not just of the UK, and not just of Brexit. But the authors are not just describing how there is opposition to other ethnic groups. While they do not explicitly share these concerns themselves, they go out of their way to say that these are valid. For example:

“Too often the left view this immigration angst solely as a byproduct of objective economic grievances when it is in fact a legitimate concern in its own right and … is rooted in broader subjective worries about loss and relative deprivation.” (p 222)

and, on popular anxiety about immigration and ethnic change:

“While many of these fears are exaggerated – especially in the case of Muslims, who as a group are often damned for the sins of a very small minority of Islamists – we need to appreciate how people feel. Given ongoing immigration and rapidly rising rates of ethnic, cultural and religious change, it seems to us unlikely that these anxieties will fade.”

“It is important to try to engage with their concerns, particularly for those on the centre-left who, to avoid further losses, will need to make short-term concessions. Meeting the demand for tighter borders or modifying the type of immigration … is compatible with progressive politics.” (pp 281-2)

Basing their stand on the evidence from numerous opinion polls, they can correctly dismiss as mistaken the views of the established political parties and of the left that if workers can be given ‘more jobs, more growth and less austerity, then their support will return’. Yet that leads them to argue that policies should be adopted to address and deal with ‘people’s concerns about immigration and rapid ethnic change’ (p 261).

If the authors escape the charge of endorsing racism, they still remain guilty of accepting and working within a framework of nationalistic politics. The irony running throughout this book is that they have set up national populism as a political challenge to liberal democracy and then have taken on board the concerns of the national populists.

Imperial politics

The authors do not ignore capitalism in their analysis, or the wider political trends. They cover quite a lot of ground in a summary historical review of how capitalism has developed, the different forms of politics that emerged in the West that helped to endorse the system in the eyes of the population, and of earlier forms of populism. They also note the different phases of immigration into the US and the UK over the past hundred years or so, and the more recent trends in a wide range of European countries.

I was pleasantly surprised to find some brief mentions of the term ‘social imperialism’, describing how capitalist parties and governments in the late 19th and early 20th century countered the appeal of socialism and attracted support from workers by ‘a combination of welfare measures to help poorer people, such as the introduction of old-age pensions, and the celebration of national greatness and expanding Empire’ (p 228). But this remained only part of their historical review and did not seem to have much implication for their discussion of more contemporary trends.

It would have been more consistent for them to spell out how masses of people in the richer countries remain wedded to the social imperialist outlook. Welfare provision by governments in rich countries has grown far beyond what it was in the early 20th century, and it has been a key pillar of what is effectively a ‘social contract’ between the national working class and the capitalist state. In other words, workers will remain loyal to the capitalist system and the national state, including support in wars, as long as the state provides some basic economic security.

That deal has now been undermined by two important developments. Firstly, the growth of the global market, aside from its dysfunction and destructive tendencies, has also shown for capitalist business that there are cheaper ways to get things produced than depending upon welfare-supported workers in the richer countries. Employment conditions have been undermined by outsourcing, supply chains and worse labour contracts, with only some privileged areas remaining relatively unscathed, in high level engineering, technology and some other monopolistic sectors. Secondly, more stagnant economies over the past decade or so have thrown into sharper relief the accumulation of debts, and state spending deficits in particular. Accentuated by problems of an ageing population in many countries and capitalist pandemics like obesity, welfare provision is under pressure.

But these developments have not led the mass of people in richer countries to realise that the game is up and capitalism no longer works for them. Instead, they have turned towards reactionary politics. This can hardly be much of a surprise, since, as the authors themselves note, there have been longstanding racist and nationalist opinions. Liberal views were often more supported by the social strata that were made comfortable by the system, while the remainder kept relatively quiet as long as things were ticking over for them. Now that the capitalist markets supported by the working class have come back to bite them, they have spoken out.

This is the relevant background to the authors’ focus on ‘hyper ethnic change’. The popular reaction to a rapid influx of immigrants seen over the past few decades, and especially in the past 10-20 years (after 2004 in the case of the EU, following the accession of several new Eastern European members), reflects the worry of the ‘native’ masses about their social and economic welfare. They don’t stop for a moment to consider the many fires that their governments have started in and the destruction they have brought upon countries in the Middle East, Africa and Latin America, nor of the collapse of living standards in many East European countries when they were incorporated into the western capitalist markets.

Culture and privilege

Privileges enjoyed by the mass of people in the rich countries are being taken away, so they blame Mexican or East European workers, Chinese and Asian goods, and they wrap that up in moans about the threat to their ‘way of life’ and culture, especially from the Muslim community. As the authors put it, using apologetic brackets to distance themselves: ‘most national populists see the quest for lower immigration and slower ethnic change as an attempt to stem the dwindling size of their group, to advance its interests and (in their eyes) avoid the destruction of their culture and identity’ (p 162). Let us consider this culture question for a moment.

I do not know whether any of the myriads of opinion polls cited by the authors have ever asked the question of whether Muslims, or other groups considered unwelcome in these polls, are believed to have a stronger sense of community than the anti-immigration respondent. The ‘native’ reaction is to a different group, whether that distinction is made visible by them using a different language, religion or something else. But it raises the question of what they are really protesting about.

‘Native’ working class culture has been disintegrating for the past 40 years or more in many western countries. Even before, it was nothing to brag about, and the latest decline has nothing to do with immigration, ‘hyper’ or otherwise. The protracted crises of the 1970s and 1980s dealt a blow to many traditional industries and forms of employment that were the centre of settled working class communities, from mining to manufacturing, from steel making to shipyards and transport, and the hollowing out of jobs in many areas. There have also been changes in technology and work practices, a reduction of trade union membership and the creation of many new service sector jobs less covered by trade unions. These and other, more recent developments, sometimes labelled the ‘gig economy’, did not come from immigration. Popular sentiment has nevertheless found immigration as something to focus on, since it was never far from a nationalistic and sometimes racist mindset in any case.

What is it about ‘culture and identity’ that popular sentiment wishes to save from ‘destruction’? The population has done little or nothing done to combat the capitalist market trends that have undermined them, and instead it has been absorbed by mass consumer culture. It is only now, when the economic foundations of an acceptable life are being taken away, that the pro-imperialist working class protests. It fights back by demanding that the capitalist state cuts or stops immigration. The authors say that even if more ‘jobs and growth’ were created then ‘tensions over perceived differences in culture and values will remain’ (p 152). But that is because a large section of the working class has chosen to try and defend itself by relying on ‘its’ state to take action against foreigners. The truth is that it is in no position to hold up anything in its own culture worthy of respect.

Political climate

This book gives a systematic overview of contemporary political opinion, especially that underlying the support for national populism. It helps to clarify the depth of the political problems faced by those who do not like what is going on, but the solutions offered by the authors end up endorsing the concerns of the reactionary populists! When the capitalist system is pissing down on everyone from a great height, they join in the argument about the distribution of umbrellas and raincoats, and wonder if immigrants should be given any if that risks the ‘native’ workers going without.

Tony Norfield, 19 December 2018

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[1] The United Nations International Convention on the Elimination of All Forms of Racial Discrimination in 1966, of which Article 1 of the Convention defines racial discrimination as: ‘... any distinction, exclusion, restriction or preference based on race, colour, descent, or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social, cultural or any other field of public life’.

Regime Change

A friend pointed out to me today that the main benefit of the Trump victory in the US presidential election is that the left will no longer be able to blame ‘the media’ for its lack of support in the main imperialist countries. Despite near universal ridicule and rejection by the established pundits, especially those outside the US, The Donald has won. More importantly, the result reflects broader developments.

Even before the election result, Trump was seen as having voiced the concerns of the (white working class) mass of the electorate in the US, and of taking votes from those who were understandably less than enthused by Madame Clinton. But for him to claim basically half the electoral vote on a programme that was fronted by building a wall on the Mexican border, protecting US jobs against the nefarious schemes of domestic capitalists and foreign countries, and to ‘Make America Great Again’, reveals more than a little about the political outlook of the voters. More than half of the voters, one would have to say, given that Clinton also felt the need to shadow some of Trump’s policies. It is an outlook that will support the revival of economic nationalism by the US as an imperialist power, and it will encourage others to do the same.

In that respect, the US election has similarities with the Brexit vote in the UK. It is not so much that the incumbent political class has ‘lost touch’ with the masses, and must move aside or reconnect, although this view is supported by the presence of dumb elites who have still not really figured out that their comfortable maxims no longer work as the capitalist crisis becomes entrenched. It is more that a political system only works if votes can be accumulated to support particular policies. But maintaining the previous policies has less and less political support. In north-west Europe and in the US, the masses are revolting – in both senses of the term, as far as the elites are concerned. The politicians must, and will, adapt. Yet, they will be adapting not to a burgeoning protest about the evils of capitalism, but to a demand that privileges must be protected in a stagnant world economy. In other words, they will respond to reactionary popular sentiment.

It should be little surprise that the Brexit vote is seen as a marker by many commentators. After all, Britain is a key part of the existing structure of world power – of trade, financial and security arrangements – despite weighing far below the US. Another interesting, historically more distant, marker is the devaluation of sterling on 18 November 1967, an event that was a watershed in the later collapse of the Bretton Woods world financial system of fixed exchange rates. Ironically, the 14% or so devaluation then is similar to the devaluation of sterling after the 23 June 2016 Brexit vote! This also reflects the pressures on the system of world power and the trouble faced by the Anglosphere today.

Tony Norfield, 9 November 2016

The Scotland Debate

The irony of the British establishment's attempt to keep Scotland within the UK from an economic perspective is that it is also an argument why the 'rest of the UK' should get rid of Scotland as an economic burden on the rest of the UK! Whether they note how population trends in Scotland make pensions less affordable, or the risk of North Sea oil revenues running low, or being volatile, or the fact that public spending per head is 10% higher in Scotland than in the rest of the UK. This might backfire, except that the rest of the UK does not have a vote on getting rid of Scotland.

My guess is that Scotland will vote for keeping the union with the UK they have benefited from. This is not such a brave gambit, given that polls in Scotland still suggest a majority in favour of maintaining the status quo, although there are plenty of 'undecideds'. The brief period when the British establishment went for intimidation and threats to the Scottish nationalists is over. Instead there are promises of more goodies to win over those who are recalcitrant. They will benefit more from extra policy autonomy from the London-based regime and do not have to answer for the local, professional prejudice against outsiders if they stay inside the club. A wild card is the vote of those aged 16-18, whose opinions appear to be less carefully tracked by the regular pollsters, and who may know what they don't like (London rule), but are unsure what might happen at the start of their real lives under a fishy Salmond regime.

When all is said and done, for 'auld lang syne', it comes down to the status of the UK as a world power. Losing 8% of the UK population in Scotland might be a misfortune, as Oscar Wilde might have said, but losing part of an internal market, territory that includes mineral rights, a nuclear base and a ready supply of aggressives for external combat (the internal requirement having long been redundant) will look like carelessness in the eyes of other major powers. This is the basis of the countervailing offer by London.

A Scottish 'Yes' vote (in favour of separation from the UK) can hardly be characterised as a vote against British imperialism, even if it would cause the British ruling class some problems of management. The Scots are part of the privileged imperialist elite, and the demand for 'independence' is essentially a demand for privileges to be improved, not really independence. That is why the 'Yes' campaign wants to keep the Queen, the pound sterling, etc, etc. The 'Better Together' campaign argues that the structure of privileges will be more secure with a 'No' (continued union) vote, because they are backed up by a united, British power. That is the referendum debate, and it is a mistake to try and give the 'Yes' side a progressive veneer, as do some misguided radicals, both in Scotland and without.

Tony Norfield, 16 August 2014

(resubmitted after some amendments)

Merkel's Money

Don’t take the rally in Europe’s financial markets as a sign that the euro crisis is over. The 4.3% jump in Germany’s Dax index today and the rise in the euro’s exchange rate are more a reaction to hopes for further flows of ‘free money’ and relief at a crisis postponed once more. The surprise was genuine enough, after German chancellor Merkel’s former hard line on the need for austerity and ‘reform’ among indebted euro countries Spain and Italy, and in the context of widespread German political opposition to further bailouts.

A report on Merkel’s rationale for dropping the position Germany had before the latest Euro meeting, and making big concessions to Spain and Italy (hence, also to France, given French banks’ massive exposure to these countries!), highlights the following issues.

Merkel seems to think that high interest rate on Spanish and Italian debt are the problem, not the mess those countries are in which is leading to the high interest rates! Plus she thinks (or at least said in her statement to the Bundestag) that the EU Commission monitoring of their economic policies is still 'tough', so they did not need any additional terms applied to extra loans.

The end result is that there is a further extension of a 'euro country' general bail out for Spain and Italy, via the European Stability Mechanism, one of the newly invented funds. Merkel did not mention Germany's dominant share in paying for these, nor being liable for these, nor was she impolite enough to note the limited prospects for 'reform' in either country.

She won the Bundestag vote. But there will be further political trouble for her in Germany, and also many more disputes over terms and conditions of the new loans between Germany and other countries, when eventually they are due to be paid out.

Partly, this episode reflects the intractable debt situation in Europe and a desire to postpone confronting problems that cannot be solved. Partly, it is one of the wonders of the credit markets that you can always appear to have more money than you really have, if you only pay attention to the interest payments and not to the accumulation of debt. This is especially when it seems possible to drive the interest rate on borrowing down through state-credit backed bond purchases!

That neat solution of using someone else's money and credit rating to extend further debt begins to unravel when their credit rating is called into question. This is probably still some way off for Germany, which recently has had very low bond yields (even negative yields for 1-2 year bonds!). However, the first sign that the game is up will be when Germany loses its triple-A rating.

In the meantime, this episode also highlights the nonsense that it is German imperialism that is strangling Europe's economy. Yes, Germany is an imperialist power, but it is desperately trying to keep together a system – at growing cost to itself – that has guaranteed both its economic privileges and those that accrue to other members of the euro group. As a policy, this is like delaying an amputation until the last minute, just in case something else, less drastic, comes up. While these matters fester, just consider: how many tens, or hundreds, of billions in cheap credits have been extended to those outside the rich club?

Tony Norfield, 29 June 2012

British Imperialism Today

For most commentators, British imperialism is a matter for the history books. It is neither polite, nor, it would seem, in the least accurate, to label Britain today as an imperialist power. Yes, there were the days of empire and colonies, they will argue. But apart from a few hangovers from the imperial past like Northern Ireland, and a string of tax havens around the world whose anthem is ‘God save the Queen’, like Gibraltar, Bermuda and the Bahamas (and many others), surely the ‘imperialist’ label is just a term of abuse with no real content in present day reality? After all, Britain now presides over a voluntary Commonwealth of 54 countries, not an empire.

However, this is to look at the form, not the content, of imperialism. Even in the colonial era, it was not always necessary to exercise domination through direct political control. The economic content of imperialism, a focus of this blog, is how the major powers derive economic privileges from their position in the global economy. This may be through violence and intimidation: do what we tell you, or else. But it can also be through other forms of exercising power to ensure the economic privileges are realised. As explained in the first article on this blog, The Economics of British Imperialism, 22 May 2011, the economic lifeblood of British imperialism today comes from earnings on direct capital investments overseas and from the UK-based global banking system, in its role as the broker for global capitalism. It is this that makes the UK more than usually prone to go to war, or at least to interfere in other countries’ business.

In this context, it was interesting to read a comment last month from a frank Labour imperialist, Lord West, the former First Sea Lord (2002-2006) under the previous Labour Government and later Prime Minister Gordon Brown’s Security Advisor. In words that rang with pride in Britain’s imperial status, and annoyance at anyone who considered Britain to be second rate, he said:

“This business of a second-tier power - we are probably, depending on what figures you use, the fifth or sixth wealthiest nation in the world.

“We have the largest percentage of our GDP on exports, apart from the tiny countries around the world, we run world shipping from the UK, we are the largest European investor in south Asia, south east Asia (and) the Pacific Rim, so our money and our wealth depends on this global scene.

“We are a permanent member of the (United Nations) Security Council and I think that gives us certain clout and certain ability.

“These mean we are not a second-tier power. We are not bloody Denmark or Belgium, and if we try to become that, I think we would be worse-off as a result.” Daily Telegraph, 22 September 2011

This is basically true, and the insults for ‘bloody Denmark or Belgium’ come naturally from one who thinks British imperialism is not always given its deserved status. Lord West fought for Britain against Argentina in the 1982 war over the Malvinas, and is less inclined to adopt the euphemisms of politicians.

Tony Norfield, 24 October 2011