My Article in Pakistan Monthly Review May 2019

Global capitalist imperialism today

Rashed Rahman

Global capitalist imperialism has transformed its production structures/systems in such radical ways today that much of the earlier analyses relying on an examination of the aggregation of separate national economies and the trade and capital flows between them no longer serves to adequately explain 21^st century reality. Of course this does not mean all the laws of motion and tendencies described in 19^th and 20^th century analyses are completely redundant. Only that those laws and tendencies have taken on new forms, transforming the world into an interconnected global economy (globalisation) that needs fresh perspectives in order to be adequately understood.

First, the forerunner view of capitalism in the late 19^th and 20^th centuries. Karl Marx had already pointed to the tendency towards increasing concentration of wealth (oligopoly if not monopoly) and the growing role of finance capital (banks, etc). These tendencies by the close of the 19^th and beginning of the 20^th century had emerged as the dominant trend in the development of capitalism. However, the increasing concentration of production and capital into monopolies and the domination of finance capital were still seen from the lens of national boundaries. These boundaries were destined to burst under the pressure (or higher priority) to export capital rather than commodities per se, fuelled by, on the one hand, the tendency of the rate of profit to fall for investment within the confines of national boundaries, and on the other, the superprofits to be gleaned by the export of production and capital to foreign shores. Colonialism helped lubricate this two-way flow, with India, for example, being compelled to transfer huge wealth to Britain in the shape of profits and commodities during the 18^th-20^th centuries.

Cartels soon emerged to divide the global market amongst themselves. A territorial division of the world amongst the capitalist powers was evident. The challenge to the older developed and dominant powers by new emerging capitalism-developing countries led to two world wars in the 20^th century, wars essentially for a redivision of the world. This terrible mutual bloodletting that took the lives of millions sobered the capitalist world to the necessity of ‘managing’ their conflicts and differences without resort to war (especially after the emergence and demonstration of the terrible effects of nuclear weapons in the mid-20^th century and the division of the world being redrawn along the lines of the First – capitalist – and Second – socialist – Worlds). The mutual devastation of the capitalist contenders in WWII induced them to seek cooperation – economic, political and military – amongst themselves and as a united front against the socialist bloc (the Cold War). This mutual exhaustion also hastened decolonisation and the emergence on the world stage of former colonies as independent states that came to be labelled the Third World.

With the success of the Chinese (1949) and Cuban (1959) revolutions and the heroic and awe-inspiring resistance of the Vietnamese people to the aggression of the most powerful superpower on Earth, the US (1954-75), hopes for liberation from capitalism’s clutches began to be invested in anti-colonial, anti-imperialist, anti-capitalist armed guerrilla struggles in the Asian, African and Latin American continents, lumped together in the appellation ‘Third World’. This approach was even elevated to the status of a global strategy by Marxists such as Lin Piao (later disgraced after being killed in an air crash while trying to flee China after a failed coup attempt), in which the Third World would ‘encircle’ the developed capitalist First World and with the help of revolutionary socialist countries (a category that excluded the now ‘revisionist’ and ‘social imperialist’ Soviet Union and its Eastern European allies), would overthrow the rule of capitalism globally. This linear and oversimplified view came to grief and collapsed during the 1970s and 1980s when, despite the successful decolonisation and revolutionary national liberation of many colonies and semi-colonies, the capitalist First World not only survived, but was soon able to subsume even the most radical revolutionary regimes within the structures of global capitalism.

Post-liberation Third World countries soon ran up against the limitations of independent economic development at the hands of global capitalist structures and the inadequate capacity of the socialist countries as a whole to provide sufficient assistance for this project. Dependence on the developed capitalist world and the international financial institutions created by them after WWII (the Bretton Woods ‘twins’ of the IMF and World Bank) emerged as the mechanism for denying these post-colonial societies the space for forging an independent path. ‘Aid’ from the west and these institutions soon began to reveal itself as the modern means for extracting surplus value from these dependent countries in the form of debt traps and their concomitant wealth and capital flows to the developed metropolitan world.

A parallel movement could be discerned from the 1970s in the shape of superprofits gleaned from low-wage workers in the Third World South, primarily through Multi-National Corporations’ (MNCs’) supremacy over international production networks. This did not necessarily follow the pattern of capital investment in such countries, although that remained (and still remains) one of the pathways to profit and wealth flows from the South to the North. The new means for extraction of wealth involved the development of global supply chains, in which without any (or at least minimal) investment, MNCs in the developed world were able to develop manufacturers and suppliers in the low wage South for their global domination of market access. This ‘internationalisation’ of production (globalisation), spurred on immeasurably by the collapse of socialism in the Soviet bloc in the 1990s (leading to a huge ‘horizontal’ expansion of capitalism), created a new (from the old to a large extent) global capitalist class that relies on low wage but higher surplus value supply chains for products it does not manufacture, only markets globally.

This development has led to the trumping of the nation-state by 15-20 MNCs that control the fate of the global economy through global supply chains fastened at the centre of the global economy through control of production located primarily in the South to final consumption (market access and domination). Currently, more than 80 percent of world trade is controlled by the MNCs, whose annual sales represent half of global GDP. This ‘offshoring’ of production by the MNCs represents a vast shift in the predominant location of industrial employment from the North to the South between the 1970s and the 21^st century. In the developed capitalist countries this has had the effect of industries closing (producing the ‘rust belts’ in the west, particularly the US, where the factory town has virtually disappeared in a contemporary version of decline and fall), manufacturing jobs shrinking, and the working class being ‘left behind’. It is this disgruntled stratum that has become the political and electoral base for right wing, far right and populist nationalist forces in developed countries, Trump and Brexit being easily recognisable as the ‘beneficiaries’ of such trends.

Meanwhile in the low wage South, workers have few rights (or practised in the breach), suffer repression, and their solidarity is weakened through devices and structures such as outsourcing, labour contractors, and home-based workers. It is observable that the lower the per capita income of a country, the higher the share of western MNCs, leading to the undeniable conclusion that this is all about low wages. This phenomenon is by no means new. There are undeniable historical precedents but the scale and sophistication of commodity supply chains today represent a qualitative change that has, and is, transforming the global political economy.

What low cost (wages in particular) country sourcing yields is the capture by global monopolies of higher surplus value generated by labour in the periphery within a process of unequal exchange. The ‘success’ of China, India (and other ‘Tigers’) lies in their largest share of total employment in global commodity chains, with the US as the primary export destination. This is an area where Pakistan is still marginal. Hence the recent invitation by Prime Minister Imran Khan to Chinese investors to take advantage of low wages on offer in Pakistan as part of the China Pakistan Economic Corridor (CPEC) project.

Production and consumption in the world economy are increasingly severed from each other. It has yielded resource transfers from the developing economies to rich countries of an estimated $ 2 trillion in 2012 alone. To hide their extraordinary wealth, the rich are offered ‘treasure islands’ in the Caribbean and elsewhere for parking their money beyond the reach of snoopy tax collectors (cf. the Panama Papers). As for the commodity supply chains that underpin this reaping of riches, the number of jobs worldwide in these rose from 296 million in 1995 to 453 million in 2013. The global division of labour shows the trend of the world’s industrial workers in the South as follows: 1950, 34 percent; 1980, 53 percent; 2010, 79 percent.

The present-day global capitalist construct offers unrestricted mobility of capital, not of labour. This has elevated the concept of a ‘reserve army of labour’ to a ‘global reserve army of labour’. The gap between wages in the developing and developed world is in the range of 40-60 percent over the last three decades. Value capture and extraction, as opposed to direct value generation, is what determines the profits of the MNCs today. Holding wages down in the periphery makes possible the enormous siphoning off of economic surplus from the South without any quid pro quo. Those parts of the developing world that are lauded for their economic dynamism (unfortunately Pakistan is not amongst them) in production and exports have manufacturing at the heart of this process. Concomitantly, we see the emergence of MNCs that do not manufacture. These phenomena are central to the new trends of offshoring.

The internationalisation of monopoly capitalism and global commodity production through the replacement of high-wage workers in the developed world with like-quality, low-wage workers abroad has increased competition amongst the expanded (by addition of the South) reserve army of labour. Insecurity of employment and the ever-present threat of unemployment keep wages down (and profits up). The MNCs indulge at best in oligopolist rivalry. The freely competitive model is obsolete. The exploitation of workers in the South is not simply confined to low wages, but the fact that the difference in wages between the North and the South is greater than the difference in their productivity. Here too the monopoly capitalists are rubbing their hands in glee as productivity (and therefore profits) in the South is improving (e.g. China, India).

The overaccumulation and concentration of wealth has reached an extreme. The 26 wealthiest individuals in the world (most of them Americans) own as much wealth as the bottom half of the world’s population, i.e. 3.8 billion people. The world capitalist economy is more centralised (monopolistic), hierarchical and unequal in and between the richest and poorest classes and countries.

This is the world globalised capitalism has bequeathed us. It is obvious that limiting oneself to the confines of the nation-state in conducting the struggles of millions of workers, peasants, the poor and other marginalised sections of the community offers limited returns. In the absence of a current-day International of the Left (not necessarily a bad thing given the sorry history in this regard), should not the internationalisation of capitalism and its effects call forth an internationalisation, or at least solidarity, of the forces opposed to this unjust construct in the shape of Left movements coming together across the globe?

rashed.rahman1@gmail.com

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Pakistan Monthly Review Editorial May 2019

From the Editor

Rebuilding the Left

May Day 2019 came and went this year with the usual labour rallies throughout the country. However, as has been the case for several years now, the rallies were relatively small (especially when compared to the mammoth rallies of the working class movement at its apogee in the 1960s), lacking the passion that characterised the movement in the past, and may be considered to reflect the weakened situation the movement finds itself in. The concern is that May Day, the biggest day for the working class in Pakistan and around the world, now runs the risk of being reduced to an annual ritual and not much else.

The trade union movement has been pushed back immeasurably and incrementally over the last four decades. A combination of repression, laws that circumscribe or deny the right to organise unions for collective bargaining, restructuring of capitalist production through outsourcing, labour contractors and home based workers has left less than two percent of the working class in the formal sector unionised. The informal sector hardly has any scope for unions so far. All this means the working class and trade unions do come together on May Day every year, but their ranks are depleted and, despite local struggles, are unable to make a significant dent in the current situation.

The rollback of the trade union movement in the early 1980s (under military dictator General Ziaul Haq) unfortunately coincided with the collapse of the Left and the virtual liquidation (one or two localised struggles notwithstanding) of the peasant movement. The Left collapsed and fragmented into small parties and groups not on major ideological/political issues but, as is known to have happened in history in periods of defeat and retreat, on petty ego, personality, and other similar differences. The result is that currently we are passing through one of the worst periods for the Left in Pakistan. Why we have arrived at this pass bears explication.

After the Communist Party of Pakistan was banned in 1954 in the wake of the Rawalpindi Conspiracy Case, the Left sought to survive and fight on under the umbrella of the nationalist-progressive National Awami Party (NAP). When NAP, after many ups and downs, splits, etc, was finally banned in 1975, the Left within its factions was orphaned, left rudderless, and became incrementally and increasingly irrelevant, a situation that continues and is at its worst today. The New Left of the 1960s also sought the ‘umbrella’ of the newly formed Pakistan People’s Party, and when that party’s fortunes declined from the 1980s onwards, they too collapsed. The remnants of these scattered, disparate Left groups are today reconstituted in a number of Left parties and groups, but these are individually and collectively ineffective. Even the formation of the Left Democratic Front of 10 parties in 2017 did not change this miserable scenario, in which the Left has neither any meaningful presence nor voice in national politics.

The collapse of the ‘umbrella’ strategy by the 1980s exposed the absence of any alternative, more autonomous or independent option the Left could come up with. The Left as it exists today seems to be broadly constituted of three tendencies. The Trotskyites are regrouping at one end. In the middle are Left parties, groups and individuals who claim to be revolutionary socialists but in practice are no more than social democrats. At the other end of the spectrum are groups or individuals inspired by the post-Cold War currents of postmodernism, identity politics, and the assertion of individualism over the collective, all summed up in the tendency to drift towards liberalism.

In this seemingly unpromising landscape, there are chinks of light. One, Pakistan’s population has 65 percent people under the age of 30. This is a vast, largely untapped reservoir of idealism. Two, Pakistan’s crisis of state and society shows no signs of improvement. With the advent of the military establishment-backed government of Pakistan Tehreek-i-Insaaf, the economy is in recession, inflation, stoked, amongst other factors, by the free fall of the rupee has deprived millions of three square meals a day, the International Monetary Fund (IMF) 22^nd programme will further dampen demand, slow growth to around or less than the population growth rate (2-3 percent) and increase the immiseration of the people. It remains to be seen how long the people of Pakistan bear this burden, informed by the ‘politics of common sense’ (see the review of Asim Sajjad Akhtar’s book below), before they arrive on the barricades.

The Left will have to gear up if it is to play a role in this looming confrontation between the people and Imran Khan’s government, backed by the military. First and foremost, the Left has to update its analysis of the world and Pakistan to reflect the contemporary reality of capitalist imperialism that dominates the globe (see Rashed Rahman’s article below). Two, the mass fronts, working class, peasantry, women, religious minorities and oppressed nationalities will have to be energized, brought together in a mighty stream before it can put pressure on the ruling elite for change. This seems the only viable path at present towards 21^st century socialism.

Business Recorder Editorial May 25, 2019

Opposition coming together?

The Pakistan People’s Party (PPP) held an Iftar dinner for the heads of almost all the opposition parties. The purpose of getting together is said to be to chalk out a joint strategy against the government on the issues of inflation, the IMF deal, the actions of the National Accountability Bureau (NAB), the allegedly rigged elections of 2018 that brought the Pakistan Tehreek-i-Insaaf to power, the rupee’s steep fall and the projected further increase of 28-47 percent in gas tariffs. Amongst those invited are Maryam Nawaz representing the Pakistan Muslim League-Nawaz (PML-N), Awami National Party’s Asfandyar Wali, Jamiat-i-Ulema-i-Islam-Fazl’s (JUI-F’s) Maulana Fazlur Rehman, Pakhtunkhwa Milli Awami Party’s Mahmood Khan Achakzai, Balochistan National Party-Mengal’s Sardar Akhtar Mengal (did not attend), Jamaat-Islami’s Sirajul Haq, Qaumi Watan Party’s Aftab Sherpao, and JUI-Noorani’s Owais Shah Noorani. The guest list reads like a veritable who’s who of the opposition, if not a significant chunk of the political firmament. PPP Co-Chairperson Asif Ali Zardari has already come out with a call for a movement after Eid against the government. Before that, and soon after his defeat in the 2018 elections, Maulana Fazlur Rehman had been exhorting the opposition to start an agitation. He is said to have played a role in persuading the PPP and the PML-N, the two main opposition parties, to lay aside their differences in the interests of removing the present incumbents. Although matters are not so clear cut in the PML-N, with imprisoned Nawaz Sharif reportedly having given the green signal for a movement and Shahbaz Sharif still in London, Maryam Nawaz’s stepping into her father’s shoes may well prove the most significant development for the party in recent times. Although government spokespersons are characterising the talk of a possible grand opposition alliance as just a cover for distracting attention from the alleged corruption of Asif Zardari and the Sharifs, the development cannot be so easily dismissed. Both the PPP and PML-N leaderships are in the dock in numerous cases being pursued by NAB.

Although the PPP and PML-N leaderships are tainted by the corruption allegations being pursued night and day by NAB, it is too facile to simply describe the intended coming together of the opposition as merely a ploy to wriggle out from under the NAB barrage. The opposition is keenly aware of the fumbling image of the PTI government, especially where the economy is concerned. They are also sensitive to the complaints getting louder by the day from the public and ordinary citizen about the tsunami of inflation that has threatened even the normal food intake, not even sparing people during Ramzan. Now the news of a further tariff hike of gas to follow the earlier over 140 percent increase must be giving the ordinary citizen nightmares. Three square meals a day are rapidly going out of the reach of the poor, with further inflation expected once the IMF programme kicks in. All this potentially provides both tinder and seething lava on the street for the opposition’s plans to hold protests all over the country after Eid, building up to Maulana Fazlur Rehman’s dream of a long march on and shutdown of the federal capital. It may be early days, but there is a discernible convergence amongst the opposition parties against the perceived arrogance of the government, especially Prime Minister Imran Khan, who has consistently avoided reaching out to the opposition even when it is constitutionally required, and exhibits an extraordinary indifference and even contempt for parliament, to which he is accountable for his government’s policies and actions. Added to this opposition parties’ convergence is the growing frustration and anger amongst the people at the inept, fumbling, and in terms of affordability disastrous handling of the economy by the PTI government so far, with far worse feared to be in the pipeline.

Business Recorder Column May 21, 2019

Dark clouds on the political horizon

Rashed Rahman

Eleven opposition parties met at an Iftar (breaking fast) dinner in Islamabad at Chairman Pakistan People’s Party (PPP) Bilawal Bhutto Zardari’s residence on May 19, 2019. If Jamiat-e-Ulema-i-Islam-Fazl (JUI-F) chief Maulana Fazlur Rehman had had his way in persuading the moot to come out in a united long march and sit-in/shutdown of Islamabad (a la Imran Khan’s dharna of 2014) immediately after Eid, we would once again have witnessed the familiar pattern of an incumbent government being challenged by a host of disparate opposition forces with but a one-point agenda: remove the government. However, the Maulana is no Nawabzada Nasrullah, that late lamented master of forging broad based opposition alliances in our history. Therefore Maulana Fazlur Rehman had to be content with what he could carry away from the opposition meeting. This consisted essentially of an agreement to mount individual parties’ protests for the moment and to come together in an All Parties Conference after Eid, to be chaired by the Maulana, to chalk out the future course and joint strategy of the opposition for its anti-government drive.

There may be those, including the Maulana, who were disappointed by this ‘halfway’ conclusion or outcome to the eagerly awaited coming together of a divided opposition, basically divided because of the history of a conflicted relationship between Asif Ali Zardari and the Sharif brothers, despite the Charter of Democracy (CoD) signed by the late Benazir Bhutto and Nawaz Sharif in exile in London in 2016. At the meeting itself, both Bilawal Bhutto Zardari and Maryam Nawaz, stepping out into a leading political role, pointed to the fact that the CoD had facilitated the continuance of democracy in paving the way for the peaceful transfer of power from one party to the other through the ballot box for the first time in the country’s chequered history. The desire was on display to broaden the ranks of the parties adhering to the CoD by including more political parties within its fold.

Asif Zardari, Nawaz Sharif and his brother Shahbaz Sharif have not had the easiest or smoothest of relationships. For example, Nawaz appeared in black coat before the Supreme Court in pursuance of the Memogate case, something he later regretted. Shahbaz swore to rip open Asif Zardari's stomach and recover alleged ill-gotten wealth (ironic in hindsight, given that today Shahbaz is under the National Accountability Bureau hammer himself). The older generation therefore carries more than its fair share of baggage from the past. This is not necessarily baggage that has carried to the new generation poised to take over the reins of these two major political parties. The PPP’s only hope of resurrection lies in Bilawal Bhutto Zardari. The Pakistan Muslim League-Nawaz’s (PML-N’s) Maryam Nawaz represents the brightest hope on the horizon for turning around the party’s fortunes. Neither is as tainted by allegations of corruption as their elders. This could serve to deflect if not diffuse the criticism from the government and its supporters that the sole purpose of the opposition getting together is to save those in its leadership who are facing corruption charges.

While there may be a modicum of (unacknowledged by those accused) truth in these charges, they have been overused by the PTI while in opposition and certainly after being ensconced in power. Their efficacy is also wilting in the face of the government’s disastrous performance in office over the last nine months. There is now open speculation amongst the commentariat whether this government can last out its five-year term and, if it does, what that may portend for the people and the country.

Handling the economy has proved the Achilles heel of this government. For them to argue that they had no idea things were so bad (because, they repeat ad nauseam, of the mess inherited from the past 10 or 70 years – take your pick) is unfortunately only half the picture. The PTI did not know accurately how things stood not only because they had conjured up a subjective, politically motivated and partisan picture of the economic landscape (e.g. corruption is the main, if not only problem of Pakistan, by which they meant the corruption of the Zardaris and Sharifs, money laundered abroad in the billions will be recovered, overseas Pakistanis will invest billions in Pakistan after a PTI government is installed, and other similar fanciful slogans that had little or no basis in reality or underestimated the challenge of proving and recovering so-called stolen money as well as persuading Pakistanis abroad and at home to invest so that foreigners would also be persuaded to return with their money bags to our shores). None of this has transpired because, also, the PTI has displayed all the characteristics of a party that is a prisoner of its own rhetoric. It has yet to make the transition (if that is at all possible) from the unabashed, unfettered, even wild rhetoric atop a container to responsible policy, statements and steps in conformity with the ground realities.

The government’s actions over the last nine months have further depleted the confidence and ability to function with relative ease of the business community. The critical need to meet revenue targets, if not increase tax collection, has persuaded the government to further squeeze through raids, tax notices and sundry other coercive measures, the existing tax filers. In the process, businesses already reeling under the impact of the recession in the country have closed. Meanwhile the non-tax filers are laughing all the way to the bank and at the ‘innocent’ filers who may be ruing their adherence to the law and rules. This is the surest way to cook the golden goose. The new FBR chief at least has acknowledged this by halting such measures.

As to the opposition, the PML-N was meeting in Islamabad as these lines are being written to decide its future course of action after briefing its two leaders: Nawaz Sharif in jail and Shahbaz Sharif in London. Whether the two main opposition parties will be able, under the generational change in their dynastic politics, to overcome their past differences and come together to mount a concerted challenge to the government only time will tell. However, there is another factor that may impinge on developments. The people are groaning under the tsunami of inflation, unemployment, lack of employment, rupee free fall that has been unleashed in the first nine months of the government. More seems on the cards now that the country has been all but delivered in hock to the IMF. Whether the opposition comes out in a united movement after Eid or not will determine the character of the response to the people’s serious difficulties. If the movement is led by a combined opposition, there is hope it will remain peaceful. If, however, this does not happen or fails in practice, the possibility of anarchy, violence and even bloodshed cannot be ruled out.

In this scenario, one wonders what the masterminds of the present dispensation are war gaming?

rashed.rahman1@gmail.com

rashed-rahman.blogspot.com