According to a report in the Times of India (November 23), the United States has asked European countries to restrict immigration in order to preserve “Western Civilization.” Many in the Third World would find the term “Western Civilization” laughable, especially if it is used in the sense of denoting something precious and worth preserving. The atrocities committed by Western imperialist countries against people all over the world over the last several centuries have been so horrendous that using the term “civilization” to cover such behavior appears grotesque. From British colonialism’s unleashing of famines in India that killed millions in its rapacious bid to raise revenue from hapless peasants, to Belgium’s King Leopold’s unspeakable brutality against the people of what used to be called the Congo, to German extermination camps in Namibia that wiped out whole tribes, it is a tale of horrible cruelty inflicted on innocent people for no reason other than sheer greed. It is not surprising in this context that Gandhiji, when asked by a journalist what he thought of “Western Civilization,” wryly quipped, “that would be a very good idea.”
But let us ignore all this cruelty and focus only on the material advance achieved by the West. This material advance itself has been achieved on the basis of an exploitative relationship that the Western imperialist countries had developed vis-à-vis the Third World, a relationship that left the latter in such a state that its inhabitants today are desperate to escape it. Western prosperity is not a separate and independent state achieved through Western diligence alone; it has been achieved through a process of decimation of the economies of countries from which the immigrants are fleeing. What is even more striking is that Western imperialism not only wants to stop the inflow of immigrants; it wants to prevent, even through armed intervention, any change in the societal structure in the immigrants’ home countries that could usher in development that stops this inflow of immigrants.
My argument might of course would be dismissed as hyperbole. After all, Western economies have been characterized by the introduction of remarkable innovations that have dramatically raised labor productivity, which in turn has made possible an increase in real wages and the real incomes of Western populations. It is this innovativeness that distinguishes the West and that is lacking in the Third World; it constitutes the differentia specifica between the two parts of the world, the root cause of their divergent economic performances owing to which migrants are seeking to move from one part to another.
Two things about innovations, however, must be noted. First, innovations are typically introduced when the market for the commodity that would come out of the innovation is expected to expand, which is why innovations do not get introduced during depressions. Second, innovations do not on their own raise real wages; they do so only when there is a tightness in the labor market that arises for independent reasons. For a very long period in history, the expectation about market expansion for Western products was generated by the seizure of Third World markets. The Industrial Revolution in Britain which started the era of industrial capitalism could not have been sustained if colonial markets had not been available where local craft production could be replaced by the new machine-made goods. The other side of Western innovativeness therefore was deindustrialization of colonial economies that created massive labor reserves there.
Even in countries where innovations were introduced, labor reserves were also created because of technological progress, but these reserves got reduced owing to large scale migration of labor to the temperate regions of settlement abroad, such as Canada, the United States, Australia, New Zealand, and South Africa, where settlers massacred and displaced the local tribes from the land they had occupied, and then cultivated this land. Within the innovating countries, therefore, tightness was introduced into the labor market through such large-scale emigration, because of which real wages could increase alongside innovations that raised labor productivity.
The labor reserves created in the colonies and semi-colonies, however, could not migrate to the temperate regions; they were kept confined to the tropical and subtropical regions, trapped within a syndrome of low wages, through tight immigration laws that continue till today. If capital from the metropolis could have flowed in to take advantage of their low wages to produce goods for the world market with the new technologies, then the wage differential could have disappeared. But that did not happen. Despite their low wages, capital from the temperate regions did not come into these economies except to primary commodity-producing sectors; and manufactured goods produced by local producers, using this low-paid labor and adopting the new technologies, could not enter temperate region markets owing to high tariffs. Western innovativeness, in short, produced material prosperity in the metropolis, because it was complemented by a segmented structure of the world economy.
That is not all. The diffusion of capitalism occurred within this segmented structure: along with labor from Europe migrating to the temperate regions like North America, Australia, New Zealand, and South Africa, capital from Europe too started getting invested in these new lands as a complement to labor migration. This capital however was extracted from the tropical and subtropical colonies and semi-colonies by impounding gratis their foreign exchange earnings from the world, making up a large part of their economic surplus, a process that has come to be known as the “drain” of surplus.
The diffusion of capitalism in the “long nineteenth century” from Britain to Continental Europe, Canada, and the United States took the form of keeping British markets open for the goods of these regions and making capital exports to them at the same time; that is, of Britain having both a current account and a capital account deficit vis-à-vis these regions. The total deficit, taking both current and capital accounts together, of Britain vis-à-vis these three most prominent regions in 1910 was 120 million pounds. Half of this amount, according to the estimates of economic historian S. B. Saul, was settled at the expense of India, through Britain’s appropriation of India’s entire export surplus vis-à-vis the rest of the world, and also India’s payment for deindustrializing imports from Britain in excess of the primary commodities it sold to Britain. If we take Continental Europe and the United States alone, then Britain’s total deficit was 95 million pounds, of which almost two-thirds was settled in this manner at the expense of India.
Thus the entire development of capitalism historically occurred through the creation of a segmented world. The innovativeness that is supposed to underlie the material prosperity of the West also occurred through this segmentation. It is not innovativeness therefore that explains why the West became prosperous while the Third World stagnated and declined, but this fact of segmentation. After all, even theories like Joseph Schumpeter’s, that emphasize innovations as the cause of material prosperity, show all workers to be benefitting from innovations. But if some workers alone are the beneficiaries (apart from the capitalists, of course) while others belonging to a different region are excluded from these benefits, then the cause for this divergence must lie elsewhere, not in the fact of innovativeness being confined to only one region. The essence of this segmentation was the deliberate exclusion of one region from the process of material development, through the imposition of tariff barriers against its products, through not permitting it to impose tariff barriers of its own against the products of the metropolitan region, and through the latter’s acquisition gratis of a part of its produced economic surplus.
The days of colonialism are over; what is more, capital from the metropolis now is willing to flow into the Third World to produce goods for the world market using local low-paid labor and new technology; why then does the poverty of the Third World continue to remain in this new situation? We go back here to the proposition that innovations as such do not raise real wages; theories like Schumpeter’s that claim the contrary, by assuming a spontaneous tendency under capitalism to use up labor reserves and move to full employment, are simply wrong. Technological progress in the third world through the spread of innovations, whether under the aegis of metropolitan capital or of local capital, which tends typically to be labor-saving, does not therefore reduce the relative size of its labor reserves, and hence of the relative magnitude of poverty. Third World labor has no scope for migrating anywhere to the temperate regions.
Two factors are going to worsen this situation in the coming days: one is Trump’s tariffs that seek to export unemployment from the United States to the rest of the world, especially the Third World; and the other is the introduction of artificial intelligence within the framework of capitalism.
[Prabhat Patnaik is Professor Emeritus at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Courtesy: Newsclick, an Indian news website founded by Prabir Purkayastha in 2009, who also serves as the Editor-in-Chief.]
