In his book titled Imperialism: From the Colonial Age to the Present written in 1978, based on Lenin’s theory of imperialism, Harry Magdoff makes a distinction between old and new imperialisms.(1)Magdoff argues that ‘the old imperialism’, which indicated the processes of directly creating and appropriating the labor in the colonies, was replaced by ‘the new imperialism’ that depends on the differentiation of goods and services produced in core and peripheral countries by creating an international division of labor, and thus, surplus value or “value-added” was created in the core countries. Similar to Magdoff, you are emphasizing that the great economic surplus value created in the Global South is included as “value-added” to the GDP of the Global North; but in fact, this should be understood as “the appropriated value” by means of late imperialism itself.(2) Considering that it has been forty years since and countless changes took place regarding both definitions, what kind of a continuous relationship can be claimed between the new form of imperialism today and its old forms? Can it be claimed that imperialist relations such as global division of labor, Triadization, The Unholy Trinity, which belong to the definition of imperialism of the 20th century, evolved into different forms?
Intan Suwandi: Harry Magdoff sees imperialism as both evolving through history and rooted in the logic of capitalism. In Imperialism: From the Colonial Age to the Present, he carefully and brilliantly explains how the characteristics of imperialism changed in relation to the colonial relationship between the core and the periphery. The emphasis on the international division of labor is especially used to explain the characteristics of European expansion after the rise of European industries following the Industrial Revolution in the 1870s, in which the colonies served mainly as suppliers of raw materials for the booming industries in Western Europe and of foodstuffs needed for the growing urban populations related to these industries. In addition, the colonies then served as new markets for commodities produced in Europe. Even after decolonization, the core countries (or the metropolitan centers) tried to maintain this imperialist relationship between them and the periphery to control the raw materials supply and all the trade and investment opportunities, both through direct and indirect means—an important aspect of dependency. Magdoff also incorporated monopoly capitalism and the rise of giant (multinational) corporations in the 1960s as significant components of the evolving characteristics of imperialism.
Many of the same processes can still be found today. Recent cases of U.S. imperialism in Latin America, such as what happened in Bolivia, can serve as a striking example. International trade and financial institutions such as the Unholy Trinity (largely controlled by the North) also still play a major role in perpetuating imperialist relations between the South and the North. As an example, the notorious Structural Adjustment Policies are pretty much still in place and perpetuating debt peonage for the South, even though they have been named differently, disguised as “poverty reduction” programs. These programs, among others, force countries to privatize their public sectors and to apply austerity measures. They are compelled to cut funding in sectors like healthcare and education so that they can redirect these funds to debt payments. When things like this happen, the most vulnerable population is the one that suffers the most. Basic resources like clean water and healthcare become more unattainable for the poor. When access to public goods and services are in the hands of the market, growing inequality ensues.
Further, when something like the COVID-19 pandemic happens, you can see where the priority lies when it comes to such institutions. In his remarks on G20 finance ministers virtual meeting in March 2020, World Bank Group President David Malpass emphasizes that countries, in their effort to recover from the consequences of the COVID-19 pandemic, need to “support the private sector and counter financial-market disruption.” He also stresses the importance of “structural reforms”—the World Bank, he says, will work with countries that “have excessive regulations, subsidies, licensing regimes, trade protection,” among other things, to ensure that they would instead “foster markets, choice and faster growth prospects during the recovery.” Of course, this has nothing to do with addressing the pandemic and everything to do with expanding the reach of neoliberal globalization, to the benefit mainly of the have countries, and to the detriment of the have-not countries.
However, also in the spirit of Magdoff’s approach, we need to acknowledge how imperialism has evolved over the past forty years, with the changes in the world economy, influenced partly by technological development, especially in information technology. These changes include the patterns associated with global production, such as the increase of foreign direct investment flows to the Global South and, more recently, the increase of arm’s length contracts, where multinationals headquartered in the Global North (mostly still in the Triad, with some exceptions in East Asia’s “industrialized economies”) are engaging in outsourced production to offshore suppliers, and financialization. Global commodity chains have become more complex, with each multinational corporation having thousands if not millions of suppliers across the globe, with the majority of the production processes happening in the South, making the South as home to a large and growing population of the world’s industrial workforce.
Suwandi, I. (2019). Value Chains: The New Economic Imperialism. New York: Monthly Review Press
With such developments, the global division of labor has changed to an extent. Previously, the South was mainly a supplier of raw materials engaged in extractive industries or agriculture, while the main areas of value-added production and employment associated with manufacturing occurred in the North. Today, some of this traditional division of labor remains, especially when we talk about agricultural products that can only grow in temperate climates, as Utsa Patnaik and Prabhat Patnaik have pointed out in A Theory of Imperialism. Nevertheless, the role of the South in industrial employment had increased massively. Today we have companies located in the North like Apple or Nike, whose products, including their intermediate parts, are entirely or almost entirely produced in the South. Even companies that traditionally operated through their own subsidiaries when it comes to overseas production, such as automobile companies like Volkswagen or General Motors, now outsource their production through arm’s length contracts, involving vast production networks in many countries.
This is where the idea of “capturing value” comes in. The neoclassical understanding of “value-added,” in which “value added” (that is, the surplus value generated in production) is attributed to the corporations at the center of the world economy even while the employment and production occur in the South, is a reflection of the core contradiction of late imperialism. This argument about value-capture has been offered previously by Marxist political economist John Smith in his book Imperialism in the Twenty-First Century. And this is also examined in my own works. Since production today happens mainly in the South, where the exploitation rate is higher due to low unit labor costs—a measurement that takes into account both wages and labor productivity—in many countries in the South that have become production (especially assembly) centers, labor values generated by production are “captured” and not registered as arising in the South due to asymmetries in power relations, in which oligopolistic multinational corporations are key conduits.
The point is this: even with such significant changes going on, we need to remember that imperialism has accompanied the development of capitalism from the very beginning. And when we are talking about capitalist imperialism—a system of unequal, hierarchical world economy, dominated by giant oligopolies and a handful of states in the imperial core—it has its own characteristics. As Magdoff explains, unlike what happened in the previous modes of production, like that of classical antiquity, where imperialism was about expansion into other geographical areas and the exaction of tribute, capitalist imperialism is characterized by the process whereby the dominated areas, that is, the South, are transformed, adapted, and manipulated to serve the imperatives of capital accumulation at the center. As I explain in Value Chains(3), while overall market relations in the emerging economy are also transformed, the firm-level transformations are often parachuted in with no real organic relation to, or logic stemming from, the emerging economy, and are just as easily dismantled and removed. This, then, creates an illusion of development and advanced production in these countries, which nonetheless remain in a dependent condition. With arm’s length production, even more than with traditional direct foreign investment, what is being produced are mere links in a global chain of value, in which particular nodes of production are digitally specified and controlled from abroad. The entire production system is designed to be highly mobile and can be rapidly shifted elsewhere if unit labor costs rise unduly. This largely explains the imperialist characteristics of our world economy today.
Internationalization of capital is not a new phenomenon. However, as you also suggest, the new wave of globalization starting in the 1970s might have certain distinguishing characteristics. What can be these distinguishing aspects, or how can we compare and contrast the so-called neoliberal period with the past of imperialist capitalism?
Intan Suwandi: I believe I have answered a large part of this question above. But it’s worth adding here that the globalized production I’ve discussed so far—that started in the 1970s in the middle of economic stagnation—was later accompanied by the demise of the Soviet Union and the integration of the workforce of former socialist countries like China and former protectionist countries like India into the world economy, resulting in the expansion of the global labor force and its reserve army in the South. In addition, as Farshad Araghi argues, depeasantization led by the spread of agribusiness in the South was widespread, partly as an effort to dismantle the “agrarian welfare state,” which functioned in the first 25 years after the Second World War, to counter the spread of peasant-based socialist or nationalist movements. This new structure of the world economy then leads to what the business literature calls global labor arbitrage, referring to the substitution of higher-paid labor with lower-paid labor globally. Capital sees this as an “urgent survival tactic” for corporations, where they search for the means to lower their production costs, partly to compensate for their inability to engage in price cutting due to monopoly capitalism. But at its core, this is a way for capital to pursue higher profits. The fact that capital can move relatively more freely compared to labor (still largely restricted by regulations such as immigration policies) enables it to take advantage of immense differences in unit labor costs globally through the processes I mentioned previously, such as direct foreign investments and arm’s length contracts.
But such phenomena rooted in unequal power relations between capital and labor as well as among nation-states are often hidden. Mainstream theories of global commodity chains have instead highlighted the complexities of such chains to push for arguments for the decentralization of power. These theorists and scholars argue that, since global commodity chains involve so many actors in various countries, power is no longer concentrated at the top and the chains are, to a large extent, not hierarchical. Less powerful firms in non-advanced countries can experience “upgrading” and better their positions, and this in turn leads to growth for the said countries. This idea of the decentralization of power often takes into account the more “buyer-driven” networks characterized by arm’s length contracts that have become a crucial aspect in global commodity chains. Between 2010 to 2014, according to the World Bank, the growth rate of arm’s length trading (6.6 percent) exceeded the growth rate of the world economy (4.4 percent), and an UNCTAD report shows that arm’s length trading generated $2 trillion in sales in 2010 alone.
But we need to question this argument. Is it true that dispersed production networks actually lead to the decentralization of power? And this is one of the questions I asked in my own research. To begin, previous critical and radical approaches, such as that of economist Stephen Hymer, have shown that “lead firms” in global commodity chains (in many cases, this means multinationals) manage such inter-firm networks within varying governance structures. Far from representing the decentralization of control over production (and valorization) as is sometimes assumed, the “dispersed” networks associated with the new non-equity modes of production are ultimately governed by the centralized financial headquarters of the giant corporations they service, which retain monopolies over information technology and markets and appropriate the larger portion of the value added. The case studies I conducted also reveal that even through arm’s length contracts, multinationals can still control much of what happens within their chains, either directly through their subsidiaries that are located in the same country as the suppliers or indirectly through a variety of bureaucratic procedures and the processes involved in what is known as “flexible production.” The point is that multinationals seek to externalize costs by, for example, giving their suppliers responsibilities to deal with risky scenarios, such as missed forecasts caused by fluctuating market demands and waste management.
Going back to the question, global commodity chains in this neoliberal period are often seen as some kind of meritocratic system free from imperialist relations due to their said complexities. But upon further critical examinations, this is not true. Through our current global commodity chains and the workings of today’s world economy, Global North capital embodied in multinationals, together with their state apparatus and their henchmen like the Unholy Trinity, has the power to restructure the economies in the South to meet the needs of the core imperial powers. As Jason Hickel explains, if countries in the South dare to fight back, they know that the consequences can be fatal; they have to be ready to face anything from economic sanctions to military interventions.
In today’s literature, the hegemony of the concept of neoliberalism is such that it is used to define contemporary capitalism itself. In this respect, do you think that the conceptualization of neoliberalism or neoliberal globalization has been transformed into a means of displacing the concept of imperialism? When you look at those discussions from your own perspective, what kind of a relationship do you think there is between neoliberalism and imperialism? Is it possible to claim that there is a dichotomy or reciprocity between neoliberalism and imperialism?
Intan Suwandi: If one associates neoliberal globalization with a “flat world” ala Thomas Friedman or a meritocratic field where power is decentralized and firms and countries can “climb the ladder” to better themselves, then I think it is problematic. John Bellamy Foster explains that the globalization of production that takes place within late imperialism has generated a generalized monopoly capitalism, as theorized by Marxist thinkers such as Magdoff, Paul Baran, Paul Sweezy, and Samir Amin. Considering these aspects, obviously, neoliberalism, like other forms of capitalism, is imperialistic. The same applies to neoliberal globalization. Regardless of its changing characteristics, the goals of globalization remain the same, as Amin writes: to control the expansion of markets, to plunder the earth’s natural resources, and to exploit the labor reserves in the periphery.
It may be more complicated when we talk about countries like South Korea or the other “tigers” such as Hong Kong and Taiwan. The discussion of their “miraculous growth” certainly warrants a critical analysis, but what we can attest to is that capitalists from these economies have been expanding their businesses for a while now, and they, for example, own factories in Southeast Asian countries, including Indonesia, to supply multinationals headquartered in the Triad.
Spatial distribution of production and global division of labor have undergone significant shifts during the past four decades. Upon the crisis in the 1970s, most peripheral economies, which had applied the inward-oriented import-substitution industrialization model in the previous era, started to pursue an outward-oriented and integrationist strategy emphasizing export-led growth. So, constituent parts of the world economy started to integrate with international markets. It was believed that semi-peripheral and peripheral economies were going to develop and converge with the core economies in terms of prosperity and the level of industrialization. Advocates of this position have always favored the production chains on the grounds that it would mean foreign investment and industrial upgrading in the periphery along with new employment conditions, an increase in productivity, and eradication of poverty. Nonetheless, the reality did not correspond to the expectations. In the eyes of your studies, how can we evaluate the gap between these expectations and reality?
Intan Suwandi: As I have mentioned above, the reality does not correspond to what is being proposed by the mainstream arguments. To begin, it is impossible to evaluate the present organization of global commodity chains without taking into account the long history of colonization and imperialism, where the imperialist powers were able to become rich and powerful due to the processes of exploitation and expropriation done to their colonies for centuries. Processes that, in effect, underdeveloped the South. To argue that countries in the South can catch up through, say, industrial upgrading, seems to be oblivious of this fact.
Further, as Magdoff writes, even without formal colonies, imperialist relations continue to exist, perpetuating dependency and allowing imperialist powers to regain control over former colonies. In terms of direct foreign investment alone—which became significant especially after the Second World War—it was a means for imperialist powers to penetrate foreign markets and for their capital to compete in these markets directly, rather than only through exports. In the era of globalized production, both FDI and arm’s length contracts are a means for capital to increase profit margins through various mechanisms, including labor exploitation, the utilization of export processing zones along with the many benefits associated with them, and the looting of natural resources. For the South, being “competitive” in the game of attracting foreign investments means that they have to be able to offer low wages and a “docile” workforce, “political stability” (which means a lack of protests and demonstrations), tax exemptions, lax environmental regulations, and many others. Some groups, such as the national bourgeoisie and political oligarchs, will benefit from such situations, but the working class, including industrial and informal workers, peasants and petty producers, as well as the urban poor, is unlikely to experience any meaningful gains, if not suffer further—their labor exploited and their lands expropriated. So even if the economy were to grow rapidly in some countries in the South because of their incorporation into the capitalist world economy—in fact, for most the BRIICS (Brazil, Russian, India, Indonesia, China, and South Africa), the economic growth over the last decade has turned out to be dramatically slower than what had been optimistically predicted—that growth would be possible only by inflicting harm to, and creating misery for, the majority of the population.
Global labor arbitrage alone is a form of unequal exchange, where multinationals, in effect, get more labor for less and benefit from high markups on low-cost labor in the South, while the excess surplus obtained is often misleadingly attributed to “innovative,” financial, and value-extractive economic activities taking place in the North. Global labor arbitrage is a quest for valorization. It is a strategy for both reducing socially necessary labor costs and maximizing the appropriation of surplus value. It extracts more out of workers through various means, including repressive work environments in periphery-economy factories, state-enforced bans on unionization, and quota systems or piece-rate work. This is how “drain” happens from the South to the North, where surplus of an economy is sucked out without an expected return of advantages; and labor is a part of the story of unequal exchange, along with other aspects such as energy, land, and raw materials. So again, regardless of the success stories of some industrialized countries (“emerging economies”) in East Asia—most people in the Global South population are not benefitting from the industrialization that’s born out of their countries’ incorporation into the world economy. We are not seeing in them a sovereign industrialization with the goal of fulfilling the needs of the people, but a form of dependent development designed to fulfill the need of capital to engage in endless accumulation for the prosperity of the few.
Especially for the period after the 2008 crisis, neo-feudalism metaphors have begun to be made for this new form that neoliberalism and, therefore, the capitalist system has transformed and taken.(4) In this conceptualization, it comes to the fore that as outlined in the previous question, with the allegations that the nation-state’s position in the capitalist system has gradually weakened even for its mediator role in the processes of appropriating the surplus-value, the multinationals have eliminated the nation-state with the supply chains they have established and by starting to their own productions in the lands they have bought in the peripheral countries. The fact that multinationals with such control possibilities in the Global South have gained the power to determine wages in these regions has opened the door to the claims that the system has evolved into a new type of feudalism. It is a situation that you and Foster claimed that multinationals undertake the processes of appropriation of surplus value in an uncontrolled manner in those purchased lands.(5)There are also examples where such companies employed their own police force and acquired extra-economic coercion devices (In Russia, the company Renaissance Construction preveneted its construction workers from going on strikes with the heeelp of AMON/SORB), thus adding new dimensions to the neo-feudalism debate. On the other hand, this position also attributes a vital role to the emergence of parcellated sovereignty, and new lords and peasants in understanding the world today. You have certain considerations on the relationship between the decentralization of production process and centralization of power. In this context, can you evaluate the neo-feudalism debates and the relations of these debates with the imperialism of the neoliberal era from the framework you look at?
Intan Suwandi: Do you mean by this question that modern corporations are like feudal lords, behaving independently without regard to any state structures? I’m not familiar enough with the debates regarding neo-feudalism, so I won’t go far here, but I do think there are fundamental differences between feudalism as normally conceived and contemporary capitalism. I don’t think we can say that modern multinational corporations behave like feudal lords. In feudal societies, economic and political power are not separated. They are instead embodied in the person of the lord, or in the king once there are state structures. In today’s capitalism, I think it is more accurate to say that corporate power has infiltrated the state to an unprecedented degree (as exemplified by cases such as extensive lobbying practices, the common occurrences of extremely rich individuals holding political office, and so on), but there are still states, and they still wield enormous power, even against certain capitals, if they wish to do so. Another difference is this: the feudal lord or king has certain obligations—even though they are not always honored—of a personal nature to those beneath him. In Europe, for example, violating these obligations was a sin, just as loaning money at interest was a sin. Today, while it may be true that capital is somewhat immune from state regulation, there is absolutely no feudal sense of obligation. In addition, in modern capitalism, there are no companies such as the East India Company or the Dutch East India Company that can rule entire nations.
Moreover, when workers or peasants engage in resistance, it is usually the state’s military apparatus that attacks them. In some cases, companies (such as agribusinesses) or factory owners can hire paramilitary or use their own private security guards to harm protesting workers or peasants who refuse to leave their land, or in some cases, ask for the state’s cooperation to deploy the military in a region to make sure that a highly exploitative extractive industry can operate without problems. But that does not mean that capital has the same ability or power comparable to that of the state. Even in terms of wages, Global North capital can, say, put pressures on countries in the South to hold their wages down through limited mechanisms. For example, through the workings of international financial institutions and their structural adjustment programs, or simply through pressuring these countries to remain “competitive” in the world economy if they want to see foreign investments pouring in. However, in the end, the state itself still plays a major role in controlling wages, and it is also the state that represses workers’ movements for higher wages. So, again, I think it’s more about how capital and the state are interconnected, and the characteristics are not the same as in feudal societies.
It is important to consider that, whether or not sub-imperialism is “a thing,” its existence would not negate the existing imperialist relations in the world economy.
In the context of late imperialism, capital owners in the Global South have also played key roles in this process. In return, they have also had many gains; they also had opportunities to make offshore investments. In some instances, this triggered sub-imperialism debates or some other debates regarding the local capital owners’ capabilities or functions. What can be said in this respect?
Intan Suwandi: Global South capital does play an important role. In the context of late imperialism, that is, the imperialism of the global labor arbitrage under the aegis of generalized monopoly capital, capitalists in the South benefit from business projects that are made possible by the incorporation of their countries (or other countries in the South) into the global commodity chains. Some of them are owners of agribusinesses; some own factories, mines, and so on. This is related to the old comprador capital but on a much larger scale in the context of globalization. This group often consists of a handful of people, in which some are still referred to as “oligarchs” in some countries in the South. They have a close connection to the political elites, and they aim to support neoliberal policies that will smooth the processes associated with foreign investments, land grab, extraction of natural resources, and other related mechanisms.
I am going to give examples from the manufacturing sector, since it was the focus of my study. In the countries with little power and wealth, these capitalists mainly serve either as local conglomerates who, say, own businesses that produce local brands that are sold on the local market and to a lesser extent foreign markets (usually in neighboring countries), or capitalists that are related to multinationals within the global commodity chains. They own local businesses that aim to supply multinationals headquartered in the North. So, in this latter case, these capitalists usually serve as “middlemen” between the local workforce and the multinationals. Even though they are still capitalists who manage and control the labor process of their workers—often in accordance with the demands of their multinational clients—and thus actively engage in exploitation, their power is quite limited when it comes to their involvement in global commodity chains.
The Indonesian suppliers I studied are included in this group. They at first claim that they take pride in being “high-tech” businesses that cater to niche segments in the market, but upon further examination, they know that they only cater to the demands of the multinational clients. Technology is to a large extent controlled by their clients, there is no room for innovation, and they have to be willing to change their production processes to fulfill their clients’ changing demands. They are required to show the details of their cost structure, often as a requirement in participating in bids, and their multinational clients can determine what their profit margins should be. There are a lot of other mechanisms involved here that show that multinationals still hold a lot of power, even in so-called dispersed networks dominated by arm’s length contracts. So in cases like this, it is unlikely that there’s a wide discussion about whether Indonesia can be the next big player in global commodity chains, with enough potential to replace countries in the Triad to become a new imperialist power, or to compete with the “Asian tigers.” (This, of course, does not ignore the fact that Indonesia has engaged in imperialist acts when it comes to West Papua, but this needs its own discussion, and the case involves the role of Global North capital in the region as well.)
It may be more complicated when we talk about countries like South Korea or the other “tigers” such as Hong Kong and Taiwan. The discussion of their “miraculous growth” certainly warrants a critical analysis, but what we can attest to is that capitalists from these economies have been expanding their businesses for a while now, and they, for example, own factories in Southeast Asian countries, including Indonesia, to supply multinationals headquartered in the Triad. Foxconn, one of the biggest suppliers to Apple, is a Taiwanese corporation even though its factories are located in China. This means that these capitalists engage in labor exploitation in other countries (and this often includes extreme cases and abusive practices), expropriate resources, but they also still serve as dependent suppliers in global commodity chains. Their multinational clients still benefit the most from this arrangement, but certainly there are variations in such complex power relations.
Interestingly, when it comes to the discussion of sub-imperialism, the country in question is usually China, whose unit labor costs in 2014 (the last available year in the data used in my book) were still at 46 percent of the U.S. level. There are debates regarding whether China has become sub-imperialist, or is on its way to becoming a new imperialist power, especially when it comes to its investments and projects in some regions in Asia and Africa. Some argue that capitalist exploitation abroad does not necessarily lead to the imperialist path, and some disagree. Further, Andy Higginbottom, writing for the Review of African Political Economy blog, points out that the top ten countries of mining FDI in Africa are still dominated by mining companies based in the Triad, with the United States, United Kingdom, and France being in the top three. I can’t go further into the debates here, but there are interesting things to consider from this conversation.
China is certainly a special case—the second largest economy in the world but which can still be considered poor in view of its income per capita; a country which, quoting John Bellamy Foster, is “neither entirely capitalist nor entirely socialist” in its post-revolutionary developments—and there is not a simple answer to the question of where China is heading. Foster argues, and I agree with his assessment, that much “still depends on whether China in the future pursues a horizontal or a hierarchical-imperialist mode in relating to the countries of the Global South.” At least for now, we should not fall into the new Cold-War narrative that has been waged by the United States when we think about China. And it is important to consider that, whether or not sub-imperialism is “a thing,” its existence would not negate the existing imperialist relations in the world economy.
It is possible that their forced exclusion from the world economy will result in some changes in the power dynamics, but to what extent, I can’t predict. What we can be sure about is that there’s no possibility that any changes—if done to serve the interest of Global North capital—will result in a radical decrease in global inequality and the end of imperialism.
It can be said that the COVID-19 pandemic hit the imperialist relations of the neoliberal era in some ways, as well as created the opportunity to refresh and deepen imperialist exploitation relations from different angles. As you have emphasized from time to time, the COVID-19 pandemic has caused the supply chains of multinationals to break to a large extent, and their production that creates “value added” in many areas is disrupted or even stopped. In line with the spirit of the neoliberal era, multinationals that have already reduced their storage costs by eliminating these activities have not been able to effectively remedy the sudden decreases in consumption demands in some sectors and have remained inactive by not meeting the orders in some different sectors. As a result, as you have stated, multinationals that are unaware of the points where their supply chains in Peripheral countries extend have entered a kind of race to regulate their supply chains in the COVID-19 pandemic period.(6) If the bankruptcies from supply-chain disruptions occur, how will labor processes in the Global South be affected? Does this possibility have the capacity to make a radical change in the form of late imperialism in terms of the post-COVID-19 era? Moreover, you underline that China is the final stop at which many of these supply chains turn around. In this context, can it be claimed that late imperialism will dissolve in the world after COVID-19 and China will begin its hegemony with a new system proposal? Or should we expect China to restore and maintain this late form of imperialism and rise as a hegemonic power along with it?
Intan Suwandi: When the COVID-19 pandemic began, causing widespread lockdowns and social distancing, supply-chain disruptions were an inevitable consequence. The entire system of global production is pretty much disrupted, so much so that the COVID-19 pandemic is dubbed the “first global supply-chain crisis” in some circles. Combined with other factors, such as the complexities of the global commodity chains and the utilization of just-in-time, flexible production, the heavy reliance on countries with low unit-labor costs, especially China, as essential nodes in global commodity chains, contributes to the worsening of the “bullwhip effects” caused by the pandemic.
The lockdowns and the halt in production activities in China alone caused a huge disruption in global commodity chains, especially in relation to commodities (or parts of commodities) that are manufactured or assembled in China, as well as raw materials that are acquired from China. Corporations based in the United States that rely on Chinese suppliers to assemble their final products obviously were in trouble almost from the beginning of the pandemic, but such disruptions also influence everybody else along the commodity chains. China is, for example, Indonesia’s biggest trading partner, and roughly 20 to 50 percent of the country’s raw materials for its industries comes from China. As another example, Vietnam, which has also become a destination for manufacturing or assembly for multinational corporations, had problems when supplies of raw materials or intermediate parts from China were halted due to the pandemic. Of course China was able to restore its production fairly rapidly due to its effective handling of COVID-19. Nevertheless, the vulnerabilities of the system were revealed. Multinational corporations usually have some means to anticipate problems like this, by working with multiple suppliers from the same region that perform assembly or that produce the same intermediate parts, but when a pandemic like this happens, even this strategy is not sufficient.
The pandemic has, of course, affected the entire world economy, so supply-chain breakdowns are occurring in many different places. On the one hand, workers in the Global South are largely affected, in many ways similar to the low-wage, precarious Global North workers: many are losing their jobs due to lay-offs or factory closures, others who can still work are risking their lives every day, especially in workplaces that do not have sufficient protective measures against the virus. Workers in vulnerable positions, such as temporary and informal workers, suffer even more. And in countries where health care systems are already bad, the pandemic means that those who cannot afford expensive treatments will be left out to die.
On the other hand, there seems to be a kind of optimism in some countries in the South in regards to their eagerness to replace China in global commodity chains. The pandemic on top of the trade war initiated by the Trump administration has prompted many multinational corporations to move or to seriously consider moving their production outside of China (and to seek to diversify their supplier pools in general). And this has received some responses from countries like India and Malaysia, for example. There are news reports that these countries are trying hard to attract investors by offering incentives or promoting their potentials. In Malaysia, there is optimism that the country can become a new industrial hub for electronics manufacturing or high-end, automated industries. The country sees the U.S.-China trade war as an opportunity to bring back their lost fortune in the 1990s, when many multinational corporations left Malaysia for China after building electronics factories in Penang. Promoting its “better infrastructure” compared to their Southeast Asian neighbors, Malaysia has attracted new investments. In the first ten months of 2019, Penang secured $2.94 billion in foreign investment, an increase of 456 percent from the previous year.
In India, the government plans to offer $23 billion in incentives to attract companies to set up manufacturing in the country, including automobile, solar panel, and specialty steel factories. Earlier this year, the government approved an approximately $5.3 million incentive for local mobile phone manufacturing—an especially valuable sector for India—“towards specified Made in India initiatives,” in addition to the $900 grand it gives to electronics components manufacturing. Ravi Shankar Prasad, India’s Telecom and IT minister, claimed that the money will boost “investments in the critical electronics segment while positioning India as a global manufacturing hub.” Two dozen companies, including Samsung and Foxconn, plan to set-up mobile phone factories in India, an investment worth $1.5 billion.
In addition, multinationals have also been rethinking their devotion to just-in-time, flexible production. But all this won’t be easy. On the side of the Global South, there will be questions whether the country has sufficient infrastructure to support industries on a large scale. Most importantly, I don’t think global capital will be willing to abandon the thing that keeps accumulation alive: the commitment to the search for low unit labor costs and to the ability to dodge a string of responsibilities—be it about working conditions and workers’ wellbeing or about dealing with the waste in labor and materials when it comes to missing forecasts. Global capital will prefer to find solutions that still adhere to the same logic.
Maybe long-term, global capital can try to restructure the world economy to their benefit once again. Perhaps China’s role within global commodity chains will change. We don’t know. The present New Cold War unleashed by the United States on China is a big factor. It is possible that their forced exclusion from the world economy will result in some changes in the power dynamics, but to what extent, I can’t predict. What we can be sure about is that there’s no possibility that any changes—if done to serve the interest of Global North capital—will result in a radical decrease in global inequality and the end of imperialism.
And I believe that it is only international solidarity that can eliminate imperialism. It would be great if we can have some form of South-South cooperation in the spirit of the Bandung conference, and it has to be one that is fully committed to socialist ideals. But whatever form the movement is, it has to involve and put the working class (in its broad sense, not only limited to industrial workers) at the front of the movement. We cannot rely on one country’s direction or a few people’s leadership. I have said this in my book, and I’ll say again here: I agree with Michael Yates, who writes that “those who have suffered the most—workers and peasants in the Global South, minorities in the Global North, working-class women everywhere—are going to lead struggles or they are likely to fail.”
We have to break the chains, including the current organization of global commodity chains. We need to continue thinking about how to build our own production and distribution links—maybe starting from local regions. The knowledge is there, and we have been strong enough to resist. So in this time of crisis, let’s use this as a chance to stir the world in a different direction.
The current affairs in employment conditions depict a minacious picture for the workers, especially in the Global South. Even ‘the war against the virus’ has put a burden on the working classes. In certain countries, we also encountered upsurges against the suppression. What are your evaluations, projections or predictions regarding the reactions against imperialist exploitation, labor class movements in the Global South and social movements in the broadest sense?
Intan Suwandi: Elements of the working class, especially those in the Global South, have continuously engaged in fights against forms and consequences of imperialism for a very long time. They defend their land, resist exploitation, facing the most oppressive and violent capital and state apparatus in doing so. Factories have been occupied by workers in Argentina, and lands have been taken back by peasants in Brazil. Indigenous peoples all over the world have relentlessly fought back against expropriation and oppression. All this has not stopped even in the time of the pandemic. Workers keep striking, peasants keep protesting, and they all are organizing. In many cases, the size of such protests has been very large, showing how people are not succumbing to repression. The Bolivian people have recently won an important battle against U.S. imperialism. I think these examples alone suggest that labor class movements in the South will continue to thrive. There’s always homework—questions about strategies, about ways to build strong solidarity, about making connections with allies in the North, and so on. But the basic ideas remain the same: we have to break the chains, including the current organization of global commodity chains. We need to continue thinking about how to build our own production and distribution links—maybe starting from local regions. The knowledge is there, and we have been strong enough to resist. So in this time of crisis, let’s use this as a chance to stir the world in a different direction.
Notes:
- H. Magdoff (1978). Imperialism: From to Colonial Age to the Present, New York: Monthly Review Press.
- J. B. Foster ve I. Suwandi (2020). COVID-19 and Catastrophe Capitalism: Commodity Chains and Ecological-Epidemiological-Economic Crises. Monthly Review, 72(2), 1-20.
- Suwandi, I. (2019). Value Chains: The New Economic Imperialism. New York: Monthly Review Press
- J. Dean (2020). Neofeudalism: The End of Capitalism?, Los Angeles Review of Books.
- J. B. Foster ve I. Suwandi (2020). COVID-19 and Catastrophe Capitalism: Commodity Chains and Ecological-Epidemiological-Economic Crises. Monthly Review, 72(2), 1-20.
- J. B. Foster ve I. Suwandi (2020). COVID-19 and Catastrophe Capitalism: Commodity Chains and Ecological-Epidemiological-Economic Crises. Monthly Review, 72(2), 1-20.