N.I. Bukharin: Imperialism and World Economy

Chapter V: World Sales Markets and Changed Sales Conditions

1. MASS PRODUCTION AND OVERSTEPPING OF STATE BOUNDARIES. 2. PRICE FORMATION UNDER CONDITIONS OF EXCHANGE BETWEEN COUNTRIES WITH DIFFERENT ECONOMIC STRUCTURES, AND FORMATION OF SUPER-PROFIT. 3. COLONIAL POLICY OF GREAT POWERS, AND DIVISION OF THE WORLD. 4. TARIFF POLICY OF POWERS, AND SALES MARKETS. 5. SHARPENING OF COMPETITION IN WORLD SALES MARKET, AND CAPITALIST EXPANSION.

Every "national" capitalism has always manifested a tendency to expand, to widen the scope of its power, to overstep the boundaries of the nation, the state. This follows from the very structure of capitalist society.

The conditions of direct exploitation and those of the realisation of surplus value are not identical. They are separated logically as well as by time and space. The first are only limited by the productive power of society, the last by the proportional relations of the various lines of production and by the consuming power of society. This last named power is not determined either by the absolute productive power nor by the absolute consuming power, but by the consuming power based on the antagonistic conditions of distribution, which reduce the consumption of the great mass of the population to a variable minimum within more or less narrow limits. The consuming power is furthermore restricted by a tendency to accumulate, the greed for an expansion of capital and a production of surplus value on an enlarged scale. This is the law of capitalist production....The market must, therefore, be continually extended....This internal contradiction seeks to balance itself by an expansion of the outlying fields of production.¹⁾

This law of mass production, which is at the same time the law of mass overproduction, must not be understood to mean that the overstepping of "national state boundaries" is something like an absolute necessity; this necessity is created in the process of profit formation, and the amount of the profit serves as the regulating principle of the whole movement. The amount of the profit depends upon the mass of commodities and the amount of profit accruing to one commodity unit, which amount is equal to the selling price minus production cost. If we use for the volume of commodities the letter V, for the price of a commodity unit the letter P, and for the cost of production per unit of commodity the letter C, we find that the sum total of the profit is expressed by the formula V (P-C). The smaller the production cost, the lager will be the profits per unit of commodity, and, assuming the sales market to be stationary or growing, the larger will be the volume of profit. The cost of production, however, is the lower, the greater the volume of commodities brought into the market. Improved methods of production, expansion of productive forces, and consequently increase in the volume of goods produced, are factors decreasing the cost of production. This explains the selling of commodities abroad at low prices. Even if such sales yield no profits at all, even if the commodities are sold at production cost, the volume of profit is still increased, since thus the cost of production is made lower. (We do not speak here of sales made at a loss for "strategic purposes," i.e., for a rapid conquest of the market and for the annihilation of the competitors.) In the general formula V(P-C), the volume of production costs will not be that amount which corresponds to the volume of goods designated as V, but a much smaller amount corresponding to the formula V+E, where E is understood to be the amount of exported commodities. It is in this way that the movement of profits compels commodities to overstep the boundaries of state. The very same regulating principle of capitalism--rate of profit--acts in still another way. We have in mind the formation of super-profit under the conditions of commodity exchange between countries having different economic structures.

Even in the epoch of commercial capital this process of the formation of additional profit is perfectly clear.

So long as merchants' capital [says Marx] promotes the exchange of products between undeveloped societies, commercial profit does not only assume the shape of outbargaining and cheating, but also arises largely from these methods. Leaving aside the fact that it exploits the difference in the prices of production of the various countries...those modes of production bring it about that merchants' capital appropriates to itself the overwhelming portion of the surplus product, either in its capacity as a mediator between societies, which are as yet largely engaged in the production of usevalue for whose economic organisation the sale of that portion of its product which is transferred to the circulation, or any sale of products at their value, is of minor importance; or, because under those former modes of production the principal owners of the surplus product, with whom the merchant has to deal, are the slave owner, the feudal landlord, the state...and they represent the wealth and luxury.²⁾

In these conditions "outbargaining" and "cheating" were able to play such an important part because the process of exchange was irregular, because it was not the necessary process of "metabolism" in a society with a world wide division of labour; on the contrary, it was a more or less accidental phenomenon. However, additional profit is obtained also at a time when the international exchange of commodities already becomes a regularly recurring moment in the reproduction of world capital. Marx gave a complete explanation of the economic nature of this super-profit in the following statements:

Capitals invested in foreign trade are in a position to yield a higher rate of profit, because, in the first place, they come in competition with commodities produced in other countries with lesser facilities of production, so that an advanced country is enabled to sell its goods above their value even when it sells them cheaper than the competing countries. To the extent that the labour of the advanced countries is here exploited as labour of a higher specific weight, the rate of profit rises, because labour which has not been paid as being of a higher quality is sold as such. The same condition may obtain in the relations with a certain country, into which commodities are exported or from which commodities are imported. This country may offer more materialised labour in goods than it receives, and yet it may receive in return commodities cheaper than it could produce them. In the same way a manufacturer, who exploits a new invention before it has become general, undersells his competitors and yet sells his commodities above their individual values, that is to say, he exploits the specifically higher productive power of the labour employed by him as surplus value. By this means he secures a surplus profit [italics ours. - N.B.] ; on the other hand, capitals invested in colonies, etc., may yield a higher rate of profit for the simple reason that the rate of profit is higher there on account of the backward development, and for the added reason that slaves, coolies, etc., permit a better exploitation of labour. We see no reason why these higher rates of profit realised by capitals invested in certain lines and sent home by them should not enter as elements into the average rate of profit and tend to keep it to that extent.³⁾

Marx, proceeding from the theory of labour value, gives here an explanation of super-profits. From this point of view, additional profit has its source in the difference between the social value of the goods (understanding under "society" world capitalism as a united whole) and their individual value (understanding under "individual" the "national economy"). Furthermore, Marx foresaw and explained cases where a certain fixation of additional profit goes on, namely when a certain territory is dominated by monopoly organisations-cases that are particularly important in our times.

It is thus obvious that not the impossibility of doing business at home, but the race for higher rates of profit is the motive power of world capitalism. Even present-day "capitalist plethora" is no absolute limit. A lower rate of profit drives commodities and capital further and further from their "home." This process is going on simultaneously in various sections of world economy. The capitalists of various "national economies" clash here as competitors; and the more vigorous the expansion of the productive forces of world capitalism, the more intensive the growth of foreign trade, the sharper is the competitive struggle. During the last decades quantitative changes of such magnitude have taken place in this realm that the very quality of the phenomenon has assumed a new form.

Those changes proceed, so to speak, from two ends. On the one hand, the process of mass production is becoming extremely accelerated, i.e., the volume of commodities seeking for a foreign market is increasing-a phenomenon highly characteristic of recent times; on the other hand, the free market, i.e., that section of it which has not been seized by the "great power" monopolies, becomes ever narrower. Moved by the requirements of home capital, the great powers very quickly subjugated the free territories; beginning from 1870-1880 the process of "territorial acquisitions" went on at a feverish tempo. For our purposes it is sufficient to give a brief account of the results of the "colonial policy" which has become a veritable mania of all modern capitalist states.

England, a country with a vast state territory, has, after 1870, succeeded in annexing a whole series of new territories: Baluchistan, Burma, Cyprus, British North Borneo, Weihai-Wei, the territories adjoining Hongkong in Asia; it increased the Straits Settlements; it took Koweit under its protectorate (1899) ; it acquired the Sinai peninsula, etc.; it annexed some islands in Australia, also the southeastern part of New Guinea, the major portion of the Solomon Islands, and the Tonga Islands. In Africa, where competition and seizures were going on with particular intensity, England acquired Egypt, the Egyptian part of Sudan with Uganda, British East Africa, British Somali, Zanzibar, and Pemba; in Southern Africa, the two Boer republics, Rhodesia, British Central Africa; in Western Africa, outside of increasing the former colonies, it occupied Nigeria.⁴⁾ Such were the "successes" of England.

France acted no less "successfully."

Beginning with 1870 [we read in a work of a French imperialist] we witness an actual colonial regeneration. The Third Republic placed Annam under its protectorate, it conquered Tongking, it annexed Laos, it extended a French protectorate over Tunis and the Comoro Islands [near Madagascar - N.B.], it occupied Madagascar, it increased its possessions in Sahara, Sudan, Guinea, the Ivory Coast, Dagomea, the Somali coast, out of all proportions [démésurement], and it founded a new France extending from the Atlantic Ocean and Congo to Lake Chad.⁵⁾

By the end of the nineteenth century the area of the French colonies was nineteen times the area of France proper.

German imperialism appeared later in the arena, but it made haste to regain lost time. The beginning of Germany's colonial policy dates back to 1884. It conquered Southwestern Africa, Cameroon, Togoland, East Africa, it "acquired" New Guinea and a number of islands (Emperor Wilhelm's Land, "The Bismarck Archipelago," the Caroline Islands, the Marianas, etc.); in 1897 it seized Kiaochow, it made ready to grab sections of Turkey and Asia Minor-all this "evolution" being accomplished with feverish haste.⁶⁾

As to the Russian colonial policy, we wish to remind the readers of the conquest of Central Asia, of the Russian policy in Manchuria and Mongolia, and lately in Persia, the latter being accomplished with the aid of England (Colonel Liakhov is its hero).⁷⁾ The same policies are pursued also by countries in other hemispheres, the most important of which are the United States and Japan. In consequence of this "division" of free lands, and with them, to a large extent, of free markets, world competition among the "national" capitalist groups was bound to become exceedingly sharpened. The present distribution of territories and populations is illustrated by the following table: