Neocolonialism by Kwame Nkrumah 1965
THESE are the hard facts of the African situation today, a process that has continued and grown since the invasion of Africa by the European and foreign powers. It has gained tremendous momentum in recent years with the growth of the struggle between the imperialist antagonists and between capitalism and socialism.
Imperialism was analysed by Lenin as the highest stage of capitalism. His exposition was written in the middle of the first world war (1916), which was waged to determine the first major revision of imperialist supremacy. He traced the unequal development of capitalism which caused the latecomers like Germany and the United States to form into cartels and syndicates before the earlier starters, and so brought them sooner to a higher stage of monopoly from which they challenged each other and the rest of world imperialism.
Monopoly capitalism by means of mergers, amalgamations, patent agreements, selling arrangements, production quotas, price fixing, and a variety of other common contrivances, had built itself into an international confraternity. However, because of its competitive character, rooted in the principle of production for private gain and the unequal development of capitalism, the struggle of the monopolies went on within the international combinations. The conflicts between the European and American financial and industrial trusts and combines for a redivision of the world’s resources of raw materials and markets for investment capital and manufactured goods, exploded into war when they became too intense to contain within the limits of diplomacy. The 1914-18 war brought a redivision of the globe’s colonial sectors. At the same time it created the opportunity for a socialist break in the chain of imperialism that encircled the world.
A heavy blow was dealt to international monopoly capitalism with the triumph of the Russian October Revolution. From then on it was faced not only with the struggle for hegemony within its own ranks but, which was much worse, it was forced to engage in a defensive struggle against an opposing ideology. That ideology had achieved a signal success in withdrawing a sixth of the earth’s surface from monopoly capitalism’s field of operations, a fact which it has never and will never forgive, and was threatening to undermine imperialism’s power at other strategic spots which had softened under the blows of war. With the failure of interventionist war to subdue the new socialist State, a cordon sanitaire was raised around the Soviet Union to prevent the spread of socialist contamination to other parts of Europe. Fascism was encouraged to prop capitalism at points where it had been seriously damaged and was faced with popular discontent, as in Germany and Italy, and to bolster it in those outputs which were and remain semi-colonial appendages to Western imperialism, Spain and Portugal.
These devices, however, were unable to cope with the recurrent crises that were tearing at the very heart of capitalism and sharpening the bitter contentions between rival imperialism which erupted into a second global war in 1939. From this holocaust, socialism emerged as a much more threatening challenge to imperialism than ver before. At the same time we, the peoples of imperialism’s ‘far flung empires’, had come to realise that we could have control over our own destiny and began to make our bid for independent nationhood. Thus imperialism came to be challenged on another front, the colonialist front, at a time when science has heightened the capabilities of the productive machinery of capitalism, thereby increasing its need for raw materials and markets for new chemically-produced primary materials, manufactured goods and overseas employment of growing capital surpluses. Challenged thus by anti-colonialism and socialism, imperialism is now engaged in a ‘to-the-death’ trial for survival against the forces that are antagonistic to it and that are building up across the globe even while the internecine struggle within itself is becoming more and more brutal. In this multi-sided struggle, imperialism has been forced into the use of many artifices to maintain itself in being by continuing the colonialist process without the benefit of colonial control.
The great colonial powers were able to monopolise external trade and agricultural and industrial primary materials production in their respective subject territories. The colonies of such a lesser industrialised nation as Portugal, however, which has for centuries has been a pawn of Britain and became a semi-colony of British finance, were dominated by British capital, together with the international banking groups with which it is associated. Belgian financial domination of the Congo, because of the close connections of Belgian banking institutions with such international houses as Rothschilld, Lazard Frères, and Schroder in their turn linked with the Morgan and Rockefeller groups, was shared with British, French and American finance.
The tribute drawn off by way of colonial and semi-colonial exploitation enabled the capitalist classes of the metropolitan countries to pass some of the crumbs to their working classes and thereby buy them off (especially the trade union and political leaders) when the class conflicts in their societies got critical. At the same time, the competition for sources of raw materials, and the export of capital and commodities intensified as productive methods improved and goods came out of the factories on a more and more massive scale.
The uneven development of capitalism brought new contenders into the field who joined in the rivalries that had grown up with the original scramble for colonies. These deepened until they erupted in the two world wars, which, notwithstanding all the pious claptrap about their being wars fought for the maintenance of democracy were, in reality, wars fought for the redivision of the world by monopoly capitalism. ‘War’, Clausewitz has told us, ‘is the continuation of policy by other means.’ What the powerful trusts were unable to achieve by ‘peaceful’ competition, their domination over larger and larger areas of the world, they embroiled their countries into military action to achieve for them. This not only gives them a wider sphere of exclusive operation but undermines the power of competing monopolies.
This redivision of the world is not confined to the less developed sectors but extends to highly industrialised areas. The important industrialised region of Alsace Lorraine was a coveted prize of the German invasions of France in the wars of 1871 and 1939. Hitler’s campaign against Czechoslovakia was inspired by the desire to annex the highly developed manufactories of Bohemia and Moravia to the German trusts. French capitalists long looked with watering mouths at the rich coal mines and chemical and other industries of the Saar, so close to the iron ore range of Lorraine, and seized the opportunity of the 1919 peace arrangements to appropriate them to France as a reparations award. A later plebiscite won the Saar back to Germany. After the second world war, agreement between the de Wendel-Schneider-Krupp trusts achieved a customs union between the German State of the Saar and France, which actually makes the Saar a dependency of the de Wendel coal and steel empire.
World war two ended in the defeat of Hitler and a temporary rebuff to German capitalism, which had to submit to a revitalising injection of American monopoly finance. At the same time an upheaval was taking place in the colonial world such as to make Winston Churchill remark that he had not been made Prime Minister of Britain to preside over the liquidation of the British Empire. All the fair, brave words spoken about freedom that had been broadcast to the four corners of the earth took seed and grew where they had not been intended. Colonial emancipation became the dominating phenomenon of the mid-twentieth century, just as abolition of slavery of the corresponding period of the nineteenth, with just as crucial consequences in national and international politics and economics.
Post-war capitalism, which had already received one devastating blow after the first world war in the rise of the Soviet Union, took another crushing defeat in the establishment of socialist regimes in a number of countries in central and eastern Europe and in China. Large sources of raw materials and financial investment and commodity markets were withdrawn from its field of exploitation. Domestic reconstruction at first occupied the attention of the European countries. The United States, having already achieved a tremendous headstart by its late intervention into the war, its physical immunity from attack, and the enormous spurt given to its productive and inventive capacity as a main supplier of war materials and services, took over from Britain the leading role in international financial monopoly.
As a result of its primacy in the financial sphere, United States foreign policy turned in a completely opposite direction from its pre-war position of ‘splendid isolation’ to one of domination in world affairs. The outcropping of new States from colonial submergence raised the pivotal problem of how to retain these countries within the colonial relationship once open control was removed. Thus has opened up a new phase in imperialism, that of the adaptation of colonialism to the new condition of the elimination of political over-lordship of colonial powers, the phase in which colonialism is to be maintained by other means.
This is not to say that the old outright form of colonialism is completely scrapped. There is plenty of evidence to show how tenaciously imperial powers cling to their colonial territories. Vietnam, Korea, Suez, Algeria, are all examples of how far imperialist nations will go to hold on physically to colonies, an attitude reinforced by the interference of America as a leading protagonist in the struggle for the world monopolist control of financial control. This struggle has been given an ideological content by invoking anti-communism as the mainspring of the battle to bring the socialist sector of the globe back into the exploitative control of Western financial monopoly. Cuba is the outstanding example of the extremist lengths to which these power groups will go in the effort to reimpose their grip where they have been ejected and to maintain what they consider a strategic bastion in the struggle for the renewal of dominion over the socialist anti-imperialist world.
Control of fuel resources is a prime motivator in the frantic competition between monopolies. The Saar was bandied between France and Germany because of its important coal resources. Similarly, the battle for oil has gone on since before the first world war. Middle Eastern oil, in fact, became an important objective of that war, and the struggle continued after the war by diplomatic and economic means inside the national boundaries and on the international plane. Rockefeller supremacy in oil has been stoutly contested by the Morgan groups, which have extended their influence by breaking into the Anglo-Dutch holdings, a one-time preserve of the Rothschilds, Lazard Frères, the Deutsche Bank, and their associates.
The frenzied battle for oil monopoly has been a cardinal factor in the suppression of popular movements in colonial and semi-colonial areas of the Near, Middle and Far East, in Latin America and North Africa. The series of events in Iran, Iraq, Kuwait, Aden, Saudi Arabia, Cuba, Venezuela, Brazil, and Algeria, that have erupted in violence, revolution and war have been largely stimulated by the struggle for control of oil. Oil finds in European centres, such as Groningen in Holland, have drawn the competition into well industrialised centres, just as the competition for coal and iron did.
Competition between the oil combines is not confined to production, but extends into the distribution of petroleum products and the new by-product industry of petro-chemicals. A fierce struggle is going on all over the world as a result of the sharp increase in the quantity of oil consumed and the territorial expansion of consumption. The oil industry has from its outset been dominated by the most powerful banking interests, the Rockefellers, Morgans, Rothschilds, because of the spiralling profits it provides. Today, even with the larger royalties the oil combines have been obliged to pay to the oil-producing countries, their profits are still mounting prodigiously.
Oil trust reserves run into billions. Much has been used in investments abroad, America far and away exceeding all others. To financial reserves from oil must be added those amassed from metal and other raw materials’ monopolies; from monopoly of food supplies and vast industrial and agricultural empires; from military preparations and the several wars that have been fought with colonial peoples since the end of the second world war; from the development of nuclear instruments of destruction and the frenzied race for leadership in the realm of space leadership.
Capitalism contains many paradoxes, all of them based in the concept of commodity production: the few rich and the many poor; poverty and hunger amid superabundance; ‘freedom from hunger’ campaigns and subsidies for restriction of crop output. But perhaps the most ludicrous is the constant traffic in the same kinds of goods, products and commodities between countries. Everyone is busy, as it were, taking in the other’s washing. This is not done out of need, but out of the compulsion of profit-making and monopoly extension. The European Common Market has become the apotheosis of this process, as well as the dumping ground of international investment, dominated by the giant American banking concerns and their British satellites.
The European Community, of which the European Common Market is only one aspect, is by no means a new concept. It was foreshadowed by Hobson in his critique of imperialism as ‘a European federation of great powers which, so far from forwarding the cause of world civilisation, might introduce the gigantic peril of western parasites, a group of advanced industrial nations, whose upper classes drew vast tribute from Asia and Africa, with which they supported great masses of retainers, no longer engaged in the staple industries of agriculture and manufacture, but kept in the performance of personal or minor industrial services under the control of a new financial aristocracy’. It is collective imperialism.
This is precisely what has happened. Competition between the monopolies has produced the phenomenon of vast advertising and public relations organisations which busy themselves selling not only goods and services but personalities as well. These organisations and the media through which they operate – the press, radio, cinema, television – and the businesses dealing with the packaging of goods, employ huge armies of people in what are nothing more than parasitic jobs which would have no place in a sane society producing for consumption instead of profit. As things are, enormous sums are invested and earned by the financial interests that participate in the promotion of these enterprises.
But this is only a tiny facet of the fevered financial activity which is going on today in the capitalist world. Every week, every day, with almost monotonous regularity, we see the same names repeating themselves as bidders for large companies; as underwriters and issuers of new shares or holders of debentures; as combiners in new financial institutions for more universal methods of investment; as participants in new factories and ventures that will extend monopoly in fresh directions and more territories.
They are especially industrious in the countries of the ‘Six’ and others which still hope to push into the Common Market as direct or associate members. The lowering of trade barriers was the signal for their entry. For practical purposes, some of the key European countries are financial servants of the dominant banking monopolist groups, the Morgans and the Rockefellers. Despite all the power pertaining to such important banks as the Société Générale de Belgique, Banque de Bruxelles, Kredietbank, Banque Lambert, to such important industrial-finance groups as Solvay, Boel, Brufina-Cofinidus, Petrofina-Belgium, with its appendage Luxemburg, is in reality a financial colony of American investment capital. Thirty-nine new companies were established in Belgium in 1959 by foreigners. In the year 1961 the number of new ‘foreign’ companies set up had grown to 237. Sums invested from abroad had swollen from 2,457 million Belgian francs in 1959 to 6,664 million Belgian francs in 1961. Of this last figure, almost 60 per cent, that is 3,979 million Belgian francs, was furnished from American sources. Henry Coston, in his revealing book on the ramifications of banking finance, L'Europe des Banquiers (p. 174), declares that this enterprise is not limited to the territory of the kingdom, and that the Belgian ex-colonies have not been ignored. ‘One might even ask if the sanguinary events in the Congo were not caused by the merciless struggle going on between rival financial groups’, he concludes.
American finance capital, of course, had a field day in Germany during the post-war occupation. German industry and finance, already linked to American industry and finance by cartel and trust arrangements, became even more heavily penetrated by the powerful United States monopoly groups. The giant German banks, Deutsche Bank, Dresdner Bank, Diskonto Gesellschaft, Commerzbank; the mighty German trusts, Krupp, Bayer, Badische Anilin & Soda Fabrik, Hoechst, and Siemens are all strung to American capital and in many ways subordinate to it. Italian banks and industry are in much the same position. The Banco Commerciale Italiano, Banco di Roma, Mediobanca, Credito Italiano, all are in several ways tied up with American finance capital either directly or indirectly. Examples can be stretched across the world, to Japan, Canada, Australia, and New Zealand. This financial dependence upon America has been put by Lord Bearsted, chairman of M. Samuel & Co. at the 1963 annual meeting, when he reported the 17 per cent acquisition of the company’s shares by the Morgan group. ‘We will not be the first merchant bank to have part of its capital owned by American interests’.
This piteous statement is a public confession of Europe’s subservience to American financial monopoly, a monopoly expressed in the strategic and political alliances that bind European capitalism to American capitalism. European statesmen are deeply conscious of their inferior standing but, in the main, feel there is little they can do to adjust the position. Resentment, however, there is, and in France it has expressed itself in General de Gaulle’s stand on an individual French nuclear striking force; in his overtures to Adenauer, former German Chancellor; in his attempts to exclude Great Britain from the Common Market as the long arm of the United States; and more recently in the overtures to China and his tour in Latin America. All these are efforts to arrest America’s dominance of Europe and to exert French independent action on the international front. Such attempts, however, have little chance of success, nor can they make but a passing impression upon the world scene. They are in reality expressions of the deep competitive conflicts within capitalist-imperialism, which exist below the surface federations and alliances, conflicts rooted in the unequal development of the contestants, in the unequal development of capitalism.
Britain, as the forerunner of the industrial revolution, became the workshop of the world, the carrier of the world’s goods, the foremost thruster for imperialist control from the City of London. Her decline set in with the upsurge of the younger, more vigorous capitalist States of Germany and America. The two world wars were a test of their strength against the older established capitalist countries and against each other. The United States came out triumphant both times. Still, the City of London is only slowly giving way to Wall Street as the symbol of world money power. It hopes to resuscitate itself by spreading into the European Common Market, even though it must do so in alliance with, and subordination to, American financial monopoly. Surplus capital in France was more heavily invested in the less advanced countries of Europe – Russia, Poland, Hungary, Romania – than that of either Britain or Germany, although they, too, had large investments in the same European heavy industries, armaments, mines and oil fields. Everybody, however, turned to the primary producing countries of the world, alienating some as outright colonies under political rule, subserving and exploiting others as spheres of investment on a semi-colonial pattern.
Because of their late start, German and American capitalism pressed forward with the amalgamation of industrial combines and the monopoly of finance capital more hurriedly than did either Britain and France, whose supremacy on the colonial plane assured their hegemony, inter-related at several points even while competitive, on the international financial level. German financial monopoly took a beating in the defeat 1918, when the colonial world was re-divided, and again in 1945. American capitalism on the other hand, owing to geographical and territorial advantages (the last inherent in its political unions), continued to make rapid strides and was the real victor of both world wars. Expansion of American financial and industrial monopoly, however, was not confined to Europe. The balance of western financial power began to tilt towards Asia and Africa, a process that has been speeded up since the end of the second world war, with the breakdown of colonial rule.
The many consortia which are being established in the majority of the new States resolve largely about the same financial and industrial groups that have rooted themselves firmly since the inception of colonial rule. Such changes as there are correspond with the changes of influence that have occurred within the groups themselves. The dominating influence is held by the ubiquitous American formations of Morgan and Rockefeller, with their British and European associates following behind. Dying colonialism is reviving in the international coalitions of neo-colonialism. These coalitions of competing organisms reflect the global character that financial monopoly has attained under the dominance of the most powerful imperialism, that of America. They are also a sign of the struggle for survival of the older imperialism against the fierce questing of the more powerful aggressiveness of American imperialism, whose vaster productive force is driving it outwards more and more.
Attempts are made to sweeten the well-known aims of rapidly disintegrating political colonialism: the maintenance of less developed areas of the world as the provides of cheap raw materials, spheres of investment, and markets for expensive finished goods and services. The finished goods and services, now that the populations of the new nations are asserting demands for a rising standard of life, are taking on a different character and over-spilling into categories formerly neglected. Land-clearing equipment, hydro-electrical projects, road reconstruction, housing, schools, hospitals, harbours, airports, and all the ancillary and supplementary services they call for, are providing new fields of capital investment and profit for financial monopoly, both at home and abroad. They are also keeping in handsomely paid employment a large army of so-called experts, technical and professional people, not always of the highest calibre.
New sources of extractive and agricultural commodities are also attracting large capital investment sums. Former dependence upon domestic sources of many minerals in the metropolitan countries is giving place to their importation from abroad. Miners in the copper and iron ore producing regions of the United States, for example, are being thrown out of work not only because of automation, but also because bigger profits are being obtained from the greatly stepped-up mining of base materials in Africa and Asia. In some places, their semi-processing also offers greater margins than can be got in the areas of more expensive labour. Puerto Rico and other Latin American countries that offer cheap labour are fast becoming centres of manufactured consumer goods, frequently processed from imported raw materials and sent to the United States to compete with American-produced commodities at only slightly reduced, or the same, prices. This gives greater profits still to finance capital.
The intricate process of balancing returns from domestic investment against the outflow of capital into more profitable foreign investment is creating serious rifts in the internal economic position of every Western capitalist country. This is felt particularly in the balance of payments position. Even the United States, whose reserves of gold and foreign exchange were so vast that they have carried her through a growing outward current over a long period, has now reached the stage when, like her less fortunate European counterparts, she is herself entering upon an adverse balance of payments crisis.
Despite the rise in national production and increased productivity, the problems of agriculture even in such rapidly rising economies as Western Germany, Italy and France bedevil the economic situation. In America, the farming small-holder still lives close to and even below the poverty line, while the extensive mechanised farms of banker-financed companies are spoon-fed by a bankers’ Government. Guaranteed prices for produce that goes into government-paid and government-built storages make large-scale farming in the United States highly profitable to finance capital, which passes on to the government the burdensome problem of what to do with unsold surpluses resulting from high prices.
The need of further outlets for the products of agriculture as well as of the industrial and commercial complexes that are coming under increasing electronic control, and hence acquiring a greatly increased potential, is forcing Western capitalism, particularly American capitalism, into greater and more intensive involvement in highly industrialised foreign countries. The recent ‘chicken’ farce played out against the background of de Gaulle’s anti-American policy which led Franco-German opposition to a continuation of cheaper American poultry importation into Europe, is just one of the lighter examples of the fierce competition going on to unload the output of bank-financed vigorously mechanised mass production. It highlighted for a moment the intrinsically paradoxical nature of the European Market as a monopolistic organism putting up a strong resistance to a dominant competitive monopoly. The competitive tug-of-war is exemplified in the retaliative higher tariffs that have now been put upon French and German small cars imported into the United States, which have lost their main advantage over the home produced article in the consequent higher price.
Facts and figures prove that trade and investment between the highly industrialised countries are outpacing those with the less developed regions. They effectively support the case that imperialism is not confined to the primary producing sectors of the world. However, the salient fact is that the profit rate from the exploitation of the less developed areas is greater than that received from the more industrialised countries. In the latter, the competition between the monopolies is fiercest and domestic interests, even those which are linked with international finance monopoly, all the time offer the stoutest resistance to the invading ones. Yet, and this is precisely due to their imperialist character, the dominating world financial groups are able to make their constant incursions into the national monopolies, and so deepen their hegemony over larger and larger parts of the globe.
How much easier then it is for imperialist finance to edge its way more and more into the developing countries where colonial rule has broken, or is breaking, down. Under the necessity of seeking greater and greater capital sums for geological explorations and the opening up of new fields of extractive materials, international finance was called to the aid of the national finance of the respective imperialist countries. This process was stimulated by the fact that the national financial monopolies had already proceeded to the stage of international alliance with the onset of imperialism, a process that has manifoldly quickened in the present epoch of rising nationalism and socialism. Thus, at this present time, all the instruments and mechanics of international imperialism, expressed in monopoly coalitions, are brought to bear in a general descent upon the new, needy countries.
This new wave of predatory invasion of former colonies operates behind the international character of the agencies employed: financial and industrial consortia, assistance organisations, financial aid bodies, and the like. Friendly co-operation is offered in the educational, cultural and social domains, aimed at subverting the desirable patterns of indigenous progress to the imperialist objectives of the financial monopolists. These are the latest methods of holding back the real development of the new countries. These are the paraphernalia of neo-colonialism, superficially proffering aid and guidance; subterraneously benefiting the interested donors and their countries in old and new ways.
There are several definitions of ‘aid’, as B. Chango Machyo in his Aid and Neo-Colonialism has pointed out.
‘The definition varies with different blocs. Thus the U.N. has its own definition, the imperialist camp has its own, so has the socialist camp, and probably the non-aligned camp might also have one. But, generally speaking, there are two main definitions: one by the U.N. and another as understood by the so-called donor countries. According to the U.N., “economic aid consists only of outright grants and long-term lending, for non-military purposes, by Government and international organisations'’. But the so-called aid-giving countries include in the term “aid,” private capital investment and export credits, even for relatively short periods, as well as loans for military purposes.’
As Professor Benham in Economic Aid to Underdeveloped Countries remarks: ‘It is pleasant to feel that you are helping your neighbours, and at the same time increasing your own profits.’ Before the decline of colonialism what today is known as aid was simply foreign investment.