January 3, 2013

Book Review: Zak Cope, “Divided World, Divided Class: Global Political Economy and the Stratification of Labour Under Capitalism”

Posted in Book Review, Class Struggle, Economics, History, Imperialism, Politics, Social-Democracy, Theory, Trade tagged , , , , , , , at 02:16 by Matthijs Krul

There are times when one encounters a book that is frustrating in a way particular to the intellectual life: that is to say, when one encounters a book that is precisely the book one wanted to write. Given the relative obscurity of my interests, this does not happen often to me, but Zak Cope’s Divided World, Divided Class is precisely one of these. I have harboured plans for the longer term to write a book on the history of the labour aristocracy and its interrelationship with the rise of social-democracy as the political expression of the imperialist rent required for the maintenance of that class, with all the necessary economic and historical detail; in fact, I almost undertook this as my PhD subject. If I had done so, I might well have been embarrassed. Cope has done just this, even up to much of the same bibliography I had had in mind! Be that as it may; these reflections are not to make myself seem important, but to underline the value I think this book has, being the only one of its kind and a real historical contribution to the critique of political economy under capitalism.

Cope’s book is a milestone in the current of Marxist political economy known as “Third Worldism”, that is to say, in developing an honest and realistic understanding based in Marxist value theory of what in the wider literature is called the divergence question: the long-standing division of the world between a small number of rich countries where even the working class has incomes in the top 10-20% of the world population, and a much larger number of poor countries lagging tremendously behind in all aspects of development. As is well known, this gap grows larger rather than smaller, and significantly from the Marxist point of view, it has led for the first time in world history to the majority of the world population actually being poor urban workers – in these countries. There is among socialists little disagreement as to the reality and significance of this fact. Nor of the corollary, the enormous significance of finding the right economic theory to explain and understand the mechanics of this divergence. Even the ‘well-meaning’ type of neoclassical economist would readily agree to this. As Robert Lucas once famously noted:

Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s? If so, what, exactly? If not, what is it about the’ nature of India’ that makes it so? The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.

(1)

For this reason it is remarkable with how little seriousness and honesty most Marxist economic theorists have been willing to analyze this subject. There is indeed some excellent Marxist literature in development economics, as exemplified by the works of Ben Fine, Patrick Bond, and others. There is also a wider literature more rooted in Marxisant versions of dependency theory, such as Samir Amin and Arghiri Emmanuel. These already go much further in trying to analyze not just the perpetuation of differences in wealth by immediate policies of imperialism and expropriation, but to also understand the historical reproduction of class relations corresponding to the phenomenon of global divergence. For this reason, perhaps, those authors are already somewhat marginal within Marxist economic theory. Generally it has been very acceptable to the various Marxist parties and political currents to expound upon the evils of imperialism and war and the poverty of the Third World, but it has been much less acceptable to try and understand those “mechanics” underlying this divergence, never mind the political conclusions to be drawn from these facts themselves. This threatens the political viewpoint of most intellectual Marxists, rooted in the politics of students and workers in the First World countries; those conclusions may not be compatible with that viewpoint, and it is hard to ignore the feeling that at some level this is sensed by many Marxist economists. Do not explore too far in this direction, they seem to say: for there be dragons.

It is therefore to the immense credit of Zak Cope (this may or may not be pseudonym) that he has done so regardless of the political consequences or palatability of this research for the Marxist mainstream in the West. Indeed, once one starts thinking about the perpetuation of divergence, the ever-declining interest in revolution and support for a meaningful socialism among First World workers, the rise of social-democracy as the ‘consensus’ of the First World even up to the neoliberal era, the logic of settler states and the inherent ‘workers’ chauvinism’ associated with them and the reproduction of similar ideas among the working classes of Old Europe in response to immigration; in short, all the unpleasant realities of Marxism today and one then notices how all these are contrary to the expectations of mainstream Marxist political thinking but entirely compatible with the Third Worldist perspective, one has a very strong case to be explained indeed. Cope does just this with great vigour and relentless scientific seriousness. What J. Sakai had done for American settlerism in Settlers, this Cope does more extensively and more scientifically for the position of the working class of the rich countries as a whole.

Cope’s case runs, briefly summarized, as follows. The imperialism of the Western countries (broadly taken), enabled initially by the plunder and exploitation of the Americas and continued by the increases in wealth, power, and technology enabled by these, have over time created the potential for systematic transfers of surplus value from the ‘imperialized’ ‘periphery’ to the imperialist ‘center’. These transfers then not only allow a great blossoming of labor in the countries of the center that is not immediately productive of capital, because it is compensated for by the external value transfers, but more importantly it permits the ruling classes of the center to buy off the exploited working class of the center with the proceeds of this imperialist rent. This labor aristocracy, so formed, then no longer fulfils the one special role the working class has in Marx and Engels’ theory of historical materialism: namely, to be unable to emancipate itself without overthrowing the conditions it itself reproduces with its labour.

In and of itself, this is not a new observation: it is the classic expression of the theory of the labor aristocracy as found in Engels and Lenin, among others. However, the real crux is that Cope then extends this theory by demonstrating, as only the obscure “H.W. Edwards” had done before him, that the natural ideology of the labor aristocracy is social-democracy, and that social-democracy is the means by which the imperialist rent is shared with a wider and wider section of the working class of the center. This First World generalized labor aristocracy thereby becomes almost entirely non-exploited in net terms, according to Marx’s theory of value, because the value of the surplus value produced by them is (more than) compensated for in the process of distribution through world trade. That is to say, the imperialist and neo-imperialist unequal exchange between the First World – defined by Cope as roughly the OECD and the non-OECD, excl. Eastern Europe – and the Third constitutes such a vast transfer of surplus value in the sphere of distribution that it permits, through social-democracy, an almost total compensation for the domestic exploitation of the First World working class.

Cope goes into considerable historical and economic detail to support this position. Almost always such a suggestion is immediately dismissed by doctrinaire mainstream Marxists as being impossible, or done away with by a kneejerk reference to the idea that the most productive laborers must be the most exploited. But not only does the theory of labor aristocracy have a considerable Marxist pedigree, as mentioned above, but it is vital to note that Marx himself emphasized that ‘world trade’ itself functions as an exogenous factor of distribution in the model of capitalist exploitation presented in Capital. Already early on, Marx criticizes the inability of Proudhon to take the global division of labor, as produced by world trade, into account, much like many Marxists today:

Mr Proudhon is so far from the truth that he neglects to do what even profane economists do. In discussing the division of labour, he feels no need to refer to the world market. Well! Must not the division of labour in the fourteenth and fifteenth centuries, when there were as yet no colonies, when America was still non-existent for Europe, and when Eastern Asia existed only through the mediation of Constantinople, have been utterly different from the division of labour in the seventeenth century, when colonies were already developed?

And that is not all. Is the whole internal organisation of nations, are their international relations, anything but the expression of a given division of labour? And must they not change as the division of labour changes?

(2) In Capital, too, the modification in the domain of distribution (affecting market prices) is recognized, for example by the classic case of differences in productivity:

But the law of value in its international application is yet more modified by the fact that on the world-market the more productive national labour reckons also as the more intense, so long as the more productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value.

(3)

Cope describes at length the formation of various labor aristocracies of settler kind, such as those of the American migrants in the United States (over and against the ‘racially inferior’ populations), of the English settlers in Ireland, and so forth. He describes how communism is subverted among these workers into a chauvinistic form, seeking the benefits of the capitalist system but shared with and among the labor aristocracy itself, not globally or with the lower ranks of the segmented labor market, and how social-democracy is the natural expression of this phenomenon, and fascism the crisis expression of it. (Which, incidentally, ought to do away with the Trotskyist canard about the supposedly evident ridiculousness of the theory of ‘social fascism’ proposed against social-democracy by the Comintern; in fact, this is precisely what social-democracy often is, seen from this global vantage point.) But, even all this accepted, Marx proposes above the usual mainstream Marxist explanation, that is, that differences in productivity and intensity of labour account for the very systematic and extremely widely shared wage differentials between the First World working class and the Third World working class. Merely pointing at imperialism and the remarkable ‘coincidence’ of this differential with the main imperialist countries or their primary trading partners is not enough, nor is historically describing the First World workers’ systematic rejection of revolutionary possibilities in favor of social-democracy, from which they benefit but nobody else. One must demonstrate the economic basis in unequal exchange and in direct exploitation of the Third World of this wage differential.

Cope then comes to the major economic contribution of his book, which is to do just that. Using the widely available statistics on working hours, male workers’ wages in OECD and non-OECD countries, the estimates of value transfer through undervaluation of Third World currencies compiled by Gernot Köhler, the estimates of value-added in production between the First World and the Third, and so forth, Cope makes a clear and convincing case suggesting strongly, although with some room for error, that it is not at all possible to account for the differentiation by productivity differentials only, and in fact that the overwhelming majority of the wage differential is composed of vast transfers of value from the developing countries to the developed ones, distributed there to the Western working class. The means of such transfer are unequal exchange in commodity trade (i.e. deteriorating terms of trade), unequal exchange in currency exchange rates, the substantial and systematic trade deficits of the First World (especially the US), FDI profit repatriation, and so forth.

The author has undertaken extensive statistical analysis of publicly available data from the ILO, World Bank, UN, OECD etc., and therefore cannot be accused of coming up with mere speculative estimates or handwaving it away, as is usually done by mainstream Marxists on this issue. Some may object that one cannot simply measure prices of production adjusted in the market and then conclude value transfers from these, but this misses the point: it is precisely the case that bourgeois measurements such as GDP, total factor productivity and so forth are merely based on existing prices, and therefore do not – as is the point of Marxist value theory – explain the causes and social origins of particular prices prevailing rather than others. Measures such as volume of trade within the First World versus between the First and the Third (the latter being much smaller at present prices) will not do as a common counterargument – they constitute a petitio principii, because it is precisely the low prices and low ‘value’ of the Third World production relative to the First World production that is reflected in such statistics, and that needs explaining in the first place.

It is tragic to note how little attention to these facts has been paid by most Marxist thinkers of the past decades, despite their enormous political and economic consequences. Perhaps this is because it is not very convenient to the outlook and strategy of many Marxist political organizations to acknowledge that the Western working class currently is not revolutionary, and in fact cannot be revolutionary without majorly violating the expectations of Marx and Engels’ theory of historical materialism. This would perhaps explain the systematic failure of many Marxist parties to analyze why they do not and cannot become ‘mass parties’ in the West, and why the ‘mass parties’ that did exist in the West did not make revolution at any point. (Although in being more serious about supporting the so-called ‘really existing socialisms’ elsewhere in the world, the Moscow line parties and ‘Eurocommunists’ were arguably still more useful than the current leading groups.) However, after the publication of this book the ball is in the court of the mainstream in Marxist political economy to do something with this, at the least to analyze it statistically, come up with new theories and new scientific research in this direction, and to not flinch from the conclusions these may offer. Socialism must be scientific or it is nothing, and there can be no partiality towards preconceived notions in science.

All this being said, I have some minor quibbles with the book, which should not detract from the great appreciation I have for its urgency and importance. At times, I fear – like many Third Worldist Marxists – Cope bends the stick somewhat too far. While he appears not to be wholly consistent in this, he suggests at some points in the historical section of the narrative that the labour aristocracy would have been relatively significant on the world stage for Britain and similar countries as early as the 18th century, due to the benefits of imperialism. This seems to me unlikely for two reasons: firstly, because social-democracy is the vehicle for the actual mechanics of ‘dividing the spoils’, and no such system was to be found anywhere but in the racial economy of settler states (including plantation Ireland). Secondly, because we know from refined economic history writing of the last two to three decades that the true ‘modern’ divergence between Europe and the rest of the world begins roughly between 1750-1830, depending on estimates, and reaches its complete form only with the conquest of India and its use as a cudgel to beat China with.

It seems therefore for a process of generalized labor aristocratization, so to speak, to occur, one would have to estimate this no earlier than the late 19th century – after the Berlin Congress, the complete colonization of the world by Europe, and the rise of social-democracy. It is important here for Cope and sympathizers not to bend the stick too far: imperialism as such is as old as the age of the first empires in Mesopotamia, and the mere fact of its presence even on a large scale does not thereby create the divergence nor generate a labor aristocracy. Ancient Rome had a labor aristocracy paid out of imperialist rent, among the plebeians of the capital city, but even this class was not numerous or politically significant enough to systematically alter the class relations underpinning ancient society, and it faded into nothingness.

It is also important to distinguish the particular political economy of settler societies from the larger set of labor aristocratic countries, and to sharpen these distinctions analytically. Cope does not fully do so. It is also for this reason that I disagree somewhat with his reading of Nazi Germany as a form of labor aristocratic imperialism. While Cope mentions the work of Adam Tooze in his footnotes, he does not seem to understand the significance of his work as counteracting Götz Aly’s claims of widespread German benefits from the very start of the Nazi empire. Of course, in Nazi Germany the programme of rearmament and re-industrialization virtually eliminated unemployment and inflation, and this made the fascist rule possible for most of the 1930s. But its basis, as described by Tooze as well as Sohn-Rethel, was not in a labor aristocracy, but in the expansionist sectors of industry, in the Junker class, and in the small and medium farmers, all classes greatly disadvantaged by the relative underdevelopment of Germany among the greater powers. A relative underdevelopment is not a basis for a classic story of labor aristocracy, but the contrary.

In my own three extensive articles outlining a preliminary Marxist political economy of Nazi Germany, I emphasize that the fascist policy of Nazi Germany was not primarily one of a ‘regular’, pseudo-social-democratic labor aristocracy in Germany, but an attempt at creating such a class; and not just that, but in the specific form of a settler society. The programme of colonization and destruction of Eastern Europe for ‘Lebensraum’ is, as Cope rightly notes, simply an application in Europe of the principles of colonial imperialism Europe undertook elsewhere; but he misses the significance of its settler form, which means a necessarily racial policy, a programme of genocide, and so forth. Cope seems to suggest that the Bismarck-Kautsky era had already created a greater labor aristocracy and that otherwise the presence of benefits from war plunder (including of Jewish assets), holidays and so forth pacified the working class of Germany.

I am not so convinced; precisely German relative underdevelopment prevented the full rise of such a labor aristocracy earlier on (hence the serious size and potential of the KPD, the various revolutionary moments, etc.), and the Nazi programme to create one was truncated by the war. It seems it was mainly a combination of repression, conscription, and the benefits of being employed in positions superior to the POWs and ‘undesirables’ that made large-scale working class resistance to the Nazis unfeasible until late in the war, but this only shows a settler society that failed to form, not one in real existence. More research is certainly needed into a serious Marxist explanation of this phenomenon, beyond opportunistic use of Götz Aly alone. The rise in the standard of living of Germans was in this way purely contingent on the first few war years and failed to materialize in a substantive way; in fact the rather austere ‘ordoliberalism’ of the Erhard period did more for post-fascist West German living standards, thanks to American value transfers(!), than the Nazi period ever did. It does, of course, all the more underline the great significance of destroying this attempt at creating the ultimate, perfect settler society in the heart of the imperialist center itself, an ultra-empire; and therefore the correctness of the Communist policy of ‘suspending the class struggle’ in favor of the anti-fascist effort.

Finally, Cope does not wholly avoid the common notion among Third Worldist Marxist writers (for example in LLCO) that the economic analysis as such necessarily generates a set of strategic political concerns. While it is certainly the case that these conclusions have major consequences for the evaluation of the possibility of revolution in Western countries, it does not follow, for example, that one must put an undifferentiated ‘anti-imperialism’ on the agenda as the only or main concern of all Marxist activity. Not that this is wrong per se, but one simply cannot make the leap from historical and political-economic analysis to strategy in this way, nor so close off the debate about the possible avenues of further political understanding. Just as the Trotskyists have a habit of reading clichéd conclusions about ‘socialism from below’ based on the experience of the Russian Revolution into every historical or economic analysis, so the Third Worldists tend to read into every event the necessity for Western Marxists to verbally or politically prop up any figure or group in the Third World that presents itself as ‘anti-imperialist’, however implausible; and this I do not think needs follow from accepting the conclusions of this critique of political economy.

These minor points being made, I cannot recommend this book strongly enough to all open-minded Marxists and people interested in development questions. Occasionally the prose is somewhat rote, but the points are extremely important and made with all scientific seriousness and are the fruit of an impressive amount of research and statistical calculation. In the current period, the capitalist classes of the First World seem inclined to go more and more against the historic compromise of social-democracy, and the social-democracy is therefore declining in historical vigour proportionally to the shift of capitalist production from the First to the Third World in search of lower wages and higher profits, pressured by ever-accumulating private debt. This death agony of social-democracy seems to me only understandable on the basis of a Third Worldist analysis as outlined in this book, if one does not want to fall back into unsatisfying and intellectually lazy clichés about “false consciousness”, “hegemony”, media dominance and whatnot to explain the current global political constellation. Nepal makes revolution while no British communist group has more than 3000 members, China and India ‘develop’ along capitalist lines because the Western working class has lived at their expense – that is the reality we must explain today. Divided Word, Divided Class is neither more nor less than an application to our time of the analysis Friedrich Engels made of the British working class in 1883, the year of Marx’s death:

Do not on any account whatever let yourself be deluded into thinking there is a real proletarian movement going on here. I know Liebknecht tries to delude himself and all the world about this, but it is not the case. The elements at present active may become important since they have accepted our theoretical programme and so acquired a basis, but only if a spontaneous movement breaks out here among the workers and they succeed in getting control of it. Till then they will remain individual minds, with a hotch-potch of confused sects, remnants of the great movement of the ‘forties, standing behind them and nothing more. And–apart from the unexpected–a really general workers’ movement will only come into existence here when the workers are made to feel the fact that England’s world monopoly is broken.

Participation in the domination of the world market was and is the basis of the political nullity of the English workers. The tail of the bourgeoisie in the economic exploitation of this monopoly but nevertheless sharing in its advantages, politically they are naturally the tail of the “great Liberal Party,” which for its part pays them small attentions, recognises trade unions and strikes as legitimate factors, has relinquished the fight for an unlimited working day and has given the mass of better placed workers the vote. But once America and the united competition of the other industrial countries have made a decent breach in this monopoly (and in iron this is coming rapidly, in cotton unfortunately not as yet) you will see something here.

(4) This world monopoly is now that of ‘the West’ so-called; and every day it is more broken, while every day the Western working class fights to maintain it. What will we do?

1) Robert E Lucas Jr., “On the Mechanics of Economic Development”, in: Journal of Monetary Economics 22 (1988), p. 3-42. http://www.parisschoolofeconomics.eu/docs/darcillon-thibault/lucasmechanicseconomicgrowth.pdf
2) Karl Marx, Letter to P.V. Annenkov (Dec. 28, 1846). http://www.marxists.org/archive/marx/works/1846/letters/46_12_28.htm
3) Marx, Capital, Vol. 1, Ch. 22 http://www.marxists.org/archive/marx/works/1867-c1/ch22.htm
4) Friedrich Engels, Letter to August Bebel (Aug. 30, 1883). http://www.marxists.org/archive/marx/works/1883/letters/83_08_30.htm

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9 Comments »

  1. Yuriy Dergunov said,

    Many thanks for this review, I have never heard about this book and it seems to be very interesting.
    BTW, are you familiar with John Smith’s PhD dissertation ‘Imperialism and Globalisaton of Production’ which is also an important attempt to provide the value-theory rooted political economy of super-exploitation of the Third World laborers? It is freely available on the web. As I understand he will publish the book on this topic in Monthly Review Press soon.

    • Matthijs Krul said,

      I have heard of him, but did not know it was going to be published soon! Thanks for alerting me.

      • Yuriy Dergunov said,

        It is still not listed on MR Press page, but here’s an information about him from the journal article in July-August issue of MR: “John Smith teaches political economy, human rights, and genocide studies at Kingston University in London. His forthcoming book on imperialism and globalization will be published by Monthly Review Press” http://monthlyreview.org/2012/07/01/the-gdp-illusion

  2. Miss Ann Thrope said,

    McCaine, I miss your posting at SA. And there are still plenty of people there who are well worth engaging, including, as always, a lot of very bright people who otherwise wouldn’t be exposed to anything beyond mainstream economics. We could really use your contribution.

    Please come back when you can.

    Best,

    MAT

  3. W (@wgllm) said,

    woah, rly wanna read this and Settlers

  4. kersplebedeb said,

    hey there – i tried sending you an email at the above address, but for some reason it bounced – i was wondering if it would be ok for me to repost your review of DWDC to my blog (http://www.sketchythoughts.blogspot.ca/) and website (www.kersplebedeb.com)?

    i would of course provide links back to you.

    you can let me know at info@kersplebedeb.com

    • Certainly, as long as it has a link & attribution to me, I’d be most pleased.

  5. kersplebedeb said,

    i posted it several weeks ago; you may be interested in a post today by Don Hamerquist, who follows up on several points you brought up in your review: http://sketchythoughts.blogspot.com/2013/02/comments-on-divided-world-from-don.html

  6. Yuriy Dergunov said,

    http://eprints.qut.edu.au/46838/


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