The Limits of the Mixed Economy. Paul Mattick 1969



Marx’s model of capital accumulation represents a closed homogenous system in which the rising organic composition of capital results in a fall of the rate of profit and therewith in the decline of capital expansion whenever the conditions of production do not allow for a sufficient rise in the rate of exploitation. But capitalism is not a closed system: it is able to slacken the rising organic composition of capital through its outward extension and to better its rentability through importation of profits from abroad. It is the value-expansion of the existing centralized capital, however, which determines the size as well as the character of the world market, and which limits the capitalization of underdeveloped nations to serve the specific profit needs of the dominating capitals. Given this world market, it is no longer possible for the underdeveloped part of the world to further its own capitalization independently of the profit requirements of the highly-developed capitalist nations.

The world as a whole is obviously short of capital and surplus-value. The overproduction of capital relative to its profitability in one part of the world confronts undercapitalization in another part. Considering capitalism as a world system it is indeed a miserable system of social production. For capitalism as a whole, of course, the organic composition of capital is not high enough to reduce the rate of profit below its accumulation needs. But due to the centralization and monopolization of capital, the inherent contradictions of capital production erect barriers to its expansion long before the abstract borders of Marx’s theory of capitalist development find some kind of approximation in reality.

Capitalism has ceased to be a socially progressive system of production and has become – notwithstanding all superficial appearances to the contrary – a regressive and destructive one. It has led to the division of the world into a few highly-industrialized countries and a large number of nations unable to lift themselves out of a state of increasing misery. Yet the destinies of all nations are inextricably intertwined; it is the world situation which finally determines the future of any and every nation. Prospects for even the most “prosperous” nations must be considered in the light of existing world conditions; seen from this perspective, they are indeed bleak. No longer able to extract out of their own working population quantities of surplus-value which assure an accelerated profitable private capital expansion, the dominating capitalist powers find that the sources of additional profits in the under-developed parts of the world are also drying up. To keep on exploiting the backward areas will slowly destroy their exploitability. But not to exploit them means to reduce even further the already insufficient profitability of capital. The great capitalist nations will thus try to increase rather than relax their exploitation in the hope that their own expansion will be the vehicle for, or yield as a by-product, the development of the capital-poor nations. Western policy still rests on a deep faith in the profit-creating powers of competitive capital accumulation – a faith sustained by the recently-experienced period of government-induced “prosperity.” It is still competition on the widest scale – the world market – to which expansion is oriented, even though on the world-scale and in each nation separately, the market-economy seems irretrievably lost.

The big corporations in the industrial nations, which dominate the capitalist economies, can no longer function within the national framework; they have become and must remain multinational corporations. “Any company of importance that wants to survive has to be international and multinational,” it is said, “for companies with world-wide operations may find it easier than purely national companies to reduce costs by moving raw-materials, production and distribution facilities, and manpower in conformance with optimization objectives.”[1] Big corporations such as Unilever and IBM for example, have interests in nearly every country in the world; IBM, specifically, operates in one hundred nations and maintains fifteen manufacturing plants in thirteen countries. “Nearly 3,000 American firms have foreign subsidiaries and their sales are double what the United States exports. These American-based corporations that operate on a multinational basis conduct manufacturing enterprises abroad, extract and process natural resources, provide services, and market the resulting goods and services on an international scale.”[2] The growth of multinational corporations is an international phenomenon but because of America’s dominant position in world economy it is most pronounced in the United States. The latter’s interests in multinational corporations is revealed in the value of her direct investments abroad. “These increased from $11.7 billion in 1950 to $31.1 billion in 1962. In the manufacturing category alone, the increase was from $3.8 billion to $13.2 billion.” Since World War II, “every President, every Congress, and numerous public and lay leaders of national and international thought have emphasized the importance to national interest of the role of private companies operating on a multinational base. From 1950 through 1962, $29 billion was received in earnings, interest payments, management fees, and royalties from direct investments abroad. This compares with the $16 billion capital outflow from the United States for direct investments abroad in the same time.”[3]

Whether or not the world structure of capitalism is such as to preclude profitable capital expansion on a world-wide scale, every capitalist enterprise, and every capitalist nation, tries to expand its own capital – at the expense of other enterprises and of other nations if necessary. The elimination of competition and the inter national centralization of capital, while perhaps not benefiting the capitalist world as a whole, will still benefit the advancing capitals and the stronger nations. The Canadian economy, for instance, has long been regarded as an extension of the American economy. “By 1963, foreign residents, mostly Americans, controlled 60 per cent of Canadian manufacturing, 74 per cent of her petroleum and natural gas industry and 57 per cent of mining and smelting…. Control in the food-canning industry rose to 90 per cent. … Some business observers attribute the continuing take-over trend to the growing internationalization of business. For Canada, however, internationalization means mostly Americanization, and this is often regretted.”[4] Opposition to actual and potential foreign domination of various industries becomes increasingly more vocal in the European nations. Both of the European trading blocs tend toward a continental allocation of capital resources and the curtailment of American investments in European industry; but the existence of these blocs spurs greater investments on the part of American corporations in order to get inside their tariff walls. Still, the developed capitalist nations comprise only the smaller part of the world. Their future depends not so much on an intensified competition within their own ranks as on gaining a broader base of capital expansion.

The big corporation must produce for and profitably sell within, an expanding international market. If its profits and production on the world market do not expand, the corporation will face stagnation within its national market; and this will increase the need to maintain social stability through government-induced production. In other words, private capital production must be accentuated abroad to arrest its internal decline. A larger part of the world must be capitalized to accommodate the expansion needs of the big corporations. (This is the reason why development, or growth, once reserved for Marxian theory, has now become the predominant issue of bourgeois economy.) But it must be a development conducive to private enterprise and its accumulation requirements, that is, a development which subordinates the developing nations to the rules of the capitalist world market.

The “mixed” character of the capitalist market economies obliterates an earlier distinction between government and capital. Government is no longer merely the political arm of the capitalist class. Its economic interests are so intertwined with those of the capitalist class that government-policy and corporation-policy are one and the same. The need for external expansion of capital in order to halt its internal contraction takes on the form of an aggressive imperialism and of imperialistic competition. But this imperialism differs from the imperialism and colonialism of laissez-faire capitalism because capital competes for more than just raw-material sources, privileged markets, and capital exports; it also fights for its very life as a private-property system against new forms of capital production which are no longer subject to economic value relations and the competitive market mechanism.

For Keynes, imperialism and war certainly affected the economy but were not an integral part of capitalism. For Marx, structural changes in capitalism, national as well as international, imply competitions crises, imperialism and war. The Second World War was quite obviously connected with the long depression period preceding it, and the current world-wide trend of supplementing economic force with political-military means attests to the imperialist nature of modern capital competition. Although the miseries of war may not be regarded as the exclusive property of capitalism, their origins and their results are necessarily connected with the competitive character of international capital expansion.

Imperialism may be described in political terms even though it finds its material basis in the requirements of capital accumulation. The current imperialist activities find their direct cause in the shifts of power relations brought about by World War II. At first sight, these shifts could lead only to a new war or to the acceptance of a world divided into two different systems of capital production, with separate spheres of interest dominated by the two strongest military powers, Russia and the United States. The second possibility seemed, however, “unacceptable” to the Western powers, even though it has in some manner constituted Western post-war policies. It was less obnoxious to Russia, confident as she was of her ability to attain security, and possibly supremacy, without the intervention of a third world war. Aside from such “preferences,” however, and despite various adventures of the “cold war” and even the Korean War, neither the East nor the West showed any real inclination to provoke a major war. Though often on the “brink” of war, both sides have thus far always retreated in time, leaving things more or less as they were.

The West European nations, occupied with their recovery and with futile attempts to defend their foreign possessions, were not in a position to act upon the “long-run” needs of Western capitalism. The United States, emerging from the war as the strongest power, had to consolidate the Western world as a precondition for resuming effective international power politics. As it turned out, there was no really urgent need to deal with further Russian expansion or to deprive Russia of those spoils of war which the West – though with some unrealistic reservations – had agreed to allow her. Russia, too, weakened by the destruction and exertion of war, needed time to recover and consolidate her gains. The general inability to act upon the new problems posed by the post-war world expressed itself in the cold-war status quo.

Everything else was based on hope – either that “historical development” would come to the aid of the East, or that “human nature” would reassert itself and restore the conditions of Western capitalism in the world at large. Both the East and the West have looked forward to a cumulative growth of the internal contradictions besetting each power bloc. The fact that Russia’s satellites are “captive people” and for that reason are a steady source of trouble to their new masters, and the possibility of arising differences of interest between Russia and China bolstered Western expectations of a possible disintegration of the Eastern power bloc. As soon as the expansion of the Eastern bloc was checked, whatever economic and political development went on in the world would by sheer necessity gravitate to the stronger power center. Whatever the merits of such expectations, they turned America’s foreign policy into a continuous postponement of decisive political actions while awaiting a more favorable future.

Stalinist Russia’s policy, too, was permeated by the recurrent hope that peace would prevail despite, and because of, the cold war. Stalin saw the capitalist world in nineteenth-century terms: to him, capitalist development was a crisis-ridden competitive process, setting nation against nation, and transforming economic rivalries into imperialistic wars. He felt, however, that for some time to come, the West was not ready to wage a new war against Russia. Western Europe was quite defenseless and the effects of the Chinese Revolution upon the whole of Asia put America at a strategic disadvantage despite her military might and superior productive power. This conviction was made apparent in the challenge of the Berlin blockade, in Russia’s ruthless policy toward her satellites, in the covert support given to national liberation movements, and finally in the major test that the Korean War provided.

By this time, however, the situation had already changed due to the partial recovery of Western Europe, the ebbing of the post-war revolutionary wave in Asia, and, last but not least, the altered character of Western capitalism itself. The immediate post-war situation could well suggest the recurrence of those very conditions that emerged out of World War I – a semi-permanent crisis for some countries and a general sharpening of international competition. The Potsdam agreements promised to realize what the Versailles Treaty of 1919 had failed to do, and the destruction of German capitalism was bound to weaken the whole of Western Europe and produce new economic and political frictions within Western capitalism. Yet something different happened. Although national interests still dominated the policies of all capitalist countries, it was soon realized that only international power politics could safeguard those national interests, and that this required economic as well as political collaboration. This implied that economic policy remained the responsibility of governments, the permanent transformation of capitalism into government-manipulated capitalism, and the emergence of some degree of international cooperation affecting the whole of Western capitalism.

The Korean compromise clearly indicated that though the West was still not willing or ready to launch another world war, it was determined not to lose further ground to the Eastern bloc. In 1954, the Korean compromise was repeated in the Southeast Asia compromise. The Southeast Asian “peace [?] spirit” remained purely spiritual, however, even though the “liberation movement” came to a temporary halt. Whatever else comprised the Russians pressed for a “general solution” of East-West differences in the direction of clearly demarcated and respected spheres of inter and free-for-all economic competition in the as yet uncommitted parts of the world. Russia’s readiness for compromise betrayed the post-Stalinist regime’s fear of war and its real concern over the restiveness of satellite nations as well as over conditions in Russia proper. Prevention of war, the new Russian leaders realized, required more than the principle of Churchill’s dictum, “peace by mutual terror.” It demanded not only that Russia and the United States come to terms, but that they mutually control the activities of other nations which might lead them inadvertently into general war.

The apparent trend to the peaceful solution of imperialistic antagonisms in the wake of the Geneva Conference came to nothing. The world is simply beset by too many problems and particularistic interests, and neither Russia nor the United States has the degree of control over other nations which could secure peace under all circumstances. Because change and development go on relentlessly and affect the fortunes of the great powers, their own possible desire for peace remains a temporary inclination. The erosion of Western colonialism led to many national-revolutionary movements which could not be controlled by either the West or the East. China, at any rate, could not be subjugated to Russian rule – relations between China and Russia gave the lie to Western propaganda which depicted China as a “colony” of Russia.

The ceaseless erosion of Western influence in underdeveloped areas must be arrested. Yet, short of military suppression, this can be done only by assisting a development detrimental to the economies of the Western world. In the American view, the end of Western colonial domination created a “power-vacuum” in certain regions of the world, which the East will fill if the West does not. What is meant by “vacuum” here refers to the fact that hitherto-controlled regions have been freed: the former colonies’ possession of “national self-determination” leaves them open to internal and external “communist aggression;” so the West must step in and guarantee their “independence.” In other words, “national self-determination” cannot include a free choice of social systems and allies, although it may include preferences with respect to “protecting” Western powers. America’s pose as an “anti-colonial” power in this special sense was not a deliberate policy to weaken her Western allies – though in fact it did so – but was adopted in the belief that it would strengthen the “free world” as a whole. To benefit the “free world,” the colonial powers were supposed to sacrifice special political-administrative interests, and national-revolutionary movements were to be induced to stay within the confines of Western capitalism. That any policy in the interest of the “whole” of Western capitalism benefits America especially was, after all, not the fault of the United States but is merely a consequence of international capital development.

America’s all-embracing view, which judges the needs of the world by the needs of American capitalism, includes, of course, numerous narrower special interests. American competition tends, or at any rate attempts, to drive out weaker capital entities wherever possible; thus there is a degree of truth in the assertion that by opposing the colonialism of other nations, America merely fosters her own. American foreign policy is not, however, exclusively determined by such narrow special interests; there is also the factor of her justified fear that continuous shrinking of the “free world” will come to affect the American economy itself and hasten the destruction of its private-enterprise nature. It does not make much difference, then, whether the foreign holdings that have to be protected, and the foreign markets that have to be kept open, are of great or small importance; the point is to prevent, and if possible to “roll back,” any social movement or nation, which intends, or might intend, to restrict or abolish private-enterprise capitalism.

Until recently, national-revolutionary movements have tended to gravitate to Russia to find protection and support. Now it is China, which, by its very existence, threatens to eliminate Western capitalism’s shaky foothold in Asia by calling forth new national-revolutionary movements that might preempt the present and future exploitation of Asian nations by Western capital. It is more Chinas “bolshevism” than her “nationalism” which agitates America so greatly, even though it is the combination of the two which proves deadly to private enterprise.

Quite independent of the meaning of these terms, the world wide defense of “freedom” and “democracy” expresses America’s chauvinism at home and her imperialism abroad. Bound to and taking pleasure in the realm of their own existence, America’s ruling class cannot tolerate an expanding social system different from its own. It is no consolation that business may be carried on with state-capitalist no less than private-enterprise systems, for in the absence of private capital abroad; they see the harbinger of their own possible obsolescence at home. The ruling class’ hatred of state-capitalist systems, which, rightly from their point of view, they equate with “communism,” is genuine: the purely ideological expression of this hate does not alter the fact that it stems from the very material advantages that fall to the privileged within the private-enterprise system. It is not an empty, superstitious hate, but rather a capitalist class-reaction to all social change that could be detrimental to private capital.

Competition and national antagonisms lead to wars between capitalist nations. In a sense, war between state-capitalist and private-enterprise systems is also a form of international capital competition. But with this difference, that it involves not only economic interests of nationally-organized capital groups but also the defense, or destruction, of different social structures. A “civil war” element enters the imperialist rivalries, even if this type of “civil-war” is carried on not within but between nations. “Anti-communism” means opposition to any and all movements and aspirations that threaten either the existence or the future of private capital.

To keep the world open to capitalist exploitation has been America’s general policy since 1945. It springs directly from the expansion requirements of private capital and, short of the abolition of the market system, cannot be changed. Particular interests may be lost, as for instance the investments and business of Cuba, and similar interests may be preserved, as by the occupation of the Dominican Republic and the overthrow of governments in Guatemala and Iran. But the general policy must be directed toward extending America’s role in world economy. Thus it must seek to prevent the rise of state-capitalist systems in regions mapped out for capitalist exploitation.

The imperialist imperative of capital expansion is often denied; European colonialism is ended and, it is said, imperialism no longer pays. Indeed, the time seems past when a few regiments could control hundreds of millions of people, and the returns from colonial rule are dwindling while the costs of empire are rising. The “white man’s burden” has become an actual burden instead of a blessing. Although individuals and corporations still enrich themselves enormously, from an overall point of view colonialism pays less and less; so that, in part, the principle of profitability itself suggests a new approach to imperial rule. Imperialism by indirection appears more promising than nineteenth-century colonialism. In view of the national-revolutionary movements, indirect control may be superior to direct control in the same way that the wage-system proved superior to slave-labor. Just as monopoly over the means of production is largely sufficient by itself, to control the working class, so monopolistic control over the destiny of world economy may be enough to determine the behavior of nations subjected to it. In either case, of course, political-military force stands ready to ensure the workings of the indirect methods of control; and while the latter do work they create the illusion of general consent.

Although thus far Western capitalism has done very little to pro mote industrialization in the underdeveloped parts of the world, it is not opposed to such a development wherever it might prove profitable. It does not prefer the exploitation of its own laboring population to that of other nations; quite the contrary. There exists, then, an apparent contradiction between the need to keep the world open for free enterprise and the refusal of free enterprise to avail itself of its opportunities. But this contradiction merely reflects the contradiction of capital production itself. It is not different from the contradiction that bursts into the open with any capitalist crisis – namely, that production comes to a halt in spite of the fact that the needs of the vast mass of the population are far from being satisfied. Production is slowed down not because there is too much of it but because it be unprofitable. Still, it will not enter the minds of the capitalists that their inability to increase production is reason enough to abdicate in favor of a different social system capable of coordinating social production to actual social needs. Nor will it enter their minds that because they have not industrialized the world and are, apparently, incapable of doing so, they should leave the world to others who presumably can do so by employing principles of social production different from those of private capital. Just as they defend their control, each particular country irrespective of their own performance, so will they defend it in the world at large.

As there is no chance of breaking the capital monopoly of the long-established capitalist powers by way of market competition, the industrialization of underdeveloped nations must proceed in opposition to the capitalist world market relations, on a nationally-organized, not a free-enterprise, basis. This possibility, however, is open only to larger countries, such as Russia and China, where some degree of “self-sufficiency” is possible. In most underdeveloped countries “national independence” does not alter their dependence on the developed capitalist nations, unless opportunities arise for aligning their economies with those of the large-scale state-capitalist systems. Having already been “integrated” into the capitalist world market, and being incapable of a self-sustaining existence, they remain, as so-called “third world” countries, objects of foreign exploitation and imperialist competition.

The national-revolutionary exertions of such countries are dissipated in internal power struggles – instead of being utilized in an actual reorganization of their socio-economic structures. They gain a measure of political control without losing their economic dependence upon the imperialist powers. “Even the militantly socialist leaderships,” it has been noted, are very careful not to jeopardize their economic survival by nationalizing foreign enterprise, lest they kill the goose that lays the golden eggs ... The usual course for the socialist governments has been the kind of tactic adopted in Ghana, where the rate of company tax was stiffened, wage-in creases of 20 per cent were insisted on, plus an increased investment locally of 60 per cent of net profits after tax. Since this left the mining companies still with dividend rates of 45 per cent, the prospect did not terrify them. The companies now scrupulously steer clear of any suggestion of direct interference in the national economy, and are rapidly indigenizing their staffs. But the ‘colonial’ character of the economy remains.”[5]

However, the continued indirect economic domination of the less-developed nations by Western capital offers no solution for the actual needs of the vast mass of their populations, nor will it solve the basic problem of profit for Western capital. All that it may do is to sustain longer the disintegrating capitalist world economy. This will require the brutal suppression of all resentment caused by growing and unrelieved social misery. It is quite safe to predict that least in the underdeveloped part of the world the prevailing misery will lead to ever new rebellions against the dominating foreign powers and their native collaborators whether they belong to t traditional ruling classes or to new ruling classes tossed up by the anti-colonial movements.

The colonialism of old is over, it is true. But it has been replaced by a system of neo-colonialism, in which nations that are nominally independent continue to be exploited by foreign capital. Within this setting, the contest between the state-capitalist and private-enterprise systems for an increasing share of world production and trade necessarily concerns itself with the future of the as yet “uncommitted” nations of the “third world.” If these nations should transform themselves into state capitalist systems, they would prevent a further penetration of private capital into their economies and get a measure of control over their trade relations which would restrict or even exclude their exploitation by the capitalist nations. This would hamper the expansion of private capital and enlarge the “socialist world,” leading to a more rapid general transformation of capitalism from its private-property to its state-organized form. Imperialism is thus not only an instrument of exploitation and aggrandizement; for the West, it is the only instrument with which to safeguard the future of private capital.

Like the old colonialism, neo-colonialism is practiced not in the interests of the imperialist nation as a nation, but in the interests of its ruling class, and to the special benefit of that powerful segment of that class which operates internationally and co-determines foreign policy. “What is the real value of their Indian dominion to the British nation and people,” Marx once asked; for “directly, that is in the shape of tribute, of surplus of Indian receipts over Indian expenditures, nothing whatever reaches the British Treasury... Such being the case, it is evident that the advantage of Great Britain from her Indian Empire must be limited to the profits and benefits which accrue to individual British subjects …Against all this a very large offset is to be made. The military and naval expenses paid out of the pockets of the people of England on Indian account have been constantly increasing with the extent of the Indian dominion ... Add to this the career of endless conquest and perpetual aggression in which the English are involved by the possession of India, and it may well be doubted whether, on the whole, this dominion does not threaten to cost quite as much as it can ever be expected to come to.”[6] The fact that the costs of en became far greater than the returns was one reason that direct subjugation was replaced by neo-colonialism.

Although the returns from colonialism accrue to individuals while its costs are carried by all taxpayers, the difference between costs and returns finds a limit in the limitations of subsidization by way of tax. Until these limits are reached, the fact that the income from colonial exploitation may be less than the national expense involved, far from deterring colonial activities, will rather spur them on in the expectation of a final reversal of the imbalance. It is not just to safeguard the returns of special interests, for instance, that the American government accepts the so much larger costs of its wide-spread foreign interventions. It pays the latter in the hope of increasing the former. This might be, and most probably is, a hopeless task, so that the whole imperialistic effort may accomplish nothing more than safeguarding the returns of special interests, if even that. But the probability of such negative results does not free the capitalist nations from the compulsive need to operate on an international scale.

Even an isolationist, non-imperialistic America would be forced to subsidize its dominant capital groups by way of government purchases, if only to avoid the depression conditions of capital stag nation. These subsidies have to come out of total production; the “returns” of subsidized capital imply the social “costs” of waste-production. This is precisely the dilemma which capitalism tries to overcome by external expansion. Imperialism projects the national dilemma to the international scene. But there is a difference. If waste-production in the form of expenditures for imperialistic purposes should result in the creation of conditions for an accelerated private capital expansion, the future “returns” may well exceed the present “costs.” In that case, the production of waste would have turned out to be the instrument for the production of capital, the necessary expense of an increased exploitation, as has been true for all previous imperialistic activity. Whereas waste-production on a national scale merely increases the difficulties of capital expansion of which it is itself an expression, waste-production by way of war might bring about structural changes of world economy and shifts of political power relations conducive to a new period of capital expansion for the victorious capitalist powers.

Such cynical notions rest on the illusion that capitalism in general, and American capitalism in particular, has no historical boundaries. But even if they recognize the trend towards the progressive dissolution of the market system, capitalists can only act as if the trend was non-existent, or could be halted and reversed. Being in fact determined by the trend, their activities become increasingly imperialistic, in order to contain and, if possible, to destroy socio-economic systems different from their own. The more mixed their own economies become, the more urgent becomes the need to arrest the spread of “nationalization” and “socialization” within the world economy, not only to gain more control over it but also to limit government-induced production in their own countries. It is for this reason that the mixed economy remains geared to war and mobilization for war; indeed, the mixed economy is nothing other than the capitalist economy as a semi-permanent war-economy. What during the depression appeared at first as a possible solution to the economic problems of the market system, now displays itself as an added cause of capitalist imperialism.

However, the consequences of war are bound up with the forces of production. These forces now make possible the destruction of most of the world and its population, which seems to preclude the utilization of war for purposes of capital accumulation. Shortly after World War II, it was still possible to look upon war as a “new industry” capable of solving capitalist problems, including that of pecuniary profits. “The destruction of the European economy,” it was said, “has solved the problem of effective demand for the American economy. During the depression we got nowhere. The great lack was the absence of effective demand. Lately, these demands have been created out of sheer necessity, and ... we are in a dawn of the greatest industrial era this country ever had.”[7] This kind of optimism cannot prevail in view of the destructiveness of modern warfare which may well include the use of atomic weapons.

However, it is not possible to proceed rationally in an irrational world. The recognition that war can no longer solve the problems that harass the capitalist world does not change a behavior pattern which may, at any time, issue into war. No capitalist desired the losses of depression, yet the relentless competition for capital nonetheless led into crisis and depression; in other words, “normal” behavior caused the “abnormality” of the crisis. It is no different with regard to war. The relentless drive to gain or to retain political and economic dominance is the outcome and sum total of all the asocial behavior that characterizes social life under capitalism. The recognition that war may be suicide, which is by no means unanimous, does not affect the drift towards a new world war. Those who make political decisions are no less trapped in this cul-de-sac than are the emasculated and indifferent masses. Simply by making the “right” decisions, as determined by the specific needs of their nations and the security of their social structures, they may destroy themselves and a large part of the world. Foreign policy in the post-war world has been essentially nothing but preparation for war, and only the perspective of war made possible that measure of collaboration which the Western alliances manifested. Aside from this, there has been no “policy” at all, just that impenetrable amalgam of contradictory actions and reactions by which uncounted special interests try to assert or defend themselves. America’s post-war policy consists of the Truman Doctrine, the Marshall Plan, the North Atlantic Treaty Organization, the Korean War, the Caracas declaration, the Southeast Asia collective defense treaty, the mutual treaty with Taiwan, the Baghdad Pact and the Eisenhower Doctrine – a foreign policy made consistent by the actuality or expectancy of war.

The defense of Western capitalism is generally expressed in political-ideological terms. “Communist aggression” is fought not to make money – at any rate not immediately – but to defend “freedom” even where it does not exist – “freedom” being presumably understood in terms of democratic institutions such as prevail in the United States and Western Europe. The outcome of World War II assured a rapidly developing American interest in the nations of Southeast Asia. The collapse of Nationalist China only gave it greater urgency. “Because of its ideology,” it was said by an American policy-maker, “Communist China is a model, so to say, of domestic totalitarianism, in complete contrast to the sort of development that we believe would foster the true welfare of these countries.” Although “we seek no preferred economic position in this area ... our policy seeks to deal with the central aggressive Communist power and its satellites by preventing their expansion as the first and essential step towards whatever relationship may later evolve.”[8] China must be contained; that is, the nations of Asia and Southeast Asia must be prevented from leaving the Western fold.

Given the weak position of the rising native bourgeoisie, it is clear that the political structures of emerging nominally-democratic nations are as authoritarian as they are in the nominally-communist nations. Both “communism” and “democracy” are here purely ideological terms, indicating no more than two different develop mental tendencies – the one toward state-capitalism and away from Western domination, the other towards a market economy to be kept in the neo-colonial structure of Western capitalism. To make the second course prevail requires at times the physical presence of American military power and the return to old-style colonialism. The war in Southeast Asia, according to Secretary of State Dean Rusk, not only is a moral imperative but also is necessitated by national interests. “Within the next decade or two,” he has said, “there will be a billion Chinese on the mainland, armed with nuclear weapons, with no certainty about what their attitude toward the rest of Asia will be. Now from a strategic point of view, it is not very attractive to think of the world cut in two by Asian Communism, reaching out through Southeast Asia and Indonesia, which we know has been their objective; and that these hundreds of millions of people in the free nations of Asia should be under the deadly and constant pressure of the authorities in Peking, so that their future is circumscribed by fear. Now these are vitally important matters to us, who are a Pacific and an Atlantic power. After all, World War II hit us from the Pacific, and Asia is where two-thirds of the world’s people live. So we have a tremendous stake in the ability of the free nations of Asia to live in peace; and to turn the interests of people in mainland China to the pragmatic requirements of their own people, and away from the doctrinaire and ideological adventurism.”[9] However, America is not only a Pacific but also a capitalist power and it is as such that she desires a “peaceful” capitalist Asia – because America cannot do what she suggests the Chinese should do, namely concentrate upon “the pragmatic requirements of her own people.”

1. G. A. Steiner, Multinational Corporate Planning, New York, 1966, p. 316.

2. H. H. Fowler, National Interests and Multinational Business, in Multinational Planning p. 123

3. Ibid., P.124.

4. The New York Times, February 11, 1966.

5. P. Worsley, The Third World, London, 1964, p. 241.

6. K. Marx, “British Incomes in India,” in On Colonialism, Moscow, pp. 157-

7. Proceedings of a Conference sponsored by the Economic and Business Foundation. New Wilmington, Pennsylvania, December 20, 1948, p. 18

8. W. P. Bundy, The United States and Asia, in China and the Peace of Asia, Ed. by A. Buchan, London, 1965, pp. 17-21.

9. The New York Times, October 13, 1967.