Decker’s Response & Riley’s Rejoinder

—Decker’s 9 April 2014 response to Riley, with Riley’s 11 April 2014 interpolations

In his 8 April response to Barbara and me, Tom revisits several old arguments attempting to show how Russia is in the same league as Brazil (or is even a notch below it) within the global capitalist system. He adds a handful of new quotes taken from the Vale 2011 study and the David Collins book, none of which is surprising.

I point out that Barbara’s evidence from Vale 2011 does not stack up to what she thought it did. I also compare and contrast a 2012 Vale study on Brazil that shows, among other things, that Russian investment is not aimed at producing superprofits and that Brazilian “greenfield” investment (mostly in backward countries) is roughly six times as large as supposedly imperialist Russia’s. I also cite material from David Collins that confirms the above and shows that Russia cannot be considered to be in a different league from Brazil economically. If none of this surprises Josh so be it.

I’m not particularly interested in responding to his document, which Tom will perhaps view as proof that the Imps are incapable of addressing what he may think is a devastating critique. (As I said to Tom during the Toronto pre-conference discussion after he complained repeatedly that we had “chosen not to respond” to some of the arguments he had made in the past, it is neither useful nor serious to assert that “failure to respond” to random points/facts indicates an inability to deal with them – especially when it should be clear that those points are only meaningful in the context of a theoretical framework we reject.)

It seems fairly clear that the imps have found it extremely difficult to find evidence that Russia is extracting value from supposed neocolonies in the CIS, Syria etc. on any significant scale. In fact, as we have shown, gas has been sold to CIS members at a substantial discount and Syria has had huge debts written off. This, not OFDI stats, has always been the central issue in my estimation because value extraction is, after all, what defines imperialism of the modern, “finance capital” type. To reject this as a “theoretical framework” is to essentially reject a Marxist approach to the question.

In our exchanges there have been many questions which do not strike me as “random” that the comrades have sidestepped or ignored. For example in my July reply to Decker-Dorn I pointed out that the document they cited to show that Russian ODFI flow had risen as Brazil’s had fallen also showed the opposite tendency for the ODFI stock figures for each of them.

I wondered:

“If it had been Russia, rather than Brazil, that had risen so rapidly in global equity investment tables the comrades might have been tempted to interpret it as evidence that ‘Russia has further entrenched itself as a finance capital power.’ “

This was not a side point but directly relevant to the issue they had posed. There are various other examples that could be cited—few more egregious than the failure to offer a plausible explanation for why “finance capital imperialist” Moscow is losing out to “neocolonial” Warsaw as the center of finance in Eastern Europe. Of course this cannot be explained without violating the imps’ “theoretical framework,” so the lack of interest in responding is easily understood.

I think that the failure to engage has been a problem. During the recent Toronto discussion when Josh said he felt that there had been a parallel tendency on our part to avoid addressing some questions I immediately proposed that we send each other five questions and agree to respond in writing within a week. Josh brushed that proposal aside.

I rather suspected that one of the questions he did not want to answer involved the four petrostates. It seems that I was mistaken in that assumption, but it is clear that the difficulty making the evidence fit within the framework of Russia as an imperialist state accounts for the lack of interest in addressing many questions we have posed.

I do, however, feel the need to address the following accusation Tom makes in his document:

“A sharp spike in oil prices in the early 1970s resulted in a similar dramatic upturn in ‘petrodollars,’ but no one interpreted the massive outflow of FDI from OPEC countries (most of which was recycled through imperialist financial centers) as signaling the emergence of Kuwaiti or Saudi Arabian ‘finance capital.’

“In his 27 March document ‘Russia’s Emergence as an Imperialist Power’ Josh attempted to deal with this argument with three graphs (which he labeled 2A, 2B and 2C) that showed Russia ‘exceeding’ or ‘greatly exceeding’ a ‘selected group of so-called “petro states”’ in terms of outward FDI, net outward FDI and FDI as a percentage of GDP. The ‘petro states’ he selected did not, however, include any of the four [UAE, Kuwait, Bahrain and Qatar] I had cited last July as having doubled, tripled or quintupled their FDI. In order to get the results he wanted Josh chose a different quartet: Iraq and Nigeria (which were both undergoing major civil conflicts), Venezuela (where the Bolivarian government was directing much of its oil revenues to various redistributive projects, including supplying Cuba with oil in exchange for medical personnel) and Iran (which has been under increasingly tight imperialist sanctions.) While Josh’s graphs largely show what he wanted them to they failed to prove his point.” [emphasis added – JD]

Tom made the same unpleasant allegation in his presentation at the Toronto pre-conference, suggesting that I had cherry-picked the data set in order to prove that Russia does not resemble the petro states. I told him at the time that there was no basis to his accusation, and that I had chosen the countries somewhat at random based on the fact that each of them had been brought up at various points by Nimp comrades as possible analogues to Russia. Given that Tom has not written directly about the many other conclusions I drew on the basis of the graphs in my 27 March document, it appears that he feels that repeating his baseless accusation is sufficient to discredit my document as a whole.

The whole issue of OFDI flows is essentially an ancillary one in my view. In my July reply to Decker-Dorn I cited a Financial Times report listing four petro states that had experienced a steep rise in OFDI during the same period that Russia did. This received no comment. Months later when Josh took up the issue of petrostates and produced a graph that left out all the ones I had cited earlier it did look to me like “cherry picking” the data. Now he has included them and his graph looks the same. I was perhaps predisposed to be suspicious because in their 19 June 2013 polemic he and Barbara had cited CIA and EU reports on Russia that mentioned that its service sector is comparable in size to most EU countries to bulwark their assertion that Russia should be seen as roughly the equivalent of the Western imperialist powers, when both reports made it clear that Russia was at a qualitatively lower level of development.

While it is a bit odd to have to demonstrate that Russia plays a different role in the global capitalist system than Kuwait, I have nonetheless added Kuwait, along with the UAE, Bahrain and Qatar, to the most significant graph (Outward FDI), which appears below. I’ve also added Kazakhstan just for fun. As before, all figures are official FDI flow statistics collected by UNCTAD. The result speaks for itself: including Tom’s favorite petro states doesn’t change a thing (apart from making it more difficult to visually distinguish the petro state lines in the graph). From the mid-2000s onward, Russia’s outward FDI has significantly exceeded that of the petro states (with the exception of Saudi Arabia, which Russia began to outpace only in the late 2000s). From the late 2000s onward (i.e., after the onset of the global economic crisis), Russia’s outward FDI has moved closer to the G7 average as it leaves the petro states behind.

Josh’s most recent graph does not show any spike of the OFDI from the four petrostates that the Financial Times reported had doubled, tripled, or quintupled. This is a bit of a puzzle. I can only presume that the data sets are somewhat different—with UNCTAD using raw, or gross figures and FT reporting something more like net ones. When I introduced the FT report originally last July I noted that much of it was at variance with other reports of surging Russian OFDI (ie, it showed Indian outward investment rising relative to other BRICs but Russian and Brazilian remaining static):

“The FDI Intelligence item cited above (and attached as Appendix A) reported little change in the relative position of Brazil and Russia in terms of outward investment. I would presume that this is because the figures are discounted for round-tripping, tax avoidance, money laundering, etc.”

At the end of the day however the whole question of OFDI is something of a sidelight. The key to solving this issue is clearly the point of origin of the value flows originate rather than their destination. Imperialism is defined by the fact that “over the long term, semi-colonies suffer a net outflow of value to more ‘developed’ imperialist countries.” If that cannot be shown to be the case for Russia, and thus far attempts by the imps have failed to do so (see my 8 April response to Decker-Dorn) then we cannot conclude that Russia is imperialist.