Dots for Joining
—Bill, 23 March 2014, with interpolations by Tom, 28 March 2014
Tom’s reply to Dave raises some issues about the way in which the argument we have been having has been conducted, expressing frustration about those who hold Russia to be imperialist failing to engage with his arguments and his facts, but somehow half-realising that we who hold that position are similarly frustrated by a sense that he and his side fail to engage with our arguments and our facts. At the last conference I think all sides were, if not angry about the other not answering their arguments, at least very sad, and that perhaps, has continued, but really neither the anger nor the sadness has been very helpful.
We can agree that one side or the other in this argument is more or less correct, and that the other is failing to engage. But only the resolution of the argument will lead to agreement on which side it is that fails to engage. The argument will not be furthered by that complaint on either side … though I know from my own experience that it is an irresistible temptation to make it sometimes.
I think that the documentary record re: engagement speaks for itself. I do however agree that we have now begun to seriously engage on the substantive issues.
Though the words have not been used too directly, I think it is clear enough that those who do not regard Russia as imperialist think those of us who do are impressionists who deny fundamental precepts of the materialist understanding of history. Most of our side of course, have the reciprocal view, that you (leaving your mistaken views on economic realities aside) have a crude economic reductionist and empiricist view blind to certain deeper processes and denying the law of combined and uneven development and the complex mediations between economics and politics as understood by Lenin and Trotsky.
So we’ve got to get on with it, clearing the way forward, idea by idea, fact by fact, argument by argument. It was to this end that a few weeks ago I started introducing a series of questions, in an attempt to make step by step clarifications. That resulted in a very strong complaint on a Skype discussion that I was introducing a hostile interrogatory tone to the discussion. That was not my intention.
One of our difficulties is that on our side we simply do not accept that the kind of orientation to the data that you ask of us will provide definitive answers. Just to take one example, that I think was alluded to in an earlier stage of the discussion: the sixth largest supplier of mobile phone networks internationally (with a revenue of $23 billion a year) is called VimpelCom Ltd. Seventy percent of its revenue comes from Russia and Italy, and the balance from Ukraine, Kazakhstan, Uzbekistan, Armenia, Georgia, Kyrgyzstan, Cambodia, Laos, Bangladesh, Pakistan, Burundi, Zimbabwe the Central African Republic, and Canada. Its headquarters are in Amsterdam and in the statistics it shows up as Dutch. It is 48 percent controlled by the Russian AlfaGroup who have 56 percent of the economic rights. The AlfaGroup is under the control of Mikhail Fridman, one of the most powerful oligarchs. As well as Alfa’s 48 percent, VimpelCom is 43 percent controlled by Telenor, a Norwegian telecoms corporation, with the balance held by various minority interests. [Wikipedia]
This company is discussed briefly in the item that Barbara sent a link out for in her recent contribution. It is not uncommon for some of the more successful Russian TNCs to seek partners with more advanced technologies and connections in Western Europe. As we have noted previously telecommunications requires on-site capacity (PLO “oligarchs” are fairly heavily represented in this field as a result). Of course Russia has connections with most of the neo colonies listed dating from the Soviet period. Fox Business News website (16 January 2013) reported that “Vimpelcom has been trying to sell its businesses in Burundi, Zimbabwe, Central African Republic, Cambodia and Laos in order to focus on its main markets of Russia and Italy, sources previously said.” This suggests that VimpelCom may have found pumping value out of some of these more backward countries to be more difficult than anticipated.
Now VimpelCom is just one example, discovered by accident, of Russian imperialist investment accruing superprofits. Business often hides its tracks, whether for reasons of deception or simply because business is not served by filing information on the questions most interesting to us, so it is lucky when you find examples such as VimpelCom.
Tracking capitalist investments and earnings can be a tricky thing, as it is not just Russian companies that try to cover their tracks to avoid regulation and taxes etc. We have to work with the best information we can find. In general the financial press has a more or less accurate sense of the big picture at least—on the whole I think they can be relied upon to “follow the money” fairly accurately.
But there’s a lot more investments than VimpelCom. How do I know that? Well it is in the nature of things that billionaires must invest their billions. It is simply not possible to spend billions of dollars on personal consumption. A billion — a thousand million — is a VERY high number. And so a billionaire simply has too much to spend it all on private yachts and pedicures and high class hookers. They invest their money. Somewhere. The other members of Russia’s finance bourgeoisie are like Mikhail Fridman, making ordinary imperialist investments, and although we might not be able to name the firms in which they are investing, there are certainly thousands of them.
Of course it is not possible to know what stocks and bonds are held by each individual Russian oligarch in their Swiss, Cayman Islands or Cypriot accounts. But of course there is nothing special about Russian billionaires in this regard–those from Ukraine, Kazakstan, Nigeria etc. are equally hard to track and are also doubtless equally anxious to make the highest possible return on their investments. Whoever manages to do so will indeed share in the value pumped out of wherever the companies they are invested in do business. This is a somewhat different question than the activities of Russian or other TNCs which also of course seek to pursue the maximum profit in any market they enter.
The available data does not do justice to the reality, but there’s enough to make a very strong case indeed. In their document of 19 June 2013 Josh and Barbara presented data which shows that Russia has been a global net exporter of Foreign Direct Investment flow since 2009. Josh’s reply to Dave of 17 March 2014 and Barbara’s reply to Roxy of 20 March 2014 are both very important contributions, adding considerably to the picture both theoretically and empirically, with Josh citing material which shows the general under-reporting of Russia’s stock of outward investment and Barbara citing material which proves a continuing and increasing flow of such investment.
As I demonstrated in my 15 July 2013 reply to the 19 June 2013 contribution by Josh and Barbara on the FDI question, there is no good reason to put Russia in a different category than its fellow BRICs (particularly Brazil). It can hardly be an accident that all bourgeois analysts consider it a “developing” or “emerging” economy rather than a “developed” (i.e., imperialist) one. Barbara’s recent contribution seeking to demonstrate surplus value extraction by Russian TNCs represents a real step forward in our discussion to which I intend to reply as soon as I have the opportunity.
We have shown there are real oligarchic financial institutions with real money for real investments, that they in fact make such investments, and that they are getting real returns. [I take it this is a reference to Barbara’s research. I cannot recall earlier imp contributions that sought to show this.–TR] It has been asserted that Russian outward investment is predominantly state sponsored and narrowly focussed for purposes of state and perhaps towards long term aspirations, but the contrary evidence is far stronger. [I think that we are now agreed that Russia’s substantial investment in Syria, previously cited as a likely site of imperialist value extraction are in reality mostly politically motivated subsidies from the Kremlin, rather than investments intended to generate a stream of income. Likewise Belarus.] And of course it is. Russian oligarchs are not distinguished among capitalists by attributes of self-denial and delayed gratification. They have money to invest and they want profits and they want them soon.
And there are a lot of them. And they are intertwined with the Russian state. And the state is one of the more powerful states on the international arena, and has expansionist policies which serve their interests. And this helps the billionaires’ investments return higher profits.
I think this requires factual substantiation. It is very close to the nub of the question—i.e., the relationship of Russian capital to neo-colonial countries. Is it the recipient of a substantial, long-term, net flow of value from less “developed” nations? I welcome attempts by imp comrades to demonstrate this, and regard it as a positive development in the nature of our discussion.
But somehow we are not getting this across.
On our side, we think it is highly significant that you use the same arguments to show that Russia is not imperialist today as you previously used in your now-abandoned attempt to show that Russia was not imperialist before the Revolution. You do not see the significance.
This is not quite right. On 26 October 2013 I responded at some length to your September 2013 “Twenty Points” document, in which (point 4) you made a similar observation.
You think that capacity to compete on the world market is proportional to labour productivity (and so to the organic composition of capital). We think that world power status and international spheres of influence may interfere with that proportionality.
We note that Russian commodities are generally not competitive on the global market and that Russia’s economic situation would be rather similar to Ukraine’s were it not for the substantial revenues gained from the sale of oil and gas abroad. Russia’s “world power status” has done little that we can see to offset the fundamental fact that it lags far behind the advanced capitalist countries in most fields.
You think that when Trotsky says Czechoslovakia was imperialist because it was highly economically developed, that implies that because Russia is on the whole not so developed, it is therefore not imperialist. We do not follow your logic.
Nor Trotsky’s either, at least on this question.
We think that high levels of raw material production have historically always been one in the array of indicators that Leninists have seen as tending to indicate that a country is imperialist. You apparently think they are a counter-indication.
Some imperialist countries have abundant raw materials (e.g., Canada and Australia) but historically economies composed of “hewers of wood and drawers of water” have more often been imperial hinterlands. Until relatively recently a bourgeois euphemism for imperialist was “industrialized.” Colonial projects a century ago tended to feature mines and plantations—which is where we get the name “banana republics.” Having negligible natural resources of their own, imperialist countries like Japan and Holland went abroad to acquire them using their more advanced industrial-military capacity to do so.
We think that the military power and geostrategic influence Russia has to facilitate hydrocarbon transit through Central and Western Asia and Eastern Europe (pipelines etc) is highly analogous to the military power and geostrategic influences Western imperialists have or had on particular rail links and trading choke-points (such as the Straits of Gibraltar or Malacca or the Panama or Suez Canal), and that power over such trading routes is a characteristic element of imperialist power contributing to its capacity to extract surplus profits. You do not.
The Suez and Panama canals were commercial imperial projects undertaken by colonial powers and carved out of more backward countries. Panama was detached from Colombia for this purpose. The pipeline arrangements undertaken in the recent past by all the various competitors have not had this quality. Control over natural resources and vital shipping lanes, along with any other sort of territory whether land, sea or space is also of vital interest to all bourgeoisies. The difference between Milosevic, Saddam Hussein etc and Tony Blair, George W. Bush et al is not in their desire to exercise geostrategic influence but their ability to do so.
We believe that some part of the flow of superprofits to Russia is incorporated in prices received for hydrocarbon exports, ie, that this untraceable element of these revenues is a function of its imperialist status. You dismiss hydrocarbon income as counter-indicative of imperialism.
You will understand that we cannot accept “untraceable” revenues as proof of Russia’s imperialist status. I am not sure why you think that energy corporation revenues are “untraceable”—in a macro sense the petrochemical market is generally viewed fairly transparent I think, i.e., it is generally possible to find out how much gas or oil is sold by what companies to whom for how much. Presumably you are not suggesting that the prices of hydrocarbons on the world market include some sort of built-in superprofit—because of course the cost of extracting, refining and bringing oil to market varies considerably. This is why as the price of a barrel goes up wells that were previously unprofitable are brought back on stream and vice versa.
We do not “dismiss hydrocarbon income as counter-indicative of imperialism,” but we observe that many of the world’s largest producers are not imperialists, and, conversely, that many imperialist countries do not produce oil or gas. In short revenues (however large) derived from sales of this natural resource do not qualify a country as imperialist.
You think that getting oil and gas from the ground in Russia through pipelines to Central and Western Europe is a technical-economic activity different in kind from that characteristic of imperialism, and that therefore any extra profits from that investment cannot be “surplus-profit” (or the fruit of imperialist advantage).
I expect we can agree that the production, transportation and marketing of commodities (including oil and gas) is characteristic of capitalism, and not specifically imperialist. Iran has been building a pipeline to send gas to Pakistan. Venezuela has built several regional pipelines. Surely no one finds them “characteristic of imperialism.” Super profits are obtained by imperialist countries in neocolonies by taking advantage of lower prices for labor or raw materials through financial manipulation, or brute force, etc. Superprofits more generally are available through higher than average productivity (usually involving a technological edge) or through some sort of monopoly position in the market. The hydrocarbon extraction by Russian companies is overwhelmingly domestic, and the production and sale of these commodities therefore involves the “normal” cycle of capital accumulation.
We think the necessary industrial activity represents continuing investment of capital and labour power, including in the semi-colonies through which the hydrocarbons flow, all of which add value to the product sold, and facilitate surplus value for the imperialist investors.
Not sure what you mean by “surplus value” here. Every capitalist enterprise that employs living labor seeks to create surplus value (aka profit). This is not equivalent to the generation of superprofits in neocolonies. In Marxist literature the costs of bringing goods to market (whether by rail, ship, pipeline or road) are usually treated as part of the necessary overheads, not as a source of added value. Typically Russian energy corporations (like other oil and gas producers) pay transit fees to countries through which their lines pass. As far as I am aware the rates paid by Gazprom et al are roughly in line with those paid by their competitors. Where do you see “superprofits” arising in the shipment of gas from Russia to Europe?
You seem to think that the bourgeoisie of Saudi Arabia and the bourgeoisie of Russia are qualitatively similar in their configurations and their relations to their states. We see discrepancies — far more than simply their rather different number of billionaires (8 Saudi billionaires as against 111 Russian according to a Wikipedia table, though that may be skewed).
I do not think you can prove your case with billionaires. Wikipedia’s billionaire lists seem to be based on Forbes which, according to the description of their “methodology,” specifically excludes royalty, heads of state, etc. from their lists. So that is why the Saudis are so underrepresented. As a rule neo colonies have historically had greater social inequality than “advanced democracies.” If we check the Forbes list for BRICs we find China with 152, Brazil with 65 (more than Germany with 58!) and India with only 52. Even Ukraine has 10 billionaires.
The following is a link to an item on billionaires per capita http://www.slate.com/blogs/moneybox/2013/03/04/forbes_billionaires_list_countries_with_the_most_billionaires_per_capita.html
The list of the top ten per capita is as follows:
1. Monaco (3/35,427)
2. St. Kitts and Nevis (1/53,051)
3. Guernsey (1/65,573)
4. Hong Kong (39/7.1 million)
5. Belize (1/356,600)
6. Cyprus (3/1.1 million)
7. Israel (17/7.8 million)
8. Singapore (10/5.2 million)
9. Kuwait (5/2.8 million)
10. Switzerland (13/7.9 million)
We think that any capitalist state will use what power it has internationally to get the best profits possible for its bourgeoisie, and that military might allows for the levering of higher profit levels. So we furthermore think that in the real existing world a capitalist great power will in fact be able to garner profits at a higher level than a capitalist state that is not a great power. You apparently think that (in the case that a capitalist great power is somewhat economically backward) it will not use its power for the purposes of increasing its profits.
What you need to try to demonstrate, it seems to me, is that this is actually happening as regards the Russian bourgeoisie—not merely that they, like every other capitalist class in all countries big or small, are willing to use whatever they have to advance their interests/increase their profits. I am not sure that, as a historical generalization it is necessarily the case that a capitalist great power (imperialist division) is able to “garner profits at a higher level than a capitalist state that is not a great power.” If we were to compare Swiss or Austrian to the German bourgeoisie, or the Dutch to the French or the Canadian to the American would we find a significant advantage attributable to great power status? Perhaps we would, but it does not seem self-evident to me.
Clearly each side is getting impatient with the other, but in the IBT comrades do change and have changed their minds in the past and are capable of doing so this time round too. So let us proceed.