11-30-06, 8:58 am

Contribution from the Communist Party of Britain to the Lisbon Meeting of Communist and Workers' Parties, 10-12 November 2006


Two apparent paradoxes underline the contradictions and dangers posed by imperialism today. The US, the world's biggest debtor, runs the world's banking and financial system. Britain, with the weakest industrial base of all leading capitalist nations, received by far the largest share of foreign direct investment in 2005: 17 per cent of the world total.

This contribution from the Communist Party of Britain will argue:

That Britain plays a key role in pulling together subordinate alliances for the US inside the EU and traditional spheres of British interest such as Central and Southern Africa.

That the objective of the US is not simply to control world resources such as oil, important though this is, but the maintenance of a wider financial dominance within a trading structure that gives free scope to its giant monopolies in IT, biogenetics, pharmaceuticals, armaments and aerospace

That in this process there is a high level of strategic intervention and control by US state monopoly capitalism which also gives significant advantages to British finance capital in its international operations.

That it is important not to over-estimate the power of even the biggest US transnational corporation, independent of the US state.

That it is equally important not to underestimate the fraught, error-prone exercise of state power, in the US and Britain, faced with the pressures of internal democracy and external resistance

In view of the contemporary myth of the all-powerful character of US transnationals, it is important to start by stressing the real power exercised over them by the US government. Both right-wingers and some on the left have claimed that such companies are beyond the control of any particular state and can now move capital without detection across any border. These claims are misleading and dangerous. They disarm the workers' movement by suggesting that governments no longer have the capacity to exercise any control over capital.

A moment's reflection demonstrates the opposite. Remember Cuba, PDR Korea, Zimbabwe and Sudan among several others. The US government has been able to track and block virtually all trade credits for Zimbabwe and for Korea for the past four years. It has been able to compel even foreign banks to halt dollar transactions in favour of Cuba. The case of Sudan is even more revealing. Sudan has very large oil reserves. The US oil major Chevron, one of the biggest, was the first to take control of these assets in the 1970s and 80s. When in 1989 the US identified the new Sudanese government as a strategic enemy swift and effective steps were taken to force Chevron's withdrawal at just the point when it was about to bring the most lucrative oil fields on stream. Chevron's losses were in the region of $1 billion although the US government gave it a tax write off of $600m. When in 1998 Chevron's Sudanese assets passed into the hands of one of the biggest Canadian oil firms, Talisman, equally effective steps were taken. Talisman left Sudan in 2002 at a time when oil from this source contributed 20 per cent of its profits. What were the weapons? The share holdings controlled by US based financial institutions and US-funded NGOs that raised human rights abuses through the Canadian government. By the time Talisman had sold its Sudanese assets its shares were discounted by 20 per cent

This is not to claim that transnational companies are puppets of the US government. Simply that even the biggest are subject to pressures from banks and fund-holders and that the US government possesses comprehensive sources of information and influence. The US government also influences, directly or indirectly, the markets for virtually all US transnational companies whether this is through Defense Department contracts, credits to overseas governments or through the military protection of overseas assets.

The big and difficult question is who does control, in whose interests and within what limits. The term state monopoly capitalism indicates that in our era it is not the capitalist class as a whole that is paramount. Nor is it, of course, the will of the people, despite the democratic forms of most such states. State monopoly capitalism requires a direct linkage between the dominant strategic controllers of finance capital and the capitalist state apparatus. This gives the capitalist state in the US, Britain and elsewhere immense powers of coercion and persuasion. But it does not mean that the state power of monopoly capital is free from constraints or that its handling of the interests of finance capital in general is always smooth and successful. Far from it. We will come back to this later.

What this contribution wants to focus on is the nature of current US strategy and Britain's role within it.

US finance capital still enjoys major strategic advantages:

Its economy is by far the biggest and recently has been growing faster than those of its main capitalist rivals.

Its transnational companies technologically dominate most, though not all, of the main areas of global growth Its banking system is globally dominant: over 50 per cent of trade denominated in dollars; in 2005 US banks handled over 70 per cent of Europe's mergers and acquisitions.

The US owns three of the top five oil trading companies and has significant share ownership within the other two, one based in Britain, the other in the Netherlands. The US thereby dominates the oil supply of most of the other main capitalist economies.

Its military alliances cover all continents and tie its allies to purchases from the US military industrial complex.

The problem for US strategists is that these advantages, largely mutually dependent, are in slow, long-term decline:

The US share of world industrial output has declined from over 50 per cent in 1950 to 25 per cent today

The US balance of payments has been in deficit for well over a decade. This deficit now equals between 7 and 8 per cent of US GDP

Other economic centres are emerging as potential rivals in Europe and Asia

US oil trading is now dependent on external sources of which the great bulk, 96 per cent in terms of global reserves, are owned by the state oil companies in countries that are either politically unstable or politically outside the US sphere of influence

The US exercise of regional dominance is meeting increasing resistance in Latin America, the Middle East and Asia.

In addition, the past decade has seen the US only able to avoid long-term downturns in the capitalist crisis cycle by a number of risky short-term expedients: doubling the size of the military budget, depressing labour costs by large-scale outsourcing of production and large-scale immigration, and finally by interest rate policies that have created unprecedentedly high levels of household debt. The rise in outsourcing and the level of internal debt have together severely worsened US problems of financial management.

Over the past two decades the general US strategic response, broadly shared by Democrats and Republicans alike, has been to build on its strategic strengths and to develop alliances with the other main capitalist powers to extend the geographical scope of the capitalist market unfettered by any form of democratic political intervention usually under the guise of introducing fully liberal democratic institutions. This geographical expansion has applied both to existing capitalist states in Europe with social democratic traditions as well as the former and existing socialist countries and others states in the Middle East and Asia. Economically and strategically, this brought most benefits to the US and its dominant monopolies. But it was also sufficiently beneficial to the big monopolies of other capitalist powers to secure their consensus and support. It was a strategy that seemed to mark up major successes in Eastern Europe and even Russia in the 1990s. Indeed, the combined NATO and EU military intervention in Yugoslavia indicated what might be possible in other regions.

For US financial capital the weakness of this strategy was that it only delayed and did not reverse the long-term relative decline in US dominance. Hence the Project for a New American Century report of September 2000. This focused particularly on two things. One was the sharp worsening in US controls over strategic raw materials, particularly energy, during 1990s and the danger that traditional allies would begin doing deals directly with producing countries. The other, linked to this, was the emergence of China and a consolidated EU as economic counterweights to the US. The authors argued that the US had to take urgent steps to reassert control over global energy if there was not be a wider and more precipitate slippage in US dominance. The report challenged existing US thinking by explicitly identifying Europe as potential base for rival (inter-imperialist) policies and by arguing that, if necessary, there would need to be a break with the traditional US commitment to multilateral action. It was essential, the report argued, to secure a political transformation of the oil-bearing regions of the Middle East and Central Asia and create liberal market democracies that would open its energy resources to full commercial operation. In this the US should be prepared for the kind of intervention used in Yugoslavia. If this could be done with multilateral support, all the better. If not, the US would have to act with those allies on which it could directly depend.

In implementing these plans the US link with Britain assumed critical importance. The US has more external investment in Europe than the rest of the world put together. However, the investment is highly concentrated. Over two-thirds is invested in just four countries: Britain ($300,000m), the Netherlands ($200,000m), Ireland ($73,000m) and Sweden ($46,000m). In Ireland it is equivalent to 35 per cent of GDP, in the Netherlands 31 per cent, in Britain 13.5 per cent and in Sweden 12 per cent. US Investments in Germany equal only 2.7 per of GDP and in France 2.6 per cent. Britain is also special in the degree to which its mass circulation press is US owned (over 40 per cent) and its own key areas of overseas superprofit in oil and financial services are highly dependent on US support and protection.

In the event the US attack on Iraq had to be undertaken without the support of Germany, France, the EU or the UN. Britain, however, took on a key role in rallying minority support. Since 2003 Britain has played an even more important role in changing the political balance inside the European Union. The entry of the Eastern European accession states brought in countries in which the neo-capitalist elites were highly dependent on US-influenced structures of support. In 2004-5 Britain succeeded in forcing a redrafting of the EU Constitution that consolidated a new voting block within the Council of Ministers and required EU military planning and armaments to be synchronised with those of NATO. In parallel Britain pushed forward the neo-liberal Lisbon agenda for a fully flexible trans-EU labour market and the opening of existing state-controlled sectors in oil, gas, electricity generation, postal services, communications and particularly financial services and pensions. This primarily benefits US and British banks and transnationals but also draws wider big business support from elsewhere in Europe. As a policy it represents a direct attack on the state monopoly capital base of French and German big business.

Although the Constitution itself temporarily failed, there has been a decisive shift in the political balance within EU institutions since 2003. Right-wing and neo-liberal forces now dominate the EU Commission, Council of Ministers and Parliament. Ideologically, there has also been a shift. The `war on terror' is now taken as an objective justification for EU policy. Explicit anti-Communism, directed against countries such as Cuba and China and the workers movement in Europe, is beginning to cohere a new alliance stretching from Poland, the Czech Republic and the Baltic States to Merkel in Germany, the right-wing government in Sweden and New Labour in Britain.

Yet these changes have been at a heavy cost. Popular attitudes in Europe have shifted. There are the beginnings of a new Popular Front politics that unites broad strata around the labour movement and the left against the big business domination of the EU and in defence of the democratic rights of national parliaments. EU directed attacks on job security and on retirement ages together with the privatisation of docks, rail transport, energy and postal services are creating mass movements of opposition around the organised working class. These have major potential. They raise the issue of popular sovereignty, of isolating the anti-democratic forces of monopoly capital and at the same time exposing the anti-democratic character of the EU. Overall, on a global scale, the new US policy of unilateralism appears to have failed. The plan for a reconfiguration of a greater Middle East in terms of liberal market democracies now looks impossible. US policy has left Syria and Iran strengthened and Saudi Arabia still more unstable. Recent attempts to open a new front in Lebanon (ultimately directed against Iran) have been equally counterproductive. Meanwhile, on the American continent itself challenges to US domination have developed a quite new momentum.

Even in Britain New Labour is no longer a reliable instrument for US policy. The united trade union movement, through the British Trades Union Congress, has rejected the neo-liberal project and subservience to US policy including Britain's US supplied nuclear weapons. The strength of this trade union opposition was reflected at the 2006 Labour Party conference that overwhelmingly rejected further privatisation within the health service or education. The right-wing `New Labour' clique, which has dominated the Labour Party for the past decade and been a key instrument of US policy, is now deeply divided and in crisis - though still controlling the Labour Party machine.

In terms of the objectives set by the authors of the 2000 Plan, US finance capital is today is in a weaker and more vulnerable position. It is the persistence with which this highly dangerous and flawed strategy has been pursued, as demonstrated most recently by Israel's criminal assault on Lebanon, which brings us back to the final issue of democracy and the nature of the state power of monopoly capital.

Conclusion: the importance of the fight for democracy and popular sovereignty

The current US government presents itself as the global defender of liberal democracy. This democracy, as everyone knows, is of a special kind. It is defined by the private ownership of the means of production and communication, the existence of a plural party system and a wider pluralism by which civic society can bring influence to bear on government. In the era of monopoly capital it is the only kind of democracy that can safeguard the dominance of the strategic controllers of finance capital over government. But it is also a dominance that is highly problematic even for finance capital itself.

In the origins of capitalist states, before democracy had to be conceded and before the era of monopoly capital, systems of constitutional government were developed that directly and proportionately represented capitalist property. These constitutional procedures provided explicit checks and balances to prevent the monopolisation of power by any particular capitalist interest.

The problem for liberal democracy in our era is that such safeguards do not and cannot exist. The whole process by which finance capital influences government is out of bounds and constitutionally invisible. At one and the same it is essential to the political economy of monopoly capitalism and a process that cannot be admitted or discussed. As such it creates great dangers even for finance capital itself. Without safeguards there is immense scope for proponents of failed strategies to use the power of the state to pursue them long after they no longer serve the interests of finance capital. In Britain the period of Nazi appeasement in the 1930s or the defence of formal empire in the 1950s illustrated the dangers. But in the 21st century these dangers are infinitely bigger - both in terms of the future of humanity and slippage towards more directly authoritarian regimes.

Communists have a prime responsibility to raise these issues and mobilise to defend democratic institutions. Our understanding of democracy is of course different. We know that in a society owned and controlled by monopoly capital, it is only by drawing on the countervailing collective force of the working class movement that democratic institutions can be utilised to defend the interests of the majority. But the integrity and existence of these institutions remains essential. Within the EU in particular they are under immediate threat. The project for a constitution has not been abandoned. Even without it, the EU current treaty provisions prevent national parliaments from exercising effective controls over the economy or capital. This is why the mass movements of the past year against neo-liberalism are so important for developing the new politics of popular sovereignty. It is critical both for the immediate needs of working people and the longer-term defence of democracy.

For working people in Britain the stakes are particularly high. Britain did indeed receive 17 per cent world foreign direct investment in 2005. But it was not investment in Britain. It represents mergers and acquisitions of British-based companies that operate largely under US suzerainty elsewhere in the world. Much of this investment is part of the colossal debt piled up in the US, money used by US fund managers to control economies elsewhere. In Britain's case these transactions will intensify the parasitism of its economy with British assets overseas now equalling 170 per cent of the country's GDP. Britain's domestic economy is, by contrast, starved of investment and progressively weakening and in doing so threatening the future of the great majority of the population.

Our party's fight for an Alternative Left Wing Programme, now largely adopted by the trade union movement, is therefore essential economically. But it is also key politically. It represents an assertion of popular sovereignty, of mass democracy which would also break the lethal alliance with US finance capital.