The comrades at Viewpoint have just released their new issue on Imperialism, featuring a long essay by ROAR editor Jerome Roos on “The New Debt Colonies.”
We think the debt has to be seen from the standpoint of its origins. The origins of the debt arise from the origins of colonialism. Those who lend us money are the same who colonized us before. They are those who used to manage our states and economies.
– Thomas Sankara (1987)
God save us from the debt, and we shall be content.
– Simón Bolívar (1825)
Today we are witnessing the resurgence of an old phenomenon: the debt colony. A decade after the collapse the U.S. housing bubble and the onset of the worst capitalist crisis in living memory, governments around the world continue to bear the burden of historically unprecedented public debt loads. In some cases, most spectacularly in the peripheral countries of the Eurozone but also in a number of emerging markets, these mounting financial obligations have led to crippling sovereign debt crises – which have in turn impelled the dominant creditor powers to intervene aggressively on foreign bondholders’ behalf, imposing highly intrusive regimes of international financial supervision on distressed borrowers in order to ensure continued debt servicing. The fiscal autonomy of Greece and Puerto Rico, in particular, has now been abolished in all but name, although similar processes have long been afoot elsewhere as well.
This contemporary experience in turn carries strong historical echoes. A century and a half ago, Karl Marx already observed how the emergence of the national debt in early-modern Europe constituted one of the “most powerful levers of primitive accumulation,” leading to the “alienation of the state” by private financiers and “giving rise to stock exchange gambling and the modern bankocracy.” These dynamics intensified during the Age of Imperialism in the late 19th and early 20th centuries, when the export of European and U.S. capital to the newly independent countries of Latin America and the Mediterranean added an international dimension to this long-standing process of dispossession through debt. During this period, the dominant creditor powers regularly subjected distressed sovereign borrowers to external financial control – often under force of arms. The British invasion of Egypt in 1882, the German push to establish an International Financial Commission in Greece in 1898, and the appearance of European gunboats on the Venezuelan coast in 1902 are but some of the most prominent cases in point.
Today, such long-standing processes of financial subjugation continue in a new form – through what has euphemistically come to be known as “international crisis management.” Ever since the Mexican debt crisis of 1982, banks and bondholders in the wealthy creditor countries have increasingly come to rely on their own governments and international financial institutions like the IMF and World Bank to impose painful structural adjustment programs on crisis-stricken debtor countries in the developing world. Over the course of two decades, international creditors – private and official alike – went on to plunder the immense wealth of the Global South, from Argentina to Zaire, aggressively opening up local economies to foreign capital and restructuring them in line with the neoliberal prerogatives of the Washington Consensus. The result has been a vast flow of capital “upstream,” from public hands in the global periphery to private hands in the advanced capitalist core, with developing countries transferring an estimated $4.2 trillion in interest payments to their creditors in Europe and North America since 1982, far outstripping the official-sector development aid these countries received during the same period.1
In the wake of the global financial crisis, these same methods have now come to be applied on a massive scale in the capitalist heartland itself. The result has not just been a new wave of “accumulation by dispossession,” but in some cases also the effective abolition of national sovereignty. When Greece’s fledgling Prime Minister Alexis Tsipras was forced into a humiliating capitulation to his European creditors in the summer of 2015, for instance, an anonymous diplomat from a Germany-allied country candidly described the terms of surrender as “akin to turning Greece into an economic protectorate.”2 In his memoirs of his brief tenure as finance minister, Yanis Varoufakis repeatedly denounces the creditors’ financial intimidation tactics as an example of “latter-day gunboat diplomacy.” When Poland’s foreign minister was asked for the reason behind his country’s refusal to join the euro, all he had to do was point south: “Greece is de facto a colony,” he explained, “We don’t want to repeat this scenario.”
These ongoing developments raise a number of important questions about the relationship between contemporary patterns in international crisis management and Europe and America’s long-standing history of financial imperialism. How different is our contemporary era really from the “era of gunboat diplomacy” in the late 19th and early 20th centuries, when the dominant creditor powers also regularly intervened in the debtors’ sovereign affairs to defend bondholder interests? What are the continuities and discontinuities between the two periods? And can the hotly debated and polemical notion of imperialism still serve as a useful analytical tool to help us make sense of the current conjuncture? If so, how far can the classical Marxist theories of the phenomenon take us in elucidating the asymmetric power relations at the heart of the contemporary global political economy – and what, if anything, can be done to revamp existing theoretical frameworks to better reflect the enduring relevance of imperialism in our time?
In what follows, I will argue that imperialism clearly remains an important factor in the early 21st century – even if the original Marxist accounts require extensive revision in light of the recent transformations of global capitalism. The lasting contribution of the classical theorists was to anchor their critiques of imperialism within a broader critique of political economy, highlighting the central role of finance in driving imperialist relations of domination. This, I argue, should remain the starting point for any contemporary analysis of imperialism. At the same time, however, the classical theories also suffered from a number of important limitations. Most consequentially, perhaps, they tended to emphasize the more overt manifestations of imperialist power (territorial conquest and military intervention) at the expense of its more subtle, structural dynamics (operating through the global financial system), which ended up blinding them to some of the underlying dependencies that later kept the asymmetric power relations between debtors and creditors in place even in the absence of territorial conquest or military intervention.
Source URL — https://roarmag.org/2018/02/03/new-debt-colonies-finance-imperialism-politics-dispossession/