Posts Tagged ‘Centre for Development’

Lenin on Britain as International Financial Creditor

March 29, 2014

Lenin Pic

Lenin: Russian Revolutionary and critic of international capitalism

I’ve already blogged on the harmful way the British financial sector is geared towards external investment, with the result that the vast concentration on developing it since Margaret Thatcher has decimated British manufacturing. British investment in the Developing World, along with the rest of the financial aid offered in the form of loans, has also contributed to the massive debt accrued by these nations and the consequent damage to their economies. I believe that Britain is now one of the world’s major creditors, owed billions by the nations in which she has invested. Private Eye has criticised the way British aid agencies, such as the Centre for Development, have been transformed into commercial funding agencies to allow British banks to invest for profit in various enterprises in Africa and the Developing World. These enterprises are purely commercial, and do not provide any valuable services to the countries in which they are established – such as alleviating mass poverty, developing food or water supplies, providing better and more widespread medical care – other than a dividend for their shareholders and investors.

Great Britain as Global Creditor in 19th Century

This financial exploitation of the Developing World has its roots in British and Western imperialism. Already by the beginning of the 20th century economists and critics of capitalism, such as the leader of the Russian Communists, Lenin, had noticed the change in Britain from an industrial economy to one based on international finance. In his Imperialism, the Highest Stage of Capitalism, Lenin states

“Great Britain,” says Schulze-Gaevernitz, “is gradually becoming transformed from an industrial into a creditor state. Notwithstanding the absolute increase in industrial output and the export of manufactured goods, there is an increase in the relative importance of income from interest and dividends, issues of securities, commissions and speculation in the whole of the national economy. In my opinion it is precisely this that forms the economic basis of imperialist ascendancy. The creditor is more firmly attached to the debtor than the seller to the buyer.”…

The rentier states is a state of parasitic, decaying capitalism, and this circumstance cannot fail to influence all the socio-political conditions of the countries concerned…

Britain without Industry or Agriculture: Hobson on the Impact of European Conquest and Investment in China

He then cites the Liberal journalist, Hobson, on the destructive effects on the domestic economy caused by dependence on the colonies. Considering the partition of China by the European powers, Hobson predicted that this would lead to the de-industrialisation of Britain and the other European countries. The country would, according to Hobson, be dominated by wealthy aristocrats living off their investments in the Far East, surrounded by the servants and a few tradesmen they supported. But domestic industry would completely vanish as it was overtaken by cheaper competition from the Middle Kingdom.

The quotation from Hobson runs:

The greater part of Western Europe might then assume the appearance and character already exhibited by tracts of country in the South of England, in the Riviera, and in the tourist-ridden or residential parts of Italy and Switzerland, little clusters of wealthy aristocrats drawing dividends and pensions from the Far East, with a somewhat larger group of professional retainers and tradesmen and a larger body of personal servants and workers in the transport trade and in the final stages of production of the more perishable goods; all th emain arterial industries would have disappeared, the staple foods and manufactures flowing in as tribute from Asia and Africa … We have foreshadowed the possibility of even a larger alliance of Western states, a European federation of great powers which, so far from forwarding the cause of world civilisation, might introduce the gigantic peril of a Western parasitism, a group of advanced industrial nations, whose upper classes drew vast tribute from Asia and Africa, with which they supported great tame masses of retainers, no longer engaged in the staple industries of agriculture and manufacture, but kept in the performance of personal or minor industrial services under the control of a new financial aristocracy. Let those who would scout such a theory [it would be better to say: prospect] as undeserving of consideration examine the economic and social condition of districts in Southern England today which are already reduced to this condition, and reflect upon the vast extension of such a system which might be rendered feasible by the subjection of China to the economic control of similar groups of financiers, investors, and political and business officials, draining the greatest potential reservoir of profit the world has ever known, in order to consume it in Europe. The situation is far too complex, the paly of world forces far too incalculable, to render this or any other single interpretation of the future very probable; but the influences which govern the imperialism of Western Europe today are moving in this direction, and, unless counteracted or diverted, make towards some such consummation. Hobson, Imperialism, 1902, pp. 1o03, 205, 335, 386, cited in Lenin, Imperialism, The Highest Stage of Capitalism, in Lenin: Selected Works (Moscow: Progress Publishers 1968) 243.

British Economic Decline Today, and Modern China as Centre for Investment

Clearly, the situation isn’t quite like Hobson predicted. Britain no longer has an empire as such, though she still has an extensive commercial system tying her former colonies to economic dependence. China is now a free nation, that has become an economic superpower in its own right. We also still have some manufacturing industry and agriculture. Nevertheless, it did provide a roughly accurate prediction of the way the British economy has been devastated to become dependent on a financial sector orientated towards overseas investment, including that of China. This can also be clearly seen in the adverts for one of the main British high street banks – I can’t remember whether it’s Lloyd’s, TSB or Barclays. The advert shows various ‘quaint’ customs in China, such as giving presents of money in red envelopes, or fishermen using birds to catch fish, before ending with the headline ‘-: the world’s local bank’.

Now I don’t begrudge the Chinese or anyone else the development of their economies. I would, however, like some of the investment we have directed to the outside world redirected inwards to stimulate and support British agriculture and industry here, rather than simply providing an income to the small part of the British economy consisting of the City of London.