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Long Live Transideological Enterprise! The Socialist Economies in the Capitalist International
Division of Labor
Author(s): Andr Gunder Frank
Source: Review (Fernand Braudel Center), Vol. 1, No. 1 (Summer, 1977), pp. 91-140
Published by: Research Foundation of SUNY for and on behalf of the Fernand Braudel Center
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Long Live
!
TransideologicalEnterprise
The Socialist Economies
in the CapitalistInternational
Divisionof Labor
Andr
Gunder
Frank
Relationsand. . .
Some Prefatory
Statementson SocialistInternational
. . . On Orthodoxy
Russian raw materialsare necessaryfor the reconstruction
of the
worldeconomy. Withoutthemit is impossible;thatis economically
obvious.Even Keynes. . . admitsthat.
V. I. Lenin
We [The Soviet Unionjare in the process of becominga part,a
veryparticularpart, but nonethelessan integralpart of the world
market.. . . Foreigncapital mustbe mobilizedfor thosesectorsof
industrythatare themostbackward.
L. Trotsky
Wecan admit withoutshame. . . thatso farsocialismhasfoundno
acceptableconceptof its own coveringthequestionofforeigntrade
and international
economicrelations.
Imre Vajda
FormerPresidentof theHungarianEconomic
Association
92
AndrGunderFrank
. . . On Policy
The new economicmechanismshould establisha close relationship
between internaland externalmarkets.It should increasethe iminforeignmarketson domestic.. . .
pact of influencesoriginating
CentralCommitteeof the CommunistPartyof Hungary
The representatives
of industryoftenregardforeigntradeas somethingsecondary.This absolutelyfalse point of view mustchange,
and the contacts between industryand foreign trade must be
strengthened.
The importanceof a stable divisionof labor betweensocialistand
developingcountriesmustbe stressed.
A. Kosygin
. . . On Practice
Because of thebroadeconomiclinksbetweencapitalistand socialist
countries,the ill effectsof the currentcrisisin the Westhave also
had an impacton thesocialistworld.
L. Brezhnev
It may be hoped that the crisiswhich is ragingin the Westmay
come to a rapidend,sinceit affectsand createuncertainties
for the
on
is
extent
a
certain
to
which
dependent trade
Bulgarianeconomy,
withthecountriesof the West.
T Zhivkov
FirstSecretaryof the CommunistPartyand
Presidentof the Councilof State of Bulgaria
... On Strategy
will
The more variedour international
relations,the moredifficult
it be. . . for ourpossibleopponentsto breakthem.And evenif[war
or blockadejwere to come, we would thenbe decidedlystronger
than we would be under conditionsof 'autarky'and the thereby
consequentslowerdevelopment.
L. Trotsky
The key to U.S. strategytowards the USSR has been to create
mutual vested interestsin the preservationof the international
order.. . . Relations[between the U.S. and the U.S.S.R.] have become so stable that dramaticnew departurescould no longerbe
expected.
HenryKissinger
relations
We will be happy if our effortsto betterSoviet-American
help draw more and more nationsinto theprocessof detente be
it in Europe or Asia, in Africaor LatinAmerica,in theMiddleEast
or theFar East.
L. Brezhnev
93
. . . On Ideology
Our foreignpolicy, today and in thefuture,is markedby the decisivenesswithwhichit defendstheinterests
of theSovietpeople the protectionof the invulnerability
our
borders,coastlineand
of
the
the
the
Soviet
airspace,
defenseof
dignityof
flag and of the
the
citizens.
and
Soviet
rights securityof
A. Gromyko
It is thefirsttime thatan arm of the USSR government
[the Black
Sea and Baltic InsuranceCo., a subsidiaryof theSovietstateinsurance agency,Ingosstakh]has supportedthe UnitedStatesgovernment in insuringU.S. private investment[againstexpropriation]
overseas. Wehope thisis the beginningof a similarmutuallysatisbetweenthe twogovernments.
factoryarrangements
President
of
BradfordMills,
U.S. GovernmentOverseas Private InvestmentCorporation,
OPIC, which insures U.S. private foreign investmentagainst
nationalization/
expropriationin underdevelopedcountries.
Two WorldMarketsor One
The implicationof the epigraphsabove is thatthe leadershipof the socialist
world has a deeply rooted traditionof long standingand greatactualityto
economicrelationswiththecapimaintainforeigntradeand otherinternational
talist world, whose survival- at least since the early 1920's - is taken for
grantedand evenconsideredessentialforthe developmentof thekindof society
envisagedby this leadership.The word "socialist" is used throughouthere to
referto the countriesof Eastern Europe and the Soviet Union withoutthe
cumbersomequotation marksthat would perhapsappropriatelyreflectlegitiof the "socialmate doubt about theirreal status.Indeed, economicintegration
ist" economiesinto the world capitalisteconomy (divisionof labor) and the
relatedpoliticalcompromiseshavebeen considerednot onlya necessaryevilbut
apparentlyevena positivegood, so muchso as to call intoquestiontheextentto
whichthe socialistworld is any way separateor differentfromthe capitalist
world.Of course,the international
relationsbetweenthe socialistand capitalist
worlds are by no means the only or even the most importantfactorin this
relations,realand desired,are only
question.On the contrary,the international
relationsof productionand otherfactorsin the socialthe reflectionof interned
ist world, which themselvesraise questions about qualitativeor quantitative
degreeof shiftover time toward or away from"socialism" in the part of the
worldthatgoesby thatname.Opinionson thatscorevarywidely.
There are fourpointsof view. (1) These countriesare indeedsocialist,which
is theopinionthatprevailsin the so-calledsocialistcountriesthemselves(except,
of course,thatthe Europeanones and the Chineseeach deny thatlabel to the
other),but is also widespreadin much of the restof theworld.(2) The "socialist" countriesare ruled by an ill-defined"elite" thatdominatestheirpeoples,
whichis a viewpopularin somepartsof thecapitalistworld'sbourgeoisieand its
intellectualelite (3) The "socialist"countries,or at leastthe East Europeanones
AndrGunderFrank
94
95
1969),55-56.
96
AndrGunderFrank
1966-70
Trade Partners
Soviet Union
OtherEast Europe
Asian Socialist
WesternEurope
OtherDeveloped
Underdeveloped
7.2
8.6
7.4
10.9
13.3
11.0
10.2
8.2
20.0
11.6
8.4
3.5
18.0
7.5
-4.6
7.6
11.1
3.4
9.0
8.2
3.0
13.1
3.8
7.9
7.2
10.5
24.2
6.0
28.0
-0.9
4.1
15.3
13.8
16.1
51.6
2.0
7.2
12.0
14.9
9.1
46.1
3.2
4.1
12.2
7.7
16.8
17.1
5.8
Soviet Union
OtherEast Europe
Asian Socialist
WesternEurope
OtherDeveloped
Underdeveloped
7.2
9.2
14.1
11.2
12.3
9.0
18.0
13.2
-0.7
12.8
16.5
-2.0
10.2
9.6
15.9
10.1
7.3
9.7
8.9
9.5
8.6
12.5
7.8
5.9
Source: U.N.E.C.E., Bulletin conomique pour l'Europe (Geneva: UNECE, Vol. 25,
1974), 34
Exports
1971 1972 1973 1974
World
17
20
Developed
Underdeveloped 13
EasternEurope
17
10
10
4
13
32
51
43
23
Turnover
Imports
26
49
38
14
15
24
4
13
32
52
43
22
29
47
57
13
12
12
4
13
32
50
43
23
27
48
46
13
97
See U.N.E.C.E., The European Economy in 1974 (Geneva: UNECE, XXX /I. Add. 1), pre-publication
text,78.
8
See U.N.E.C.E., "Recent Changesin Europe's Trade" in Economic Bulletinfor Europe, XXVII, 1975.
See U.N.E.C.E., European Economy in 1974, op. cit., Table 3, 14, and pp. 43, 70.
98
AndrGunderFrank
AnotherGerman source estimates$22 billion for 1975 and $32 billion for
mid-1976,of which$11 billionis owed by the Soviet Union.12 For theend of
1976, thereis an estimatedprojectionof U.S. $38 billion East Europeandebts
to the West.In mid-1976,20 billionD-marks($8 billion),halfof themthrough
suppliercredits,were owed by the socialistcountriesto WestGermanyalone.13
An increasingshareof thissocialistdeficitand debt withthe Westis settled
and a perhapsnot insignificant
multilaterally,
part of that, throughthe EastSouth and West-Southtrade with the underdevelopedcountries.East-South
trade between the socialist and capitalistunderdevelopedcountrieshas until
recentlybeen growingfasterthanothertrade,doublingeveryfouryearsbetween
1953 and 1968, and growingat a compoundannual rate of 21% between1971
and 1974.14 It has typicallyresultedin a chronicand growingbalance of paymentssurplusfor the socialistcountriesand a corresponding
balance of payments deficit for the underdevelopedones. Althoughmuch of this trade has
been on a bilateralbasis withnon-convertible
currencies,an increasingpartof
East-Southtrade is carriedon throughthe convertiblecurrenciesof developed
the surplus/deficit
in East-Southtrade that
capitalistcountries.Significantly,
is settledin convertiremains,afterotherattemptsat eliminationor settlement,
ble currenciesof the developedcapitalistcountries.15
The socialistcountriesthuspartiallyredresstheirdeficitwiththe industrialized West throughtheirsurpluswiththe underdevelopedSouth, whose overall
See InternationalHerald-TribuneOct. 18, 1976.
11
12 See International
Herald-Tribune,
July 17-18, 1976.
13
Enterprise!
Long Live Transideological
99
deficitis, of course, therebyincreasedstill further.Moreover,part of the bilateralcommoditypaymentreceivedby the East fromthe South is also "multilateralized" and often sold to the West throughso-called "switch" transat least fromthe point of view of the now
actions.16 Even more significant,
countries
in East-Westtrade,are the "linkedexsocialist
chronicallydeficitary
and
compensationdeals and othertypesof parallel
importarrangements,
port
contribute
substantiallyto East-Westtrade financeby transtrading[which]
claims
eastern
towarddevelopingcountrieswithnon-convertible
fering
Europe's
currenciesinto a means of financingthe westernimportsurplus."17 Thus,
withinthegeneralinternational
divisionof labor,therapidlygrowingEast-South
traderepresentsa positive,ifmodest,aid to thesocialistcountriesin theireffort
to reduce the deficitthattheirgrowingimportsurplus/export
deficitwiththe
industrializedcountriesgeneratesin East-Westtrade. For the underdeveloped
countries,thoughbilateralismwith the socialistworldsignifiesan absolute increase in tradingpossibilitiesand a relativedecreasein economicand political
of East-Southtrendand its
dependenceon the West,the growingmultilaterality
insertionin the international
divisionof labor increasetheiroveralldeficit,debt,
and dependence.
The commoditycompositionof East-Westand East-Southtrademaybe summarizedby notingthat in theirtradewiththe Westroughlytwo-thirds
of the
importsof the socialistcountriesare industrialproductsand that the exports
withwhichtheypay fortheseconsisttwo-thirds
of rawmaterials.In East-South
trade the proportionsare reversed:two-thirdsof socialist importsfromthe
of socialistexports
underdevelopedcountriesare raw materials,and two-thirds
to the underdevelopedcountriesconsistof industrialcommodities.That is, as
thesocialistcountriesare to the developedcapitalistones as the
tradingpartners,
ones are to them- or viceversa!
capitalistunderdeveloped
TRADE
OF EAST-WEST
ANDEAST-SOUTH
Table4. COMMODITY
COMPOSITION
ofsocialist
exports)
(inpercent
1957-59
1965-66
Manufactures
East-West
East-South
East-East
33
60
57
Raw Materials
Manufactures
67
40
43
40
68
68
Raw Materials
60
32
32
Percentof Westernexports/Socialistimports
East-West
68
32
67
33
AndrGunderFrank
100
Imports
1965
29
28
33
33
26
33
Exports
28
35
1970
35
36
35
29
37
22
Source: U.N.E.C.E., Economic BulletinforEurope, XXIII, 2, 16-17; Carlo, op. cit., 94.
Enterprise!
Long Live Transideological
10 1
102
AndrGunderFrank
By 1975, the 200 agreementsof 1971 and the 600 agreementsof 1973 had
of whichover600
grownto over 1,000 such East-Westco-operationagreements,
were in the metal-usingsector.22 East-West industrialcooperationagreements
have a growingimpacton theemerging
divisionof
of theinternational
structure
labor and, as we will observe,on the structureand relationsof productionin
East,West,and South,suggestedin partby Wilczynski:
Joint East-Westventuresassume differentforms: (i) The mildestformis the exchange
of licenses, designsand industrialtrainees,(ii) Co-operationin exportingpartsof complete plants to thirdcountries,(iii) Co-productionventureswherea socialistenterprise
is usuallysupplied by a Westernfirmwith initial key equipment and then certainkey
components, technical designs,and perhaps technical advisers The Westernfirmis
entitledto an agreedportionof the complete article,(iv) Dual productionand marketing undertakingswherea socialistenterpriseis supplied withsimilarassistanceas under
(iii), but the final stages of production are usually completed in the West ("vertical
co-production"). Subsequentlythe socialistenterpriseundertakesthe marketingof the
completed article in the Socialist Bloc whilstthe Westernpartnerdoes it elsewhere.
(v) A Westernenterprise,using its own key equipment,technicalknow-how,management methods, and technical staff,carrieson production in a socialist country.The
latter supplies the buildings, raw materials, and labour. The Westernenterpriseis
guaranteedan agreed share of production.. . . The initiativein the new driveforjoint
production and tradingschemes has originatedprimarilyfromthe socialistside, particularlyfromthe more dynamicEasternEuropean countries.2^
Enterprise!
Long Live Transideological
103
In otherwords,withcertainvariations,East-Southindustrialco-operationagreeWest-Southones) rangefromsimple
mentslike East-Westones (and traditionally
licensingand the export of equipmentor of completeplants all the way to
socialistforeigninvestment
in underdeveloped
countries,eitherthroughordinary
cases,throughsome
or,in politicallyinconvenient
equityownershiparrangments
kind of "contractual"subterfuge.By 1975, the socialistcountriesof Eastern
Europe had completed, or were implementing,2,900 industrialand other
projectsin developingcountriesand had extended11 billionrublesin credits.25
East-Southtrade,aid, and othereconomicrelationshave,as observedabove,
expanded more rapidlythan tradebetweenother"regions."Estimatesof total
tradeand the East Europeanbalance of tradesurplusforvariousyearsappearin
Table 6:
24
See Ivan Ivanov, "Tripartite Industrial Co-operation: Recent Situation, Problemsand Prospects"
(Geneva: UNCTAD, TAD/SEM.1/27,Nov. 12, 1975), 4.
104
AndrGunderFrank
Table 6. GROWTH OF EAST-SOUTH TRADE, 1952-1972
(in $U.S. millions)
1952
1956
1960
1964
1968
1972
860
610
1213
1130
1767
1722
1122
1010
1717
863
2180
1160
*China, Cuba, Mongolia, North Korea, North Vietnam. Decline after 1960 reflectsthe
Sino-Sovietbreak.
Source: Nayyer,op. cit., 4.
105
27
no
29
PekingReview.
See U.N.C.T.A.D., "Trade RelationsAmongCountries. . .," op. cit., 10-11.
See Economic and Political Weekly,April17, 24, 1976.
U.N.C.T.A.D., "InternationalSpecialization in IndustrialProductionand its Impact on the Expan-
106
AndrGunderFrank
sion of Trade and Economic RelationsBetweenthe Socialist Countriesof EasternEurope and the DevelopingCountries,"(Geneva: UNCTAD, TSC/24,Jan. 21, 1976), 7-9.
31
Enterprise!
Long Live Transideological
107
operation.... It appears that an importantincentivefor participationin such cooperation by enterprisesfromboth socialist and Westerncountriesis to develop new
marketsor to consolidate export flows,eitherto the host developingcountryor region
or to thirdcountries. *
Amen!
U.N.C.T.A.D., "TripartiteIndustrialCooperation,"op. cit, 16, 17, 24.
go
Guy de Lacharrire,"The Role of East-WestCo-operationin the Development of TripartiteCooperation,"(Geneva: UNCTAD, TAD/SEM. 1/16,November18, 1975), 7, 4.
34
108
AndrGunderFrank
ImmediateMotivesforEast-West/South
EconomicRelations
For the capitalistWest,the socialistEast offersa life-buoy,in timesof economic crisis.35Fromthepointof viewof theWesterngovernments
withbalance
of paymentsproblems,chronicand increasingbalance of paymentssurpluses
with the socialist East offersome relief.As U.S. Deputy Secretaryof State
KennethRush notedin April1973, "at a timewhenwe havea tradedeficitwith
most areas of the world,our balance of trade surpluswith easternEurope is
welcome."The nationaltradedeficitis, of course,a reflectionof the
particularly
of
inability privatecapital to sell enoughabroad.Therefore,it shouldalso come
as no surprisefor the Vice-Presidentof the Chase ManhattanBank to declare:
"Let's be quite honest.. . . We do have a balance of paymentsproblemand we
6 Therefore,
he suggested,
Nixon'sand Kissinger's
haveto look fornewmarkets."3
detentewas bornout of necessity.
Reflectingon Marxisttheorizingabout cycles and crisesin capitalismand
an earliercycle,Wilczynski
writes,"it is ratherironicalthat,duringthe
reviewing
1958 recession,the Westerncountries'tradewithothercapitalistcountriesdeclined by 5%, whilst,with the Socialist Bloc, it rose by more than 6%."37
Ironical or not, that is the patternin all capitalistrecessions,most particularly
includin&the last one, in which Westernexportsto the Soviet Union,Eastern
Europe, and China rose whileworldtradeas a wholedeclinedmorethan10% in
the one year of 1975, (as did Westernimportsfromthe East). Perhapsmore
significantstill, the capitalistexports that rise most sharplyto the socialist
countriesduringa capitalistrecessionare thosewhosecapitalistmarketdemand
is most affectedin all recessions:capital goods and particularly
machinetools.
to
the
American
of
the
ten
Machinist?*
According
largestproducersof machine
tools in the world in 1974, the three socialist countriesin EasternEurope
accounted for28% of total productionand 15% of total exports;but fourEast
European socialistcountriesaccounted for44% of thetotalimportsof machine
tools, worthover U.S. $1 billion,most of whichthe capitalistproducerswere
unable to sell elsewherein the recessionyear. Conversely,in capitalistboom
times, capitalistinterestin exportingto the socialist countrieswanes a bit,
especiallyif paymentis not made in convertiblecurrency.This suddenloss of
interestaffectsparticularlythe capitalistexportersof rawmaterialsfromunderdeveloped countries,who can then fetch high prices in hard currencyfor
theirraw materialsin the Westernindustrialcountries,whereupontheybecome
loath to sell them (or even to fulfilltheirdeliveryobligations)to the socialist
countries.This circumstancemay help account for the relativelylow increase
consideringthe rise in the pricesof rawmaterials,in the importsby thesocialist
countriesfromthe underdevelopedcountriesduringthe yearsof the 1972-74
boom in rawmaterialsprices.
35
See Joyce Kolko, America and the Crisis of World Capitalism (Boston: Beacon Press, 1974),
150-161.
Both quotes are cited in ibid., 159-160.
37
38
Enterprise!
Long Live Transideological
109
Economic fluctuationsand perhapscycles in the socialisteconomies themselvesmay also help accountforvariationsin theirforeigntrade,or in itsrateof
growth(althoughin the socialisteconomiesthe influenceof economic fluctuaon theirimportsratherthanon theirexports,as it is in
tionswould be primarily
capitalisteconomies).Moreover,also contraryto thecapitalisteconomies,in the
- or "hardtimes"
socialisteconomieslow growthratesof incomeor investment
- are likelyto lead to an increaseof importsfromabroad,includingthecapitalist West.The patternof "storming"(the rushto fulfillplan targetswhenbehind
scheduleat the end of the plan period),whichis familiarin domesticeconomic
behaviorin the East Europeansocialistcountries,seemsalso to be reflectedin a
Annualgrowth
temporalincreasein importsto aid in theprocessof storming.39
rates of national income,industrialproduction,and investmentare knownto
fluctuatewidely.Thus, between 1966 and 1974 the maximumannual growth
rate of national income was 50% higherthan the minimumannual rate in the
GermanDemocraticRepublic (G.D.R.), 100% greaterin Bulgaria,130% greater
in the U.S.S.R., and 288% (nearly4 times)greaterin Poland.40
but less demonstrably
More significantly,
so, thereappearsto be a patternof
economic fluctuationsin investmentand income in the socialisteconomiesof
EasternEurope,whichseemsto assumea patternof "cycles" of about 8 years
duration,with four or five years of acceleratedgrowthalternatingwith the
1
yearsof lowergrowthrates.4 The greatestamplitudesare in therate
remaining
and constructionimplyingthe existenceof "investment
investment
of industrial
in
and
secondly industrialproduction.There is at least seeminglya
cycles,"
between the up and down phases amongthe various
temporalsynchronization
in
the
1960's theG.D.R. and Czechoslovakiaseemedto lead
countries,although
the othercountriesby a year or two. The early 1950's seemto havebeen years
of lowergrowthratesor downswing,1958-1960 acceleratedgrowthor upswing,
the 1961-65 period downswing,the 1966-70 plan periodupswing.Finally,there
was anotherdownswingduringthelast fiveyearplan periodfrom1971 to 1975,
in whichthe growthof industrial
production,especiallyof consumergoods,was
below plan and lower than in the previousplan period. The growthrates of
foreigntrade, and particularlyof East-Westtrade,seem to have followedan
inversepattern:higherin the early 1950's and lower towardsthe end of the
decade, 10% growthin the firsthalf of the decade of the 1960's, 11% (unadjusted for inflation)in the second half,and a verymuch fasterexpansionof
foreigntradein the 1970's.
Entirelysatisfactoryexplanationsfor such apparenteconomiccycles in the
socialistcountriesare not yet available.But thereis some suggestionthatambiThese lead to supplybottlenecksand
tiousplans lead to upswingsin investment.
behind
of
restrictions,
shortagesof consumergoods,and
lags wages
productivity,
that expressesitselfin politicalpressure,and
increasedconsumerdissatisfaction
See U.N.C.T.A.D., "Trade RelationsAmongCountries. . .," op. cit., 14.
See U.N.E.C.E. Long TermEconomic Growthof East European Countries. . ., op. cit.y7.
41 For
a reviewof the evidence and of possible explanations,see AlexanderBajit,"InvestmentCycles
in European Socialist Economies: A Review Article,"Journalof Economic Literature,IX, 1, 1971, 55-63.
110
AndrGunderFrank
2
resultsin renewedloweringof the pace of investment.4
Importsfromabroad
would seem to offersome possibilityto supplementthe supplyof goods, and
in machineryand equipment,particularly
especiallyto maintainthe investment
iftheseimportscan be boughton credit.U.N.C.T.A.D. notes:
The trendtowardsgrowingrelianceby the socialistcountriesof EasternEurope on the
utilizationof externaleconomic factorsin the course of the implementationof their
currentfive-yearplans was clearly reflectedin the marked acceleration in the growth
of the volume of theirforeigntrade,both in comparisonwiththe levelsachievedin the
43
past and withthe planned annual targetsfor 197 1-75.
Enterprise!
Long Live Transideological
Ill
EconomicRelations.. .
Advantagesand Disadvantagesof East-West/South
The internationaldivisionof labor experiencesits most qualitativechanges
crisisin the worldcapitalistaccumulationof capital.
duringperiodsof structural
the
erstwhile
these
methodsand relationsof production,particuperiods,
During
those
in
the
larly,
previouslyleadingindustriesin the most advancedsectorsof
the world capitalistsystem,become relativelyless profitable,even altogether
unprofitable,so that the crisis of accumulationobliges capital to undertake
importantchangesin the divisionof labor. At the same time,thisneed created
by or at least magnifiedby the crisisoffersthe opportunityto undertakethis
change for those sectors of capital that are able and willingto do so. This
and intratransformation
of the international,intra-national,inter-sectoral,
sectoraldivisionof labor is also reflectedin, or rathereffectedthrough,changes
in patternsof East-West,East-South,and West-Southproductionand trade,as
well as in the relationof these patternsof trade and productionamongeach
other.
. . .fortheWest
Lookingat the matterfromthecapitalistWest,Timemagazinerefersto more
than 1,000 cooperationagreementsbetween Hungaryand the Westand offers
the clue that "in theirsimplestform,such venturesinvolvelittlemore than a
thinlydisguisedexploitationof,cheap Hungarianlabor."49
Writingin the AmericanEconomic Review, Hewett adds furtherconsiderations:
For the Westernpartnerthese "small deals" are quite profitable,since they shiftthe
less profitableprocesses to an area wheresemiskilledand skilled
more labor-intensive,
labor is relativelycheap and a good deal more dependable (no strikes). "
These two economic and political reasons for expandingtrade with and production in Eastern Europe appear repeatedly,often explicitly,in the U.S.
businesspress such as BusinessInternational/
BusinessEasternEurope. Morethe
and
not
unlike
of
investment"
over,
elsewhere,Internationpractice "foreign
al Harvester'smanagerof special operationsnotes that "the Poles have made a
substantialcapital investment
in a facilityto build an IH product.To the extent
have
IH doesn't have to make it."51 In the West,
made
the
investment,
they
Harvesterwillhave exclusiverightsto marketthePolish-built
International
units,
and in the underdevelopedcountriesthe same bulldozers,loaders,and other
48
Sandor Ausch, "Problems of Bilateralismand Multilaterismin the External Trade and Payments
System of the CMEA Countries," in I. Vajda and M. Simai, eds., Foreign Trade in a Planned Economy
(Cambridge:CambridgeUniversityPress,1971), 90-93.
49
Edward A. Hewett,"The Economics of East European TechnologyImportsfromthe West,"4 merican Economic Review,LXV, 2 May, 1975, 379-380; cf.Joyce Kolko, op. cit., 157.
51
AndrGunderFrank
112
Ibid., 195.
53
54
1974.
7&id.,June25,
113
56
See Business Week,Jan. 12, 1976; Far EasternEconomic Review,Nov. 21, 1975.
See Far EasternEconomic Review, Feb. 13, 1976.
58
See Frankfurter
Rundschau,Dec. 5, 1975.
114
AndrGunderFrank
forthe South
The advantagesof East-Southeconomicrelationsfromthe point of view of
the capitalistunderdevelopedcountries,or at least of theirrulingclasses, are
fairlyeasy to see. To the extentthattheirexports,and theimportsthatcan be
to theirtradewithcapitalistcounconsequentlypurchased,are supplementary
and
insofar
as
need
not
"divert"
tries,
they
exportsfromconvertiblehard curtrade
to
inconvertible
bilateral
trade, this East-South trade represents
rency
a
net
to
the
mostly
gain
underdevelopedcountriesor ratherto theirbourMost
studies
geoisies.
suggestthat such exports to the East are in fact not
The
construction
of capitalprojectsthat,otherthingsremain"trade-diverting."
the
same
that
is
ing
(if
imaginable)would not be undertakenwithoutEastern
are
even
more
help,
clearly a net gain - to those who benefitfromthem.
Economic and militaryaid on relativelyfavorableterms- generallylower
interestrates,longeramortizationon loans repayablebilaterallyin merchandise
of accumuratherthan hard currency,some grantaid or favorablerenegotiation
lated debts - are of course welcometo thosewho benefitfromit fortheirown
Moreeconomic,political,and militarysupport,protection,or aggrandizement.
over,beyond the directadvantages,supportfromthe socialistcountriesand the
withcapitalist
alternativeit offersstrengthens
the recipient'shand in bargaining
- or othersocialist- countries.
The termsof trade in East-Southand the real cost of aid that is tied to a
particulardonor countryfor a particularproject have long been a subject of
In 1964 already,addressingthe Afro-Asian
heated controversy.
EconomicSeminar in Algiers,Che Guevarapointed out that,insofaras the socialistcountries
trade with the underdevelopedones at the "world market"prices set by the
imperialistmonopolies,the socialistcountriesexploit the underdevelopedones
throughunequal exchangeno less thanthedevelopedcapitalistones do. Pricesin
East-South(as well as in intra-socialist)
trade - now notably in petroleumhave as a rule followed "world market"prices,albeit with a certainlag that,
however,has been drasticallyreducedrecently(beingchangedfromfiveyearsto
one in intra-socialist
tradesince 1975). Indeed, a socialistcyniconce remarked
that after all the world had become socialist,Switzerlandmighthave to be
retainedas a capitalistcountryin orderto provide"worldmarketprices"forthe
socialistworldto follow.
fromsome quartersin theWest,in the
However,therehave also been charges,
countries
and
themselves,
recentlyvery insistentlyby the
underdeveloped
that
the
countries
of
Eastern
socialist
Chinese,
Europe even chargepricesthat
are higherand pay pricesthatare lowerthanthosegoingon the "worldmarket."
M. Sebastianforinstancereviews:
have
likeJ.R.Carter,
M.Golman,
andKurtMuller
Authors
VassilVassilev,
J. Berliner,
charged that the Soviet Union sells its commoditiesto the developingcountriesat 15
to 20 per cent higherthan the world prices and that it purchases mostly primary
commoditiesfromdevelopingcountriesat a rate 15 to 20 per cent lower thanworld
prices.. . . Our analysis of the data forcesus to conclude that India sold dear to and
bought cheap from the Soviet Union. In the trade with the Soviet Union, India has
been a net gainer: Similar conclusions have been reached by J. Bhagwatiand Padma
Desai the N.C.A.E.R. and Dharm Narain.59
59 Economic and Political
Weekly,Dec. 1, 1973.
115
AndrGunderFrank
116
On the one hand the socialist countries,in their Declaration at the third
U.N.C.T.A.D. Conferencein Santiagoin 1972, observethat "the causes of the
continuingeconimicbackwardnessof developingcountriesare theexistingstructureof international
economicrelationsin thecapitalisteconomicsystem,based
on an obsolete and irrationaldivisionof labor. . ."64 On the otherhand,at the
same conferencewhere they issued thisstatement,the East Europeansocialist
countries,and particularlythe Soviet Union,in factlined up in debate and in
vote (except when they abstained) on the crucialissuesbehindthe developed
capitalistand imperialistcountriesled by the United States. At the various
laws to governthe
international
conferencesforthe negotiationof international
of economic
the
coincidence
and
their
of
the
oceans
sea-beds,
exploitation
interests
betweenthe U.S.S.R. and the U.S.A., WestGermany,etc. has also made
them willingallies againstthe demandsfor protectionpressedby the underdevelopedcountries.65At the fourthU.N.C.T.A.D. Conferencein Nairobi,
. . . despite Indian Prime MinisterIndira Gandhi's enthusiaticexpression of appreciation for Soviet support for the Third World on her arrivallast week in Moscow
[Japan's Chief Delegate to the Conference,Toshio] Kimura was struckat Nairobiby
the gap between Moscow's words and its actions. "The Soviet Union and the East
Europe bloc (the *D Group') expressed great sympathyfor the less developed coun62
See CPI-ML, op. cit., 18-19, and "Declaration by the Socialist Countries.. . at the ThirdSession of
the United Nations Conferenceon Trade and Development"(Geneva: UNCTAD, TD/154, Apr. 12, 1972).
64 me.
This also happened at the Caracas Law of the Sea Conference;see Frankfurter
AUgemeineZeitung,
Sept. 6,_1974.
117
tries, but their attitude did not differfrom that of the B Group (the developed
countries) on specific matters such as the common fund and accumulated debts,"
which were the two principal points of contentionbetween the capitalistdeveloped
and underdevelopedcountries,in which the latter demanded a common fund to finance and stockpile raw materialsand a moratoriumon accumulated debt, both of
whichthe U.S.A., WestGermany- and the U.S.S.R. - refusedto accept.66
it is simply
And where"politics" was not or is not immediatelydeterminant,
business.For "businessis business,"as the FirstSecretaryof a SovietEmbassy
in Latin Americaansweredthe presentauthor,in responseto thequestionwhy
but increasingits tradeand creditsto
was not only maintaining
his government
Brazilafterthe reactionarymilitaryregimewas installedtherethroughthe 1964
coup d'tat. The sameexplanationprobablyappliesto the factthatthe U.S.S.R.
increasedits creditsto BoliviaafterBanzer'smilitarycoup againstthe populist
Torres.68The same explanationplus politicalcompetitionwithChina and the
U.S.A. no doubt also applies to continuedSoviet economic supportfor the
Suhartoregimein Indonesia,whichkilledoff500,000 to 1,000,000 people in its
repressionof capitalistAsia's largestCommunistParty,and whicha dozen years
afterits militarycoup stillmaintainstensof thousandsimprisonedwithouttrial
while the Soviet Union "will financemost of the expected U.S. $100-million
cost of two dams and hydroelectric
stations.. . . Moscow has been knownto
wantexpanded relationswithIndonesia,the area's largestcountry(132 million
of diplomaticrelations
people) in advance of Jakarta'sexpectedfullrestoration
with China."69 Moscow also gave economic and militarysupportof Egyptwhichmaintainedthe EgyptianCommunistPartyillegaland its membersinjail
fora decade and whichfinallybrokeoffthe "special relationship"at thebehest
of Kissingerand the rightwing of the Sadat government.
Moscow's similarly
continuedsupportof SyrianPresidentAssad - whileSyriantroopssuppressthe
66 Far EasternEconomic
Review,June 18, 1976, 52.
Deepak Nayyar,d., op. cit., 245.
68
69
118
AndrGunderFrank
119
71
72 Neue Zrcher
Zeitung,Mar. 18, 1976.
Far EasternEconomic Review, Feb. 20, 1976.
74
75 International
Herald-Tribune,Mar. 18, 1976.
76
120
AndrGunderFrank
but it has not foundany practiceof its own thatis acceptableto socialists.We
observein the epigraphsas the beginningof thisarticlethat,since the timeof
Lenin and Trotsky- and withthe approvalof both - the "socialistworld"has
divisionof labor,under
continuedto participatein the capitalistinternational
the sway of imperialism.Whenthisinternational
divisionof labor changes,the
socialistcountriesfindit convenientor necessaryto changewithit,lest- as in a
game of musical chairs- theybe leftsitting.. . and out! Thus the Directorof
Intercooperation,the official Hungarian agency concerned with relations
between socialist and capitalistenterprises,
observes:"We are aware than an
in the international
divisionof labor is takingplace.
epoch-making
rearrangment
We must findour place in this new internationaleconomic order."78 Understandably,thisimperativeis greaterforthe smallersocialistcountriesof Eastern
forHungarywhichdependsso heavilyon foreigntrade,
Europe, and particularly
than it is for the relativelymore self-sufficient
Soviet Union. Nonetheless,the
Ministerof ForeignTrade of the U.S.S.R., N. Patolichev,believesthat "in this
age of scientificand technicalrevolution,no country,not even the most developed one, can advance its industryfast enough without using efficiently
ecoworld achievementsin science and technology".79The 1971-75 five-year
nomic plans of the individualsocialistcountriesof EasternEurope (as well as
Brezhnev'sintroductionof the Soviet Plan at the meetingof the CentralCommittee of the.CommunistParty in 1971), and the C.M.E.A. Comprehensive
Programmefor the Further Extension and Development of Co-operation
sessionin 1971, laid particularemphasison technoadopted at its twenty-fifth
logical advance to improvelabor productivityor to reduce costs, and on the
expansionof and increasedrelianceon foreigntrade.
The increasingparticipationof the socialistcountriesin the capitalistinternationaldivisionof labor also has far-reaching
implicationsforthe intra-socialist
divisionof labor, forthe structureof socialistsociety,and fordomesticas well
as foreignpolicy. As the formerPresidentof the HungarianEconomic Association, Imre Vajda, observedin thebook underhis editorship,
ForeignTradein a
PlannedEconomy,
Stalin's thesis of two parallel world marketshas had to be rejected, and not only
because the parallelismnever materialized,althoughdespite the alienation of the two
systems, they were never totally separated. The thesis also had to be abandonded
because the socialist "world market" revealeditselfto be a fiction,within facthardly
any of the characteristicsof a real market.. . . The marginalrole which foreigntrade
came to play in the Soviet Union was to some extent due to the fact that the Soviet
Union is a "big country". ... It also became evidentthatthe problemswhicharose in
the field of foreigntradewere not marginalin characterand could not be neglected.
op. cit.,54.
121
AndrGunderFrank
122
86
See U.N.E.C.E., The European Economy in 1914, op. cit., and U.N.E.C.E., The European Economy
in 1915, pre-publicationtext (Geneva: UNECE, XXXI/1, Add. 1), ch. 2.
88
123
prices,since they may sooner or later become serious hindrancesto the progressof a
purposefuldivisionof labor.89
Bla Csiks-Nagy,"Some Theoretical Problemsof the Price Systemin the Trade between CMEA
Countries,"in Vajda and Simai,eds., op. cit., 106, 110.
yu
91
Q2
AndrGunderFrank
124
On the other hand, Ticktinarguesthat the economic reformsand the introduction of foreigntechnologyalso have a mutuallyreinforcing
spiraleffect,in
whichthe failureof thereformsto liveup to expectationsso farwilllead to still
closerties withthe Westand to stillgreaterconcessions.94The importationof
technologywhetsthe appetiteformoreof the same and increasesthe attractiveness of the reforms.
concessionsto foreignfirmsand to
They requirestillfurther
the states of the imperialistWest,on both of whichthe socialistcountrieswill
become increasinglydependentfor creditsto financetheirimportsof technodiverted
logy and capital,whiledomesticproductionwillhave to be increasingly
into exportsto pay forthe importsand to repaythecredits.Thus,thebeneficiaries of thisprocessof East-Westintegration
in the socialistcountriesand their
rulingclass will become increasingly
dependenton theWest- and on economic
and political stabilityin the West to maintaintheireconomic and political
power in the East. Meanwhile,no less than in the underdevelopedcapitalist
countries,the socialistcountriesof EasternEurope and theSovietUnionwillbe
importingnot only Westernfactories,technology,and products,but thecapitalist relationsembedded in them, includingspeed-up of production,capitalist
a capitalistwage structureand
organizationand criteriaof decision-making,
incomedifferentials,
capitalistconsumptionpatternsand ideology,and capitalist
class structure.In short,the "socialist" countriesof EasternEuropewillbe and
are alreadyimporting
capitalism.
Poland's programfor allowing foreignersto establishprivatebusinessesin the country
- Eastern Europe's most forthright
bid everforcapitalistinvestment- is even broader
in its final form than was originallyenvisaged by planners. A key condition that
investorsbe of Polish originnow livingin the West has been dropped in the detailed
regulationspublished in recent weeks. Instead, virtuallyanyone willingto put up the
money evidentlywill be considered under termsthat seem notably flexible.. . . The
unique feature of Poland's new programis that business will be wholly-ownedand
operated by foreign individualsor corporations.. . . The leadership's willingnessto
submergeideological principlesof state economic managmentto blatantexpediencyis
a potentially importantbreakthroughin East-Westties. [At the same time,] Poland
has ceased buildingstate apartments,ending a 30-yearCommunistprogramand opening the way for what is virtuallyprivateenterprisein provisionof most privatedwellings.95
Hewctt,
op. cit.,380-381.
94
und Entspannungspolitikder
See Hillel Ticktin, "Das Verhltnis zwischen Wirtschaftreformen
Sowjetunion,"inJahn,op. cit., 50-72.
See InternationalHerald-Tribune,
June 22, 1976.
125
China
97
AndrGunderFrank
126
2,305
2,415
+110
2,835
3,085
+250
4,975
4,895
-80
7,518
6,247
-1,271
1975
7.430
7,284
-146
Enterprise!
Long Live Transideological
127
The International
Herald-Tribune
reports,witha Pekingdateline:
101 International
Herald-Tribune,Oct. 26, 1976.
128
AndrGunderFrank
beyond thatand predicta big boom in China tradeis around the cornerwould be rash,
givensome realities.. . .102
105
106
108
Enterprise!
Long Live Transideological
129
The plant is to cost about U.S. $10 millioninitiallyand is intendedto supplement China's alreadylarge exports of machinetools throughand fromHong
109
130
AndrGunderFrank
Kong.111
SocialistChina's use of Hong Kong literallyas a capitalistislandcolonymust
be relatedalso to the economic,social,and politicalconditionsthatexistand are
maintainedwithChinesesupportin HongKong:
Hong Kong probably has grosser inequalities of wealth than any society in the
world
In 1971 the Mongkok area of the Colony had a densityof 400,612 people
per square mile - more than ten times the population densityof Tokyo . . . [Hong
Kong] has by farthe highestlevel of utilizationof plant in the textileindustryin Asia:
in 1965, looms were employed the equivalent of 24 hours a day for360 days a year.
No other country approached even 75% of this figure.... In 1968, Hong Kong
workershad the longest workingday and the longestworkingweek of citydwellersin
Southeast Asia: 58% worked 7 days a week, 52% worked 10 hours or more a day.
There is no legal limit.. . . [There] is widespreaduse of child labor. . . . Hong Kong is
a rich territorywhich compiles a huge budget surplus each year, and yet stolidly
refusesto spend this surplus to help the local population. ... In fiscal 1969-70, while
the London-appointed colonial administrationwas spending HK $19,204,686 on its
Social Welfare Department, the Colony's budget showed a surplus of HK
$618,678,000. The bulk of this was sent to London to bolsterthe U.K.'s reservesand
support the pound. By 1972 one American so rce calculated that Hong Kong was
1
providingas much as half all the backingof the pound.1 ^
Ibid.,80.
112
Books,
Spokesman
HongKong ResearchProject,Hong Kong:A Case to Answer(Nottingham:
1974),25-28.
113 See Current
Scene,Dec 1973.
See FarEasternEconomicReview,
July30, 1976.
115 See
Scene,Dec. 1973.
ibid.,andCurrent
!
Long Live Transideological
Enterprise
131
AndrGunderFrank
132
noris thisall:
Two reasons are given for the North Korean economic misery. First: North Korea
importedlargequantitiesof Westernproducts,in orderto fulfillits six-yearplan ahead
See Far EasternEconomic Review,Dec. 19, 1975.
Enterprise!
Long Live Transideological
133
of schedule. In doing so, it moved away fromeconomic realities.Secondly: a significant fall in metals prices on the internationalmetals exchangeshit the NorthKorean
metals industryin its vital nerve. Thirdly: the increase of oil prices by the Soviet
Union and China made the NorthKorean economic crisisworse. . . -118
an
Thus, thecapitalistworldcrisishas created,or at leastseriouslyaggravated,
economic and politicalcrisisof majorproportionsalso in NorthKorea, which
had long distinguished
itselffor its self-reliant
economicand technologicaldeThe
internal
crisis
has led to countlessand invelopment.
resulting
political
cessantrumorsof a successioncrisis,involvingKim II Sung'sson Kim Chong II,
his supporters,and his opponents.Indeed, even the spectacleof the expulsion
of NorthKorean diplomatsfromDenmarkforsmuggling
and
whisky,cigarettes,
even drugs,and the subsequentrevelationof similarsystematicNorthKorean
and elsewhere,could no longer
activityin Sweden,Finland,Malaysia,Argentina,
be laid to aberrationsof individualdiplomatsbut had to be accounted for
throughinstructionsto Korean diplomatsto do anythingto earn additional
foreignexchangefor the state treasury.123And what,we may ask, is the explanationfor the factthat the DemocraticPeoples Republic of Korea was still
trainingMobutu's militaryforcesin Zaire - withpublicappearancesat military
parades- whilethe latterwas helpingthe F.N.L.A. to combat the M.P.L.A. in
Angolain 1975?
| 1O
1
Oct.22, 1976.
See Frankfurter
Rundschau,
1
| Q
ll*
See FarEasternEconomicReview,Dec. 19, 1975.
120 See
ibid.,Nov.5, 1976.
121 See
ibid.,July16, 1976andNov.5 1976.
1 11
A FarEasternEconomic
Review,
June11, 1976.
123 Sec
Oct.22, 1976.
Rundschau,
ibid.,Nov.5, 1976;Frankfurter
134
AndrGunderFrank
EarlierChandahad reportedthat
Vietnam Workers'Party First SecretaryLe Duan has made it clear in his latestspeech
that technologywill be givenpriorityover narrowideological considerationsin order
to rebuild the country'sbattle-scarredindustry.. . . Apparently,most investmentwill
go towards buildingheavy industryin the north,while the south concentrateson light
industryand agriculture.In a commentaryon the speech, the Hanoi daily Nhan Dan
went furtherand said that scientificand technicalrevolution"is the key to achieve the
goal of socialism." If this is the official line, it is inevitable that massive foreign
assistancewill be required.125
135
130
131
132
Ibid.,July16, 1976.
133
Ibid.,Nov.12, 1976.
136
AndrGunderFrank
SomeImplications
In conclusion,
theconsomemajorclaimsof thesocialistcountries
regarding
for
that
the
existence
for
their
and
their
have
sequences
struggle liberapolicy
tionand socialismelsewhere
in the worldappearto be half-truths,
and some
half-truths
are sometimesworse than outrightfalsehoods.This conclusion
of theparticipation
of thesocialistcountries
in
emergesfromourexamination
the capitalist
international
divisionof laborevenwithouta detailedanalysisof
the socialistsocietiesthemselves.
The continuedindeedincreasing
and often
of
the
socialist
in
the
economies
enthusiastic,
participation
capitalistinternationaldivisionof laboraccording
to thelawsandrulesofthelatteris enough
to castthemostseriousdoubton thefullveracity
of theclaimsofthesocialist
countries
abouttheirsocialism
anditsconsequences.
In countlessofficialdeclarations
and statements
by theirauthorized
spokesthe
socialist
countries
make
two
main
of
sets
claims:
men,
One,themereexistence and exampleof the socialistcountries
exercizesa mostbenenecessarily
ficialinfluence
on theotherwise
its
world
and
internal
contradictions,
capitalist
whichare therebyameliorated,
naturalbellireducingcapitalism'sotherwise
of
its
its
and
of
coloniesand
cosity,exploitation
workingclass,
oppression
neo-colonies.
the
active
of
co-existence
of
thesocialist
Secondly,
policy peaceful
their
selfless
to
the
of
the
countries,
plus
help
peoples
capitalist
underdeveloped
countries
andtheirmovements
ofnationalliberation,
makea majorcontribution
to the maintenance
of peace, the furtherance
of nationalliberation,
and the
of
or
transition
to
in
socialism
the
world.134
there
is some
promotion
Though
truthto theseclaims,theycannotbe acceptedat facevalue,and uponfurther
examination
haveturnedoutto be half-truths,
whoseacceptance
without
serious
would
be
indeed
for
who
those
are
to
committed peace,
qualification
dangerous
andsocialism.
liberation,
The existenceof thegroupof socialistcountries,
sinceWorldWarII, hasthus
farcontributed
thebalanceof
to theprevention
of anothermajorwarthrough
nuclearterror.
Butit is lessclearthatthisis theconsequence
oftheirsocialism.
It maybe said to derivefromthebalancebetweentwosuper-powers,
regardless
of how theSovietUnionmaybe defined.The multipolarity
fromthe
emerging
Sino-Sovietsplit,as well as the increasedpowerof EuropeandJapan,may
contribute
to a mutualbalanceof powerstrategy
similarto thatknownin the
WorldWarI, butcertainly
ofsocialno thanksto theexistence
periodpreceding
istcountries.
The balanceof power,however,
is inherently
unstableandhasnot
guaranteed
peace in the past; and thereis no reasonto believethatit will
do so in thefuture.
necessarily
With regardto capitalistand imperialist
Klein claimsthat
exploitation,
becauseoftheexistence
ofsocialism,
and
In view of the changed power relations,the influenceof socialismon imperialismand
the effectsor the example of socialism.. . , themonopolybourgeoisieis, in the interest
of assuringits dominance, obliged among other thingsto expand the sphere of social
consumption,that is withregardto the productionof surplusvalue - of unproductive
labor. . . . [Thereby socialism] also makes a significantcontribution to the fight
134 For an
exampleof suchclaims,see forexampleDieterKlein,"PolitUcheAspektedet Kampfes
zwischenSozialismusund Kapitalismus,"
I.P.W.Berichte(Berlin,DDR), No. 3, 1976. Kleinclaimsthat
"theinfluence
ofsocialism
modifies
theoperation
ofthelawsofcapitalism
. . . ."
!
Long Live Transideological
Enterprise
137
against reformism,social democracy, and bourgeois conceptions of society generally. ... The power of socialism imposes limitsto the operationof imperialistagressiveness and produces a limitation of the possibilitiesof imperialismto exploit other
peoples. It even obliges imperalismto make certain concessions to these countries,
which cannot be explained throughprivate monopoly competition for maximum
profitsand whichalso enterinto contradictionwiththe same.1^5
ibid.,4.
138
AndrGunderFrank
Ibid,6.
137
For post-war WesternEurope, sec for instance Fernando Claudin, The CommunistMovement:
From Cominternto Cominform,2 vol., (New York: MonthlyReview Press, 1976); also Joyce Kolko, op.
cit.
139
high price for gold, of which she is the world's second most importantpro- after South Africa? As far as the termsof trade and the
ducer/exporter
international
divisionof labor in generalgoes, we have seen thatthe "socialist"
countriesbehave no differently
from,and sometimesworsethan,the imperialist
ones, except that for reasonsof theirown they preferlonger-term
price and
become
And
now
the
unless
burdensome.
they
arrangements,
delivery
imperialist
countriesalso showincreasinginterestin stabilityof supplyof rawmaterials,but
commonfundin whichthey
like the Soviet Union not througha multilateral
cannotexercisetheirown bargaining
powerbilaterally.
If
Nationalizationshave long since ceased to be an obstacle forimperialism.
can
the
firm
invest
in
is
which
more
paid,
imperialist
profitable
compensation
abroad to do the same elsewhere,and ifnationalization
endeavours,or transfer
promotesthe formationof mixed companiesbetween imperialistand underare
developed state capital, then the imperialistfirmsand theirgovernments
morethan satisfiedand happy. Supportforsuch nationalizationmeasuresfrom
socialistcountriesis, of course, not so welcometo the imperialistones if this
the bargaininghand of theunderdevelopedstates.But again
supportstrengthens
the objectionis not because the supportis socialist,but ratherbecause it offers
an alternative,which could and oftenis similarlyofferedby anotherWestern
linkswiththestatesector
capitaliststate. For the socialistcountries,investment
of the underdevelopedones is, as we haveseen,beneficial,particularly
insofaras
it providesa basis for exports of otherwisenot so competitiveproductsof
socialist heavy industry.For the underdevelopedcountries,however,this relationis not particularly
more favorablethan it would be or is witha capitalist
And
thecase, thereis
everybodyis made happywhen,as is increasingly
supplier.
collaboration
in
such
East-West-South
major capital projects- everytripartite
body, thatis, exceptthemassesof thepeople,and theirliberationmovementsin
these underdevelopedcountries,who are condemnedto suffercontinuedand
increasingexploitationand repressionfrombureacratizedand militarizedstate
division
capitalism,supportedby Westand East in thename of theinternational
of labor.
We must unfortunatelyconclude that both the Soviet theory of "nonand supposedcapitalistdevelopment"underthe leadershipof thebureaucratic,
in
the
anti-feudal
Third
and
World,and
ly progressive
anti-imperialist
bourgeoisie
the Chinesetheoryof "new democraticrevolution"throughthe anti-imperialist
allianceof fourgroups(workers,peasants,pettybourgeoisie,and
and anti-fuedal
nationalbourgeoisie)againstfeudalismand super-powerimperialism,are little
morethanideologicalfigleafsfortheirrespectiveeconomicinterestsand political policies. Both ideologieshave been invokedin supportof theirsponsor's
respectiveforeignpolicies in Indonesia,India, Egypt,Ghana,Chile,Angola,and
othercountriesin the ThirdWorldas well as in international
forumssuch as the
UnitedNations,U.N.C.T.A.D., the Non-AlignedNationsConference,etc. Their
reformistand sometimesdownrightreactionarysupportfor
indistinguishably
bourgeoisregimes,and frequently
equallyindistinguishable
ideological,political,
and even materialoppositionto popularrevolutionary
movementsin the Third
World,has led to political disasterin one countryafterthe other.We must
concludethatunfortunately
thiskindof "socialist"sponsored"third-worldism,"
whicharguesthat the principalcontradictionis between on the one side the
140
AndrGunderFrank