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Book Review: Capital Campaign; By K. Subramanian

Updated: Sep 1, 2023

C3S Article no: 0042/2017

Courtesy: The Hindu 

Utsa Patnaik and Prabhat Patnaik, A Theory of Imperialism (Tulika Books, India, 2016). 

Research on the nature and origin of “Imperialism” has an irresistible allure for academics. The venerable Marxian view of capital ever seeking outlets, particularly in the periphery, held sway for long. Lenin regarded imperialism as the highest stage of capitalism. After the liberation of erstwhile colonies, analysts began to describe changing economic relations as neo-colonialism or “New Imperialism.” Globalisation, which intervened, was the spoiler and put paid to earlier theories. The strategies adopted by multinational corporations such as “New International Division of Labour” together with the rise of monopoly capital made the patterns more complicated. Imperialism, as a process, was losing relevance.

The Patnaiks, authors of this book, are economists of repute and have made significant contributions to Development Economics. In this book they offer a framework for the emergence of imperialism and the causes for its persistence. The endeavour is to “establish ….continuity between the colonial period and now, notwithstanding the fact that countries of the Third World are no longer ruled by foreign powers.” This continuity, they argue, arises from the structural relationship characterising capitalism.

Structural relationship

They narrate the nature of the structural relationship or the asymmetry governing it. The thesis is that metropolitan countries require a large range of tropical products essential both for consumption and manufacturing which they cannot produce within their own geographical space. Nor can they find substitutes for them. Perforce, they have to procure them from the Global South. There are limits to which they can augment supplies, given fixed land mass and technological constraints. This results in “increasing supply price.” Such an increase will debase the currency in the metropolis and make it impossible to hold financial assets. To maintain the value of their money and to continue to secure tropical supplies, they have to resort to “income deflation” measures on the periphery to depress prices and also their incomes. These steps are unavoidable to maintain continuing tropical exports. They contend that “structural arrangement for such income deflation is an essential component of imperialism and as central today as ever.” This is a bald summary of their hypothesis which has been elaborated at length in the book.

Among economists, whether neo-liberal or post-Marxian, there is an urge to seek theoretical formulae which are predictive. Unfortunately, this is not how economic forces operate on the ground across countries. Despite all their efforts to free the study from the Marxian baggage, the authors lean heavily on the notions of “metropolis” and “periphery”. So are their views on capital flows. Both are out of sync with current economic trends.

Metropolis and periphery

Trends in global trade, commodity trade in particular, do not lend support to the older demarcation between “metropolis” and “periphery.” Recent data on trade flows suggest that developing countries have not increased their share of agricultural exports, especially to the West. Middle income developing countries are the markets for low income developing countries. Trading among industrial countries continues to dominate global agricultural trade, mostly within the EU and NAFTA. An early World Bank study said, “commodity markets exhibit complex political economy, both domestically and internationally.” The nature of policy interventions in the markets and many heterogeneous interests exacerbate the complexity. The deadlock over agricultural subsidies in the WTO represents this malaise.

Given these trends, it is rather facile to emphasise the impact of tropical supplies and their prices on the West and to argue that an increase in tropical product prices will threaten their monetary stability. As David Harvey has added in his commentary (included in the book), “The dependency of metropolitan capitalism on products from tropical and sub-tropical regions is nowhere near as significant as Patnaiks claim.” Their notions of “spatial exploitation” also do not stand the scrutiny of later-day research by geographers and sociologists.

Indeed, there is exploitation related to factors like unequal exchange, dependency, technology, etc. The post-war trading system dominated by the West and bolstered by the WTO adversely affect the South. As Harvey argues, “it is useful to abandon the idea of imperialism (along with the notions of the core-periphery model of world system theory) in favour of a more fluid understanding of competing and shifting hegemonics within the globalized state system.”

Capital flows

Much of the Marxian or post-Marxian studies harp on the capital surge from the West seeking exploitative investments in the South. In recent years, it is observed that the direction of capital flows is “uphill”, i.e. from the developing to the developed countries. Advanced economies, as a group, are estimated to have received “persistent and sizeable net inflows, peaking at about 1% of global GDP in the run up to the Global Crisis.” (Revisiting the paradox of capital, EmineBoz, Luis Cubeddu, Maurice Obstfeld, VOXEU, 9 March, 2017). These inflows were mirrored by large and growing outflows from China and commodity-exporting economies helped by low global interest rates, sharp rise in commodity prices and high savings in developing countries. Countries like China seek investments abroad to diversify their reserves and get better returns. Do they fall under the rubric of “Imperialism?”

The idea is not to deny the exploitative nature of the current capitalist system. Under conditions of rapid growth and development in the South, these relations are in a state of flux. Supply chains dominate and their interlocking ownership is opaque. Further, unlike in the colonial era, sovereign states play interventionist roles to safeguard national interests. The stalemate over Singapore issues in the WTO is a pointer. Lastly, among recents economic developments, the most significant is the shift in the balance of economic power towards the South. This may run contrary to the notion of persisting Imperialism.

The plea that the current global economic system dominated by capitalism is asymmetric and unfair is valid and deserves attention. However, the battle to redress the imbalance has to be fought on several fronts such as the WTO on specific issues and codes. Though well intentioned and sincere, that battle is not served by the analyses in this book.

(The writer Mr. K. Subramanian, is Former Joint Secretary, Ministry of Finance, Government of India and Member, Chennai Centre for China Studies – C3S. Email: The views expressed are the author’s own. )

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