The president of the United States of America, Donald Trump, has been castigated in liberal circles for his supposed ‘madness’, as exhibited in his imperialist annexationist proclivities, in his free recourse to the tariff weapon against countries that do not bow before him, and in his willingness to threaten even his Western allies for securing American gains. What is missed in all this, however, is that this ‘madness’ arises not because of some personal idiosyncrasy on his part but as a fall-out of the specific character of post-War capitalism. It is not Trump who is to blame for his ‘madness’ but the nature of contemporary capitalism. Liberal opinion believed that capitalism could do without colonies and Trump is discovering the vacuity of this belief. So used have we got to the fact of metropolitan capitalism surviving, and even flourishing, without colonies, that to claim otherwise would appear absurd; but this is the plain, unadorned truth.
Capitalism requires a stable medium in which to hold wealth, in addition to physical capital stock. Gold alone cannot provide such a medium because of its limited availability; typically, the currency of the leading capitalist country, whether explicitly linked to gold or believed by the world’s wealth-holders to be ‘as good as gold’, has provided such a medium. The British pound sterling, explicitly linked to gold, played this role before World War I, and tried unsuccessfully to continue playing this role in the inter-War period; the American dollar took over this role after World War II. It was initially also linked formally to gold under the Bretton Woods system (convertible at $35 per ounce of gold); but even after this link was snapped in the early Seventies, it has continued playing this role because of wealth-holders’ belief that it is ‘as good as gold’. But how is this belief sustained?
If it was simply the export competitiveness of the leading country, shown by its running a current account surplus vis-à-vis the rest of the world, then that could certainly sustain this belief; but that would not be of much help, for then the leading country would not be making available an outflow of its currency to the rest of the world to hold as wealth. The leading country must make capital exports to other parts of the world for a diffusion of capitalism to them, thus running capital account deficits with them; simultaneously, it must also accept their exports of goods and services so that they are allowed to industrialize, and hence also run a current account deficit with them. It must do both, without increasing its net external debt, which might undermine wealth-holders’ confidence that its currency is ‘as good as gold’; and for this triple objective it needs a colonial empire.
Indeed, these apparently contradictory demands made on the leading capitalist country, demands whose fulfilment is conducive to the success of world capitalism, were met over a long period of time because of colonialism. Britain, as the leading capitalist country of the pre-WWI era, ran balance of payments deficits vis-à-vis the emerging capitalist countries of that period, namely Continental Europe, the US, Canada, Australia, New Zealand and South Africa. But it did not get into any net external debt; on the contrary, it was a net capital exporter because of its tropical and semi-tropical colonies, or ‘colonies of conquest’, as distinct from the ‘colonies of settlement’. Britain simply appropriated without any quid pro quo the large export surplus earnings of these colonies of conquest, derived from their exports of primary commodities to these newly-industrializing countries of that time (what the Indian nationalist writers had called the “drain of wealth” from the colonies to Britain); and it exported its own goods, mainly textiles, not wanted in newly-industrializing countries that were building their own industries, to these captive colonial and semi-colonial markets. Britain thus preserved its leadership role without getting into debt because of its colonial empire.
This situation could not last forever. The post-War leader of the capitalist world, the US, had no such colonial empire because of which its fulfilling the leadership role entailed its getting into external debt; this is why we have the bizarre spectacle of the world’s most powerful capitalist country also being by far the most indebted. This poses a risk not only to the system as a whole but also to the US in particular for any attempt by the government or wealth-holders of any big country to move away from holding dollars would profoundly undermine the stability of its currency. The US, of course, would use its military might to prevent such a denouement, but then, it can also use its military might pre-emptively to ensure that such a denouement does not arise at all by acquiring a colonial empire of its own that is rich in mineral resources, especially oil, whose importance will continue for quite some time.
This is Trump’s agenda — to buttress the role of US imperialism by acquiring a colonial empire that is rich in natural resources so that its hegemony is no longer vulnerable to threats. Venezuela has the richest-known oil reserves in the world, and Greenland is rich in rare earths for which the US at present has to depend on China. To be sure, in the process of acquiring such a colonial empire, it has to enter into conflicts with many countries, including even its Western allies. This is what we are seeing at present. Trump’s ‘madness’ is a myth; what his aggressive acts show is that imperialism without colonies of conquest can only be a historically transitory state.
Prabhat Patnaik is Professor Emeritus, Centre for Economic Studies, Jawaharlal Nehru University, New Delhi