A Policy Neither Fainthearted Nor Foolish,
Imperialism and the Myth of Underdevelopment,
Maldevelopment and a "Sharp Philanthropy"

excerpted from the book

The Sword and the Dollar

Imperialism, Revolution, and the Arms Race

by Michael Parenti

St. Martin's Press, 1989

p1
Why does the United States support right-wing autocracies around the world? Why is it antagonistic toward revolutionary movements and most socialist countries? Why does the United States intervene in other countries with military aid, embargoes, surrogate counterrevolutionary forces, and the US military? Why does the United States have military bases all around the world? Why does it spend hundreds of billions yearly on military appropriations? Why do Washington and Moscow have nuclear arsenals that can blow up the world many times over? ...

p3
Conservatives detest liberal reforms, which they see as taking the country down the slippery slope to socialism.

p3
Neither liberals nor conservatives seem to have anything to say about economic imperialism as practiced throughout the world by the corporate and financial interests in the United States and other capitalist countries. Most liberals and conservatives, be they political leaders, academics, or media commentators, do not believe imperialism exists-at least not since Rudyard Kipling's day or not since the Spanish-American War. If they use the term "imperialism" to describe a contemporary event, it is usually in reference to something the Soviet Union is doing. They never consider whether capitalism as a global system has any integral relationship to US foreign policy...

... liberals and conservatives seem to agree that the US government act with benign intent in the world. While they allow that the United States sometimes must do unsavory things because that is the kind of world we live in, they generally leave the goals and premises of US policy unexamined.

p4
Liberals and conservatives agree that there is something in the world called "US interests," which, while seldom defined, are always thought of as being in urgent need of defense and morally defensible. It is implicitly understood that these "interests" are linked in some way to the freedom and salvation of humanity. Liberals and conservatives also seem to agree that something called "stability" in the Third World is better than "instability"-that is, better than agitation and change, even though it is sometimes admitted that change is needed in one or another oppressively impoverished country.

Liberals-and, to a far lesser extent, conservatives-.-recognize that much "instability" is due to poverty, but they give little recognition to imperialism and capitalism as a cause of poverty, and any attempt to do so is treated as ideological posturing.

*

Imperialism and the Myth of Underdevelopment

p10
Harry Magdoff

What matters to the business community, and to the business system as a whole, is that the option of foreign investment (and foreign trade) should remain available. For this to be meaningful, the business system requires, as a minimum, that the political and economic principles of capitalism should prevail and that the door be fully open for foreign capital at all times. Even more, it seeks a privileged open door for the capital of the home country in preference to capital from competing industrial nations... "

p10
There are more than 200,000 corporations in the USA today, but 100 companies control more than half the nation's industrial assets. Fifty of the largest banks and insurance companies own half of all the financial assets. Ten firms make 22 percent of all the profits.

... Some 400 corporations control about 80 percent of the capital assets of the entire nonsocialist world. One-third of the assets of US industrial corporations are located outside the United States. Eight of the nation's nine largest banks now rely on foreign sources for over 40 percent of their total deposits. Many of these holdings-often the larger portions-are in other industrial countries. But more and more investment is going into the Third World. Citibank, for instance, earns about 75 percent of its profits from overseas operations, mostly in the Third World. American and other Western corporations have acquired control of more than 75 percent of the known major mineral resources in Asia, Africa, and Latin America. The USA is South Africa's largest trading partner and its second-largest foreign investor, with investments amounting to about $2 billion as of 1986. US banks provide the apartheid regime with one-third of its international credit.

p11
Where business goes so goes government ... In the service of big business, the governments of capitalist nations, including the United States, have striven mightily to create and maintain the conditions of investment and accumulation in other lands. This may not be the only function of US foreign policy, but it is the function that is often ignored by those who would minimize the role played by international capitalism in the affairs of nations.

p11
For some 500 years the nations of Western Europe, and later North America, plundered the wealth of Asia, Africa, and Latin America. This forceful expropriation of one country's land, labor, markets, and resources by another is what is here meant by imperialism.

p12
When the merchant capitalists replaced the mercantilist monarchs, the process of expropriation accelerated and expanded. Along with gold and silver, they took flax, hemp, indigo, silk, diamonds, timber, molasses, sugar, rum, rubber, tobacco, calico, cocoa, coffee, cotton, copper, coal, tin, iron, and later on, oil, zinc, columbite, manganese, mercury, platinum, cobalt, bauxite, aluminum, and uranium. And of course there was that most dreadful of all expropriations--of human beings themselves-slaves. Millions of people were abducted from Africa, while millions more perished in the hellish passage to the New World.

The stupendous fortunes that were-and still are being extracted by the European and North American investors should remind us that there are very few really poor nations in what today is commonly called the Third World. Brazil is rich; Indonesia is rich; and so are the Philippines, Chile, Bolivia, Zaire, Mexico, India, and Malaysia. Only the people are poor. Of course in some areas, as in parts of Africa south of the Sahara, the land has been so ruthlessly plundered that it too is now impoverished, making life all the more desperate for its inhabitants.

... the Third World is not "underdeveloped" but overexploited. The gap between rich and poor nations is not due to the "neglect" of the latter by the former as has been often claimed. For forty years or more we have heard how the nations of the North must help close the poverty gap between themselves and the nations of the South, devoting some portion of their technology and capital to the task. Yet the gap between rich and poor only widens because investments in the Third World are not designed to develop the capital resources of the poor nations but to enrich the Western investors.

p14
Africa has been one of the lands most often misrepresented as "primitive" and "underdeveloped" by imperialism's image makers. The truth is, as early as the 1400s, Nigeria, Mali, and the Guinea coast were making some of the world's finest fabrics and leathers. Katanga, Zambia, and Sierra Leone produced copper and iron, while Benin had a brass and bronze industry. As early as the thirteenth century, finely illuminated books and manuscripts were part of the Amharic culture of Ethiopia, and impressive stone palaces stood in Zimbabwe. Yet Africa under colonial rule soon was exporting raw materials and importing manufactured goods from Europe, like other colonized places.

The advantages Europeans possessed in seafaring and warfare proved decisive. "West Africans had developed metal casting to a fine artistic perfection in many parts of Nigeria, but when it came to the meeting with Europe, beautiful bronzes were far less relevant than the crudest cannon." Arms superiority also allowed the Europeans to impose a slave trade that decimated certain parts of Africa, set African leaders against each other in the procurement of slaves, and further retarded that continent's economic development.

Attempts by African leaders at development, including the area of arms technology, were suppressed by the British, French, and other colonizers. From the seventeenth to the twentieth centuries, Europe imposed imperialist trade relationships, forcing Africa to sell its raw materials and buy manufactured goods on increasingly disadvantageous terms. As Walter Rodney points out: "There was no objective economic law which determined that primary produce should be worth so little. Indeed, the [Western capitalist] countries sold certain raw materials like timber and wheat at much higher prices than a colony could command. The explanation is that the unequal exchange was forced upon Africa by the political and military supremacy of the colonizers. "

p15
If Third World nations are impoverished, then, it is not because of their climate or culture or national temperament or some other "natural condition" but because of the highly unnatural things imperialism has been doing to them. It is not because they have lacked natural wealth and industries but, quite the contrary, because the plenitude of their resources proved so inviting to the foreign pillagers, and the strength of their industries so troublesomely competitive to foreign industrialists.

Nor is overpopulation the cause of Third World poverty. The most desperately impoverished areas of the Third World, such as Northeast Brazil and the various famine regions of Africa, are among the more sparsely populated. Countries like India, Pakistan, and Indonesia, whose poverty is often blamed on their supposedly excessive human fertility, actually have less people per square mile than England, Wales, Holland, Japan, Belgium, West Germany, Italy, and a few other industrialized countries. Cuba, with a population of only 5 million people in the 1950s, suffered widespread poverty and hunger; today with a population of 11 million no one is starving.

p17
Third World poverty and multinational industrial wealth are directly linked to each other. The large companies invest not to uplift impoverished countries but to enrich themselves, taking far more out than they ever put in.

Publications on both the Right and the Left, along with the United Nations itself, describe the Third World as composed of "developing" countries. This terminology creates the misleading impression that these countries are escaping from Western economic exploitation and emerging from their impoverishment. In fact, most of them are becoming more impoverished. Third World nations are neither "underdeveloped" nor "developing"; they are overexploited and maldeveloped.

*

Maldevelopment and a "Sharp Philanthropy"

p20
In Mexico, where about 80 percent of the children in rural areas are undernourished, livestock-raised by big landowners for profitable exports-consume more basic grains than the country's entire rural population. At the same time, tons of fresh produce are shipped annually from Mexico to the USA.

Throughout much of the Third World the choice land is owned by major landowners and corporate agribusiness and is either left underutilized or is used for livestock or cash crop exports that bring enormous profits to a few. With "development," or what more accurately should be called "maldevelopment," countries like Indonesia, Ceylon, and Malaysia, which were easily self-sufficient in food production as late as the 1950s, now suffer shortages as their land comes increasingly under the control of multinational agribusiness. Similarly, Africa has become both less self-sufficient in food and more active as a commercial food exporter. Land once used to grow corn and sorghum for local consumption now produces coffee and cotton for export. Deprived of native grains and unable to afford the imported wheat and rice, the people of Africa suffer increasingly from hunger, even as their lands feed people elsewhere.

When profit considerations rather than human need determines how resources are used, then poor nations feed rich ones. Many of the protein products consumed by North Americans (and their livestock and domestic pets) come from Peru, Mexico, Panama, India, Costa Rica, and other countries where grave protein shortages exist. Even as large numbers of children in these countries die from malnutrition, food production is increasingly geared to the export market. Under capitalism, money is invested only where money is to be made.

The problem is neither poor lands nor unproductive populations but foreign exploitation and class inequality. A mere 2.5 percent of landowners (mostly absentee owners including agribusiness firms) control almost 75 percent of the world's land.

p21
If poor nations are so hamstrung as to be unable to help themselves, it is equally difficult for them to band together and help each other. Trade among them has actually declined. As they all export more to the rich nations in order to pay off their astronomical debts, they also buy less from each other and become increasingly locked into the imperialist system. Due to the maldevelopment imposed on them by foreign investors, many Third World countries have not had the chance to develop natural markets with each other. Instead, they often produce the same export products-which further stymies trade between them.

p23
Today in the maldeveloping countries, we find more factories,] more exports, more giant agribusiness-and more poverty and hunger than ever before. After a decade of a very good growth rate in the Philippines, according to the Washington Post, "the average Filipino is probably worse off than when the decade began."' Of the 9 million Filipino children between six months and six years of age, at least one-third are either "moderately" or severely malnourished. Yet the Philippines has become a food exporter in the last two decades, selling abroad large quantities of the very rice and vegetable products needed by Filipino children.

Fifty percent of Guatemala's Indian children die before the age of five from malnutrition and related illnesses. It has been argued that such poverty is historical, an original condition: the Indians have always been poor. In truth, the Mayan Indian population had more abundant food supplies and better lands in the fifteenth century before the Spaniards arrived than they do today. Their staples were corn and beans, supplemented by fruits, vegetables, and wild game. With the arrival of the Europeans the forested plains were cleared for the growth of cotton, sugar, coffee, and the raising of beef for export to more affluent nations. The Indians were forced back into the hills where the land was poor and quickly eroded. Today, the largest landowners and investors in Guatemala are American agribusiness corporations.

p27
US aid is not intended to change the social structures of recipient nations but to shore up existing class relations, creating what our leaders call "stability." Aid is cut off when genuine reforms are attempted, when the reformers tamper with the distribution of class power and wealth. Thus in 1970, as the democratically elected government in Chile, under the presidency of Salvador Allende, initiated social and economic reforms, all US aid was cut off-except for military assistance to the Chilean military, which was increased. President Kennedy spoke accurately when he said that "foreign aid is a method by which the US maintains a position of influence and control around the world."

p27
US aid usually influences the recipient nation's skills, tastes, and needs so that the dependency on American products continues well after the aid program has ceased. The recipient country must sign an agreement with the Agency for International Development (AID) that commits it to come up with a certain amount (usually 25 percent) in matching funds for any aid project. American monies are allocated often with the express condition that they be used to buy American goods transported in American ships at American prices. This "has meant that three-fourths of U.S. foreign-assistance money remains in the U.S." According to AID administrator Peter McPherson: "Two-thirds of what we give comes back in 18 months in the form of purchases." Technical assistance grants are a boon to American consulting firms since all aid consultants must come from the USA. Along with aid, the needy nation has to open itself to US capital penetration. Thus in 1966, in a widely publicized instance, India was denied a shipment of US food until it agreed to accept a chemical fertilizer plant run by an American corporation.

Then there are the foreign loans from Western banks and the balance-of-payments support from the International Monetary Fund (IMF) to financially troubled countries. (Member nations control the IMF by a system of weighted voting which ensures dominance by the wealthiest countries, principally the USA.) Since 1973, the Third World debt has grown from $73 billion to more than $1 trillion, that is, $1,000 billion, an unpayable sum. One of the causes of indebtedness is the debt itself. The more a nation borrows, the greater is its payment burden and the greater the pressure to borrow still more to meet expenses-often at higher interest rates and shorter payment terms.

An increasingly larger portion of the earnings of indebted nations goes to servicing the debt, leaving still less for domestic consumption and creating an even greater need to borrow. So the debt increases budgetary deficits, which in turn increase the debt. By 1986, 80 percent of Paraguay's export earnings went to pay the interest on its $2 billion foreign debt. Most other debtor countries must devote anywhere from one-third to two-thirds of their earnings to service debts. By 1983 the money collected by foreign banks in the form of interest payments on Third World debts was three times higher than their profits on direct Third-World investments.

Eventually, to qualify for more loans a country must agree to the IMF's "stabilization" terms. The terms invariably include cutting back on domestic consumption while producing more for export, thus earning more of the hard currency needed to pay its debt. Countries have had to cut back on their already insufficient spending in the fields of health, education, and human welfare, and penalize the common population "with wage freezes and higher prices while offering generous tax and legislative concessions to foreign investors.

But if these foreign loans have intensified the impoverishment of Third World nations, why do these same nations keep asking for more and more money? Sometimes they have no other means of getting by. In other instances, borrowing serves the private interests of rulers. Nations as such do not make the decisions to borrow money; their leaders do. And these leaders are often outrageously corrupt military and political figures who amass personal fortunes by siphoning off substantial portions of the borrowed funds. The pattern of a growing national debt and a self-enriching elite could be observed in Chile under Pinochet, Nicaragua under Somoza, the Philippines under Marcos, Zaire under Mobutu, and Indonesia under Suharto, to name a few.

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