Lenin's Principle and Nkrumah's Critique of Welfare State Capitalism

It’s not unfair to claim that Kwame Nkrumah’s (1965) Neo-Colonialism, the Last Stage of Imperialism is highly indebted to Lenin’s Imperialism, the Highest Stage of Capitalism (1916). They both ground imperialism in the workings of monopoly capital.

Of course, in his analysis of imperialism, Nkruham (1909 – 1972) dispenses with the need for territorial control over the territory of (former) colonies. All his treatment requires is a kind of external structural control over the economy of the former colony. This is “in theory, independent and has all the outward trappings of international sovereignty. In reality its economic system and thus its political policy is directed from outside.” (Introduction) Thus, imperialism is a kind of economic dependence on external powers which, thereby, control the politics of the (former) colony.

A key conceptual/explanatory principle/axiom of Lenin is that “the monopoly created in certain branches of industry increases and intensifies the anarchy inherent in capitalist production as a whole.” [Chapter 1; emphasis in original] So, for Lenin an ‘economy’ is a kind of coupled system in which control and order in one part has a disproportionate disordering effect on the other (unregulated) part. (I am pretty sure Hayek also embraces a mechanism like this.) Let’s call this ‘Lenin’s principle.’ In Lenin’s Imperialism, treating domestic economies as such and the interactions among national and international economies as coupled systems is worked out in considerable detail. As an aside, I would welcome suggestions for scholarship on Lenin’s principle, or its origins in history of economics.

Lenin’s principle is lurking throughout Nkrumah’s argument. But in the conclusion, he draws out a new rather important insight.

IN the Introduction I attempted to set out the dilemma now facing the world. The conflict between rich and poor in the second half of the nineteenth century and the first half of the twentieth, which was fought out between the rich and the poor in the developed nations of the world ended in a compromise…In the industrially more developed countries, capitalism, far from disappearing, became infinitely stronger. This strength was only achieved by the sacrifice of two principles which had inspired early capitalism, namely the subjugation of the working classes within each individual country and the exclusion of the State from any say in the control of capitalist enterprise.

By abandoning these two principles and substituting for them ‘welfare states’ based on high working-class living standards and on a State-regulated capitalism at home, the developed countries succeeded in exporting their internal problem and transferring the conflict between rich and poor from the national to the international stage….

World capitalism has postponed its crisis but only at the cost of transforming it into an international crisis. The danger is now not civil war within individual States provoked by intolerable conditions within those States, but international war provoked ultimately by the misery of the majority of mankind who daily grow poorer and poorer…

As this book has attempted to show, in the same way as the internal crisis of capitalism within the developed world arose through the uncontrolled action of national capital, so a greater crisis is being provoked today by similar uncontrolled action of international capitalism in the developing parts of the world. Before the problem can be solved it must at least be understood. It cannot be resolved merely by pretending that neo-colonialism does not exist. It must be realised that the methods at present employed to solve the problem of world poverty are not likely to yield any result other than to extend the crisis…

Today the need both to maintain a welfare state, i.e. a parasite State at home, and to support a huge and ever-growing burden of armament costs makes it absolutely essential for developed capitalist countries to secure the maximum return in profit from such parts of the international financial complex as they control. However much private capitalism is exhorted to bring about rapid development and a rising standard of living in the less developed areas of the world, those who manipulate the system realise the inconsistency between doing this and producing at the same time the funds necessary to maintain the sinews of war and the welfare state at home. They know when it comes to the issue they will be excused if they fail to provide for a world-wide rise in the standard of living. They know they will never be forgiven it they betray the system and produce a crisis at home which either destroys the affluent State or interferes with its military preparedness. [Conclusion, [emphasis added]

Before i comment, let me take a step back first. In Imperialism: a Study Hobson’s (1902) argument against imperialism was motivated by the thought that parasitic finance was distorting external politics and the domestic economy which led to underconsumption of the domestic working poor. But he also hoped to reduce the international arms race(s) through cosmopolitan federalism among the wealthy/‘civilized’/developed states. In many ways, the 1960s represent a considerable step toward Hobson’s political program: all over Europe there were welfare states, imperial retreat was visible, and the European Economic Union had created a robust foundation for the growth of federalism (which the UK joined for a few decades in the 1970s). Obviously, the road to Hobson’s Utopia was imperfect due to the Cold War and nuclear arms races (etc.).

By relying on Lenin’s principle, Nkrumah suggests that European welfare states, which did not destroy monopoly capitalism as such, would intrinsically reinforce imperialism. By regulating class conflict and the economy domestically, European economies intensified and worsened political anarchy in the global system. And so new (and worse) imperial wars are not yet prevented. For Nkrumah (and many others in the 1960s) the Third World War is hanging in the air.

But there is also a secondary argument (also relying on Lenin’s principle) in which Nkrumah suggests that European welfare states are paid/funded by the monopoly profits extracted from the periphery/neo-colonial structures. Domestic peace and abundance are secured by a global, extractive imperialism. The fruits of social democracy come at the expense of the global poor. I think for Nkrumah this is so even if (miraculously) welfare state capitalism could somehow manage general disarmament.

That’s all I wanted to digress today. But I have one more thought. To the best of my knowlefge Rawls, and the Rawlsians, never responded to Nkrumah’s argument. Familiarity with Nkrumah’s argument helps explain why welfare state capitalism lost some of its sheen among the educated. Part of it has to do with the fact that welfare state capitalism was gendered (white and) male and so seen as insufficiently hospitable to all kinds of bottom-up emancipatory projects that one might code as ‘socially’ (and ‘sexually’) liberal. But the other part has to do with a more general sense that domestic high living standards and social peace were bought at the expense of the global poor. (This was, of course, most visible in tariffs against agriculture from the Global South.) Because Nkrumah thought aid programs were merely attempts at imperial control, Nkrumah himself thought that the only answer to this zero-sum structure was planning; but it is no surprise that arguments (now associated with ‘neoliberalism’) that emphasized win-win possibilities were given a more welcome hearing in subsequent decades. But that’s for another time.