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The USA became imperialist, what about Canada?

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In Part One of this article we asked if the European Settler Colonies can break the rule and make the transition from dependent colonies or semi-colonies to imperialist powers. That ‘rule’ is that capitalist semi-colonies cannot make this transition because they “cannot accumulate enough surplus value to become economically independent of existing imperialist powers.” We have shown in a number of articles that the emergence of Russia and China as imperialist powers is an exception to the rule because they had national revolutions that overthrew their bourgeoisies and became economically independent of imperialism.
We stated however, that there was “one category of colonies, European Settler colonies, that appears to be the exception to this rule”. There was no question that the USA became imperialist, but what of Australia, New Zealand, South Africa, Canada, Australia and Israel? Unlike the US, none of these won wars of independence so how would it be possible to achieve “economic independence” from Britain and the US? While we argued that NZ, Australia and South Africa failed to become sufficiently economically independent to become minor imperialist powers, we left open the question of Canada. We will come back to the question of Israel in a future article.

Is Canada imperialist?

The situation in Canada is less clear cut and the ongoing debate over whether or not Canada is imperialist between economic nationalists and ‘internationalists’ is more vigorous than that in Australia. In many ways Canada is similar to Australia. Originating as a British colony after defeating the French and then holding off the ‘Americans’ the settlers occupied lands inhabited by ‘First Nation’ peoples and started built a new capitalist society. Like Australia, Canada had many of the features of a settler colony that created the conditions for capitalist development and it too had no war of independence.

However, unlike Australia, Canada developed under conditions which, in the absence of a war of independence, allowed a national bourgeoisie to emerge capable of becoming economically independent of the colonial power. The unique factor that explains this seems to have been the proximity of the American Revolution that threatened to spread into Canada. US revolutionaries made incursions into Canada and there was widespread support for the revolution on the part of a majority of settlers coming into Canada. The British state had to build a strong national capitalist regime in Canada to defend it from the revolutionary advances from the South. In doing so, this colonial regime kept firm control on the settlers and put down two rebellions by small farmers and an uprising by Metis (mixed race) in the mid 19th century.

Canadian historians generally agree on these colonial origins but differ on what happened next. Most argue that Canada ceased to be a colony controlled by Britain in the late 19th century but could not achieve economic independence as it fell under the dominance of the US as it embarked on its own imperialist expansion. The ‘dependency’ school of thought explains this as the result of a Canadian ruling class pre-occupation with trade and commerce so that the banks played a weak role in investing in domestic industry which had to rely on US investment. Investment of US finance capital in Canadian industry therefore established a division of labour in which Canada was a producer of ‘staples’ or raw materials, while its branch plant industry was dominated by the US. The result was that Canada became an economic dependency of the US rather than a developed industrial capitalist state or imperialist power.

Yet contrary to the ‘dependency’ theory, there is a rival school of thought that argues that Canada is imperialist. For example, Bill Burgess in the 2006 article, ‘Canada, Imperialist or Imperialized’ (CIOI) argues that the evidence today points to an independent finance capitalist class in Canada:

“Statistics Canada reports that the 25 largest enterprises in Canada in 1988 controlled 41% of the assets of all corporations in the country. As reported in Figure 1, the rate of Canadian control over the assets of this highly strategic group was an impressive 95%… When the ‘top 25’ ranking by assets is added to the ranking by revenues, 36 of the ‘top 44’ enterprises are Canadian-controlled. 90.2% of the revenues in this group are Canadian-controlled; only 8.8% are US controlled. The 44 enterprises account for 50% of the revenues of the largest 763 enterprises in Canada, and 42% of their assets. In other words, within the core group of corporate power in Canada, Canadians capitalist control is seven or eight or nine times greater than US capitalist control, and this does even include other important points of support like Canadian government policy.” [Emphasis in original]

However, proving that Canadian finance capital exists does not explain the why and how this finance capital emerged, a question which is not settled as we show below. A minority like Bill Burgess trace the formation of finance capital as the result of Canada’s early development. The majority including Todd Gordon in Imperialist Canada, see the rise of Canadian imperialism as occurring after WW2. Within the majority some like Jerome Klassen see it as a ‘new imperialism’ that emerged as part of the neo-liberal free trade era of CAFTA, NAFTA etc, and picked up speed in the period since 9/11. Nevertheless, both minority and majority agree that whatever its origins Canadian imperialism is ‘deeply integrated’ into US imperialist hegemony and plays the role of a ‘secondary imperialist’ power.

Origins of Canada’s Finance Capital

In terms of the theory that we advance about the rise of imperialist powers, we take the minority view on the emergence of finance capital. We argue that Canada could not have become imperialist unless the conditions for this had been established before WW1 and the redivision of the world into the spheres of influence by rival capitalist powers. Did these conditions exist in Canada? The general rule that a colony must wage a war of independence to win its economic independence from imperialism did not apply in this case. The opposite was true. Canada won its political independence from Britain as the result of its counter-revolutionary role on the side of the British against the American Revolution. In order for the British to prevent the American Revolution spreading to its colony it had to create a strong national bourgeoisie as a bulwark. But why would this lead to that classes’ economic independence from both the British and then the US empires?

As we have seen the dependency theorists argue that Canada didn’t win its economic independence from Britain and the resulting weakness of the Canadian bourgeoisie reflected its comprador role as the mercantile agent class of the British Empire. Such a weak bourgeoisie could not claim more than a merchant bankers’ share of the surplus-value produced in Canada. The lion’s share of super profits would be shipped off to Britain. The Canadian comprador state defeated settlers uprisings for independence on behalf of the British and without tariff protection industrial development remained ‘backward’. When Canada gained ‘self-governing’ status its comprador class then looked to US industrial capital investment in ‘branch plants’. This is widely known as the “Naylor-Clement” thesis after those who developed this idea within the ‘dependency’ camp.

And yet the evidence shows that these features of ‘dependency’, while significant, were a subordinate aspect of Canada’s economic development. Canadian banks invested heavily in the transport and energy infrastructure necessary for capitalist production. This proved that there was no split in the capitalist class between merchant bankers and industrialists. In fact, the big majority of Canadian capital was what Lenin later called ‘finance capital’ – the fusion of banking capital with industrial capital in large increasingly monopolistic enterprises. The rise of this finance capitalist class in Canada therefore occurred at the same time as in all the other imperialist powers. [Burgess, 142; CIOI, 2006]

How to explain the rise of finance capital?

What this proves, against both ‘dependency’ theorists, and ‘new imperialist’ theorists, is that Canada was already imperialist by World War I. What is doesn’t demonstrate is the specific circumstances that allowed a comprador class to transform itself into a class of finance capitalists. Burgess suggest an explanation lurking in the ‘Naylor-Clement’ thesis of a weak, divided bourgeoisie that proved in reality to be the opposite, a strong and united national bourgeoisie:

“Naylor and Clement argued that, first, there is an atypical division and rivalry between sectors of Canadian capital dating back into the 19th century. Second, they claimed that financial capital in Canada chose a continental alliance with US capital over a national alliance with indigenous industrial capital.” [Burgess, Thesis, 147]

As Burgess and others have explained, the Naylor/Clement thesis is based on the misunderstanding that merchant capital invested in building railways and canals was not industrial capital. Yet Canadian merchant banks which served Britain in Canada, employing British capital, were not merely building railways and canals to transport commodities to the British market, they were doing much more than that. They were laying down the infrastructure necessary for capitalist agriculture, forestry, and more important, manufacturing. The capital invested in this infrastructure was not merchant capital but bank and state monopoly finance capital. That is why the large family and state enterprises that were created at the time fused banking and industrial capital to concentrate investment and as a result became highly monopolised, giving rise to the finance capital typical of imperialism. [Burgess, Thesis, 142]

So perhaps the explanation we are looking for runs like this: the Canadian settler colony converted British merchant capital into industrial capital by extending the circuit of industrial capital from Britain to the colony and at the same time creating the conditions for capitalist production in Canada. The foundations for the rise of Canadian finance capital were laid by the state’s policy of developing domestic industry, contributing to the solution of Britain’s crisis of falling profits, and at the same time accumulating surplus-value in its own right. But how was this possible without a national revolution to win economic independence?

Burgess suggests that the policy of land settlement may have played an important role in the formation of industrial capitalism in Canada, but that more work needs to be done to prove this point. [Burgess, Thesis, 27-28] In the next section we put forward our interpretation of the importance of the land question in the settler colonies.

The Land Question

British imperialism in the early to mid 19th century was facing a crisis of falling profits at home caused by the high cost of raw materials due to the lack of capital investment in agriculture. The resulting stagnation, unemployment and poverty led to famines, epidemics and widespread social unrest. The political economist E.G. Wakefield promoted his ‘systematic colonisation’ as a solution. It would put a sufficient price on the sale of land in the colonies to prevent settlers from occupying ‘free land’ and at the same time use the proceeds of land sales to fund free immigration. It would solve the social problems in Britain as well as the underlying profitability crisis, by opening up new lands for capitalist agriculture to provide cheaper raw materials for industry at home, simultaneously creating a class of wage labourers. As a form of ‘primitive accumulation’, indigenous lands were expropriated by the state and sold to petty capitalist farmers, while denying migrant workers free access to land, forcing them to perform wage labor for a living. In short the denial of “free land” was necessary to ensure the separation of labor from the land to create “free labor” and capitalist development in the settler colonies.

Marx critiqued this policy as implemented by the Wakefield Scheme. In Australia and NZ the plan failed when workers escaped “free” labor for “free” land proving that capital and land cannot create value without labor power. In Canada, the colonial state controlled crown land directly, or indirectly through groups of wealthy families after 1812, and then through the Canada Company from 1825, all of which sold land at a relatively high price. So there was no “free” land to allow migrants to escape wage labour unless they crossed the border to adopt the “American” way. Of course the labor market was replenished by constant flows of migrants.

So while the Colonial government did not officially apply Wakefield’s “systematic colonisation” they achieved its main purpose. By creating the conditions for capitalist production, freehold land, free labour, and capital, the colonial elite became a national bourgeoisie in which banking capital and industrial capital could merge as finance capital. In completing this process by World War I, Canada was already joining the imperialist powers, large and small, that entered that war in the interests of increasing its own sphere of interest rather than that of either Britain or the USA.

Critique of ‘New Imperialism’

The most common view of Canadian imperialism today is that it emerged in the post-World War 2 period. We argue that such a theory ignores Marx and Lenin in settling the question of the origins of finance capital. If Canada was not already imperialist by World War I on what basis could it emerge thereafter? Like the ‘left’ in Australia that speaks of a small, secondary, or sub-imperialist Australia, the method used to arrive at this conclusion is empiricist. It argues that Canada during the epoch of imperialism can make the transition from a ‘dependent’ or semi-colonial country and emerge as imperialist in a world already divided and fought over by imperialist powers in two Imperialist wars. In other words existing imperialist powers can step outside the laws which govern monopoly state capitalism to donate super-profits to dependent countries so they can accumulate some of these super-profits on their own account and even redistribute them as a ‘socialist’ policy as the ANC claims in South Africa.

This view of imperialism as ‘bad policy’ is the inverse of the dependency theorists who claim that Canada’s ‘deep integration’ in the US security state disqualifies its imperialist status. For example Gowans argues that Canada cannot be imperialist because it doesn’t have its own military independent of the US. Klassen rebuts this view but opts for the term ‘secondary’ imperialist, to acknowledge that Canada, like many other imperialist powers (for example Japan) is subordinated to hegemonic US imperialism. Yet Klassen cannot explain how the US has allowed Canada to escape a semi-colonial fate since World War 2 other than by voluntarily subsidising Canadian imperialism with US super-profits. Here is empiricism in all of its glory: selecting facts to fit a preordained political position without reference to the origins of finance capital in Canada before World War I.

Are we empiricists? No. Imperialism arose from the crises of overproduction and exported capital to restore the rate of profit. Before the epoch of imperialism proper began in the late 19th century, British imperialism as the dominant power by the mid-19th century had a colonial policy of state monopoly capitalism that prefigured global imperialism. State monopoly capitalism is parasitic and destructive in extracting surplus-value and resorts to war to partition the global market.

We argue that British imperialism retained finance capital control of its colonies and semi-colonies except in the case of Canada where an independent capitalist class arose out of the counter-revolution against the American Revolution. In the epoch of imperialism, no capitalist colony or semi-colony has been able to make the transition from semi-colony to imperialist power since the redivision of the world economy by the imperialist powers in 1918. There are states like Israel and South Korea where modern industry has developed large multinational firms in the aftermath of World War 2 in 1945, but this would not have been possible were it not for their status as heavily subsidised special security states defending the interests of US imperialism.

Canada born of the first imperialist crisis?

We have argued here that the ‘how’ and ‘why’ of Canadian Imperialism can only be understood by applying the theory of Lenin on imperialism. Lenin’s theory of imperialism means that after World War 1, when existing imperialist powers re-partitioned the world into their respective spheres of influence, no new imperialist powers could emerge. The export of capital from the imperialist countries created dependent colonies or semi-colonies which could only escape colonial super-exploitation and oppression by permanent revolution. We argue that attempts to find ‘new imperialisms’, such as that of the British settler colonies such as Australia reject Lenin for ‘social imperialism’. This is the prevailing view of the post-World War 2 Mensheviks who think that imperialism is the ‘bad’ policy of imperialist ruling classes that can be reformed without overthrowing capitalism.

In Part One of this article we argued that New Zealand and South Africa are clearly semi-colonies in terms of the dominant share of super-profits expropriated by the major imperialist powers. Australia is less clear cut combining both rich semi-colonial and imperialist aspects. We have gone back to our original position on the balance of the evidence showing that Australia’s dependence on the US and China makes it a semi-colony. However this analysis has shortcomings because we have not gone back to Lenin to explain ‘how’ and ‘why’ Australia failed to qualify as imperialist by World War I. In that sense we were still arguing on the empiricists terrain.

In the case of Canada we started with Lenin’s theory as necessary to explain Canadian imperialism today. This means extrapolating back from the early 20th century to the early 19th century to look for the origins of Canadian finance capital. Canada as a British colony developed an industrial economy as part of the solution to Britain’s crisis of overproduction as the “industrial workshop of the world”. Britain’s export of capital to Canada was still merchant capital in the early 19th century, but became industrial capital when invested in the capitalist production of commodities in Canada. The Canadian ruling class oversaw the development of domestic capitalism and monopolised ownership and control of means of production, accumulating and concentrating banking and industrial capital as finance capital in its big banks and enterprises. That is why we think that it is possible to show that Canada was imperialist by World War I and so eliminate both the ‘dependency’ theories and the ‘new imperialist’ theories of the post-World War 2 period.

If this analysis is correct it strengthens our argument that we can extrapolate the character of monopoly capital back in time in the British settler states, and show why and how the US and Canada, though taking very different paths, became imperialist while the other settler colonies did not. It also gives us more confidence that we are correct in developing Lenin and Trotsky to explain the exceptional emergence of Russia and China, which won their economic independence by overthrowing the imperialist and national bourgeoisies, and despite the counter-revolutionary restoration of capitalism, inherited the conditions that made it necessary for their belated capitalist development to become imperialism.

First published on redrave blog

Written by raved

June 11, 2015 at 10:57 pm

Posted in Uncategorized

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