Capital, Export of
Capital, Export of
the movement (migration) of capital from the country where the owner is located to another country for the systematic extraction of surplus value and also for political purposes.
Part of the surplus value extracted is transferred to the country which exports the capital, and part is capitalized (that is, reinvested in production) in the country which imports the capital. Under conditions of premonopoly capitalism, where free competition was completely predominant, the export of capital played a secondary role. The primary form of international economic relations was the export of goods, which served as the basis for the appearance of the world commodity market. In the age of the rule of monopolies the export of capital, in contrast to the export of goods, has become one of the most typical characteristics of imperialism. In the countries of developed capitalism at the turn of the present century, monopolistic alliances of capitalists were formed. A monopoly of capital was established in a few of the richest countries, in which the accumulation of capital had reached gigantic dimensions; an enormous “excess of capital” was formed. The possibility of exporting this excess was already established because a number of backward countries had already been drawn into the circulation of world capitalism. Profit was high in these countries because the organic composition of capital was low, manpower and raw materials were inexpensive, and the price of land was comparatively low. The export of capital became essential because “in a few countries capitalism has become ‘overripe’ (owing to the backward state of agriculture and the poverty of the masses); capital cannot find a field for ‘profitable’ investment” (V. I. Lenin, Poln, sobr. soch., 5th ed., vol. 27, p. 360). Already in 1899, Great Britain’s income from the export of capital was five times as great as the income from foreign trade. In 1968 the income of the USA from the export of capital was six times greater than income from foreign trade. The volume of capital exported by all capitalist countries and by such individual countries as the United States, Great Britain, France, and Germany (subsequently West Germany) has increased sharply (see Table 1).
|Table 1. Capital invested abroad (billions of francs)|
|Great Britain||France||Germany||USA||Other countries||Entire capitalist world|
The export of capital takes two forms: entrepreneurial capital and loan capital. The export of capital in the form of entrepreneurial (or operating) capital means the investment of capital in industrial, agricultural, transportation, trade, and other enterprises (direct and portfolio investments). Direct investments are investments primarily in the shares of industrial, trade, and banking enterprises, plantations, and so on that secure full ownership or make possible complete control over their activity. A significant part (about 40 percent for the United States) of all direct investment is carried out through reinvestments. Portfolio investments are capital investments in foreign securities that do not formally give their owners the right to full ownership or complete control over the foreign enterprises. Portfolio investments frequently camouflage the export of capital with a national disguise, out of fear of possible nationalization; such investments appear, for example, as a form of “cooperation” between foreign and national companies. Between 1958 and 1967, while direct US investments in Latin America were increasing 32 percent, portfolio investments increased 2.8 times. Direct investments remain the primary form of the export of capital. In 1968 profit from direct investments was 72 percent of the profit received by the United States from the export of capital and 84 percent of all Great Britain’s profit from the export of capital.
The export of loan capital occurs in the form of short-term credits—that is, those for up to one year (deposits in foreign banks)—and long-term credits (external loans). Inter-governmental loans, a form of the export of capital that arose during World War I (1914-18) under the name inter-Allied debts, play the primary role. At the end of 1947 they constituted 85 percent of the total volume of foreign investments in the form of loan capital, and at the end of 1968 the figure was 59 percent.
As the state monopoly character of imperialism grew stronger the state’s role in the sphere of the export of capital changed. The state is becoming a major exporter of capital. At the same time it guarantees the export of private capital against the commercial and political risk connected with the growth of the anti-imperialist movement in other countries. Sometimes the state acts as a partner of particular monopolies in building enterprises, taking on itself the development of the projects that are most disadvantageous from a commercial point of view. With the aggravated struggle for markets, the export of state capital also stimulates the export of goods, thus performing a function that was formerly carried out entirely by private exporters of capital. Export of capital in the form of loans from international credit institutions has assumed large dimensions, particularly with reference to the International Bank for Reconstruction and Development and its subsidiaries, the International Development Association and the International Finance Corporation, as well as to the regional banks, the Inter-American Development Bank, the Asian Development Bank, and the European Investment Bank.
The export of capital is a primary economic tool utilized by neocolonialism. More than 60 percent of Great Britain’s direct investments are invested within the limits of the former British Empire. Most of France’s foreign investments are in the franc zone. The primary sphere for export of capital from the United States remains the dollar zone—Canada and Latin America. However, the share of this capital has been reduced from 54 percent in 1946 to 43 percent in 1968. At the same time the share of Australia and the countries of Asia and Africa has increased from 11 to 24 percent.
Before and just after World War II the capital exported by monopoly capitalists to the developing countries went primarily to consolidate the agrarian and raw-material structure of their economies. With the disintegration of the colonial empires and the intensified struggle for economic independence in the developing countries, the imperialist powers try to use the export of capital to capture key positions in the leading sectors of the manufacturing industry in these coun-tries. Between 1950 and 1968 the share of direct US investments in the manufacturing industry of the most developed countries of Latin America—Argentina, Brazil, and Mexico—rose from 40 to 67 percent. The share of US investments in the manufacturing industry in the Republic of South Africa rose from 31 to 48 percent. In the countries of the Middle East the share of investments in the manufacturing industry rose from 0.1 to 3.4 percent.
Most of the capital moving from the imperialist powers to the developing countries of Asia, Africa, and Latin America represents export of capital in the form of state capital. Furthermore, of the total sum of state capital that went to these countries during the 1960’s, about 60 percent was for nonrepayable subsidies that are not included in official statistics of the total sum of foreign investments, whereas the remaining 40 percent was for loans. Subsidies and loans have been converted into a tool for the imperialist powers to penetrate the developing countries under the guise of “economic assistance.” State loans to the developing coun-tries significantly surpass the amount of loan capital exported by the private monopolies and are becoming the primary form for exporting state capital. Under the influence of assistance given by the socialist countries, the capitalist powers have been forced to reduce interest rates on loans and extend their periods.
Significant amounts of capital are also exported from certain developed capitalist countries to others and are used by the monopolies of the exporting countries in the struggle for markets and spheres for the application of capital. These transfers grew particularly after World War II, a growth related to the disintegration of imperialism’s colonial system and to the nationalization of foreign enterprises in a number of developing countries.
The scientific-technical revolution that unfolded in the middle of the 20th century created a field for profitable large-scale capital investments in the economies of the developed capitalist countries and called forth important changes in the directions and forms of the export of capital. The monopolies were given an opportunity to extort colossal profits by building enterprises in new sectors of civilian and military production, within both their own countries and other developed capitalist countries. Between 1950 and 1968 the total direct foreign investments of the United States increased from $11.8 billion to $64.8 billion (almost 5.5 times), whereas in Western Europe investments rose from $1.7 billion to $19.4 billion, or 11.4 times. It is primarily private capital that is exported to the developed countries.
The export of capital is developing in an extremely uneven manner, which is a result of the unevenness in the development of the capitalist countries. Whereas Great Britain was first in foreign investments before World War II, after the war the United States took the lead. Foreign investments of the USA now exceed the total foreign investments of all other capitalist countries. Great Britain occupies second place, France is third, and West Germany is fourth.
In the age of imperialism, enormous masses of monetary capital accumulate in a few large capitalist countries. There is extraordinary growth in the stratum of rentiers, that is, people who live by clipping stock coupons and are completely removed from participation in any enterprise at all. The export of capital “still more completely isolates the rentiers from production and sets the seal of parasitism on the whole country that lives by exploiting the labor of certain overseas countries and colonies” (Lenin, ibid., vol. 27, pp. 397-98). Therefore Lenin called the export of capital “parasitism squared” (ibid., vol. 30, p. 164). Whole states are turning into rentiers. “The world has become divided into a handful of usurer states and a vast majority of debtor-states” (ibid., vol. 27, p. 398). The balance of international investments of the capitalist countries—that is, a comparison of the long-term capital invested abroad with foreign capital invested in the given country—will establish whether a given country is a rentier-state or a debtor-state. Thus, on the basis of data from the balance of international investments in 1967, such countries as Switzerland, the Netherlands, Belgium, Sweden, Portugal, and Ireland may be considered as rentier-states, along with the major exporters of capital, namely, the United States, Great Britain, and France. West Germany, Japan, and Italy are rapidly turning into rentier-states. The other countries of the capitalist world are debtor-states.
Capitalist economists view the export of capital as assistance to the developing countries, but the facts show that the rentier-states receive much more capital from the developing countries than they give to them. For example, the export of capital from the United States to Latin America (including economic subsidies) from 1950 to 1968 was $12 billion, while the transfer of interest and dividends to the United States during these same years was $20 billion. The export of capital (including subsidies) to countries of the Middle East was $2 billion, while the transfer of dividends to the United States was $12.5 billion. In granting loans, the capital-exporting countries impose the condition that this capital be used to buy goods that they export, and at monopoly prices. A large part in the export of capital is played by the banks and their divisions established abroad by the rentier nations; they are one of the bulwarks of neocolonialism. The growth in the export of state capital gives the contemporary export of capital a military and police nature. The export of capital is one of the most important foundations of imperialist policy and of the growth in militarism and aggression.
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M. IU. BORTNIK