All the statistics we need to check this prediction are contained in a single table that presents the weighted average annual growth rates of per capita income for QCCs and lagging sovereign countries for three time periods, 1900-1913, 1913-1950 and 1950-1992. [6] The qualifier "lagging" refers to countries whose per capita income in 1900 was 66% or less of the US per capita income; this keeps our sample of countries relatively homogeneous in their economic characteristics. We have growth rates for 12 QCCs in the first period and 13 QCCs in the second and third periods. Although this sample appears small, the QCCs included are the largest in this category, and together their combined population in the three periods is only slightly less than three-fourths of the total population of all QCCs. The average growth rates for the sovereign lagging countries are based on 18 observations in the first period and 22 for the second and third periods. [7]

The story these numbers tell is both strange and true: the bad boys were winning the growth derby. Over the first half of the 20th century, the illiberal, protectionist, debt-repudiating sovereign countries resoundingly trumped the free-trading, budget-balancing, law-and-order QCCs, many of them placed under the direct care of the world's best masters. Over 1900-1913, the sovereign lagging countries outperformed the QCCs by a factor of more than 3:1. Over the next 37 years, which included two World Wars and a depression, the per capita income in the QCCs declined by 10% while the sovereign lagging countries notched an increase of 64% in their per capita income. For the half-century 1900-1950, the per capita income of sovereign lagging countries grew at the average annual rate of 1.43%, while the QCCs declined at the rate of 0.08%. [8]

A comparison of the mean average annual growth rates for the sovereign lagging countries and the QCCs yields similar results. The mean growth rates for the sovereign countries over 1900-1913 and 1913-1950 were 1.67% and 1.34%; the corresponding growth rates for the QCCs were 0.81% and -0.02%. In addition, over the first period, only three of the 18 sovereign countries grew at rates below the mean growth rate for the QCCs; over the second period, there was no sovereign country that grew at a rate below the mean for the QCCs. The differences in the growth rates for the two sets of countries are large and systematic. [9]

At this stage, the orthodox economists are likely to blame the QCCs for their poor growth record. There was nothing wrong with the Civilizing Mission or orthodox policies; together, they could not turn these countries around because of the intractable barriers to growth presented by their culture, religion and race. The negative impact of these barriers had to be very strong indeed, much stronger than the dual advantage of their orthodox policies and superior governance. Is there a way to disprove this bunkum?

Fortunately, we have the numbers that will do this - the numbers in the fourth column of our table. In the 42 years after 1950, the terminal point for the colonial period, the former QCCs begin to turn a new leaf. Suddenly, out of the bog of economic decline they sprint into the territory of rapid growth. From a weighted average annual growth rate of -0.27% over the previous 37 years, they are now bounding at nearly 3% per annum, even outpacing the old sovereign lagging countries, who grew at 2.58% per annum. What happened to all the "tenacious" barriers to growth that had held them back for centuries? Did they suddenly vanish in 1950?

The apologists of orthodoxy are unlikely to pass up a third argument. The accelerated growth in the former QCCs, they might argue, had nothing to do with their new sovereignty; this was a period of rapid growth for all countries. Yes, but this cannot save the day for them. With their "tenacious" barriers to growth still in place, the growth record of the QCCs would still lag behind that of the old sovereign lagging countries'; but now the reverse was true. There is an additional problem. Since the former QCCs had decisively abandoned their orthodox policies, this should have worked to nullify the improved growth conditions, leaving them with little or no growth as before.

That leaves us still looking for answers. Is it possible, just possible, that the long-stagnant QCCs turned into growth sprinters in the 1950s because they had repatriated Europe's Civilizing Mission and they were now free to choose the "wrong" economic policies? Over much of 1950-1992, the former QCCs in our sample engaged in economic planning, undertook public investments in infrastructure and industrial activities, operated overvalued domestic currencies, rationed foreign exchange, imposed protectionist tariffs, established development banks in the industrial and agricultural sectors, sold underpriced utilities to their new industries, sought to keep out foreign investments, etc. Indeed, some of them were assisted in their planning exercises by economic experts from the US Agency for International Development. Is it possible that these "wrong" policies were right for economies that had been underdeveloped by the Civilizing Mission and its orthodox policies?

Are these numbers going to bring some humility to the unctuous purveyors of European Civilization? Will they now admit that the Civilizing Mission failed the peoples of the QCCs, humiliating them and holding them back for centuries? Will they admit that all this was just a cover for Europe's true business in the colonies, which was to open them up to manipulation for the benefit of its privileged classes? Will this admission then be followed by contrition, by calls for compensatory adjustments in the global system so that the transfers can now flow in the opposite direction - from the rich to the poor countries?

The purveyors of ideologies are not defeated by contrary facts. In the surrealist world of economic orthodoxy, if the facts fail to support established theory that is too bad for the facts. The theory reigns supreme. The ideologues stop peddling their merchandise only when their paymasters are defeated. For a few decades after World War II, their capitalist paymasters had been checked, put on notice. This was the result of two self-mutilating wars among the colonial powers, the offspring of rivalries between the old and aspiring industrial powers. In turn, this produced anti-capitalist regimes in two major countries - Russia and China - and national-liberation movements in all the colonies and quasi-colonies. Together, these developments seriously weakened the centralizing power of the capitalist system, its ability to concentrate power in a few European centers.

This retreat of global capital opened up a window of opportunity for countries at the Periphery. Quickly, the former colonies took matters into their own hands - protecting manufactures, creating development banks, restricting foreign ownership, offering better technology to farmers, investing in utilities and infrastructure, and opening schools. In other words, the QCCs - together with Latin America - sought to create economic and political arrangements that would allow them to resist the centralizing power of Core capital. Thus was created the Third World, an intermediate economic zone between the capitalist Core and the communist sphere, often seeking advantages from one or both by playing them off against each other. The creation of the Third World produced some striking results: many of the long-stagnant former QCCs began to advance, industrialize and develop an indigenous capitalist base. Understandably, Core capital did not look too kindly upon the nascent centers of capital developing Third World.

Although checked, the capitalist Cores - now led by the United States - were constantly seeking to restore the centralizing tendencies of the capitalist system through the covert activities of their intelligence agencies, foreign aid, military assistance and training programs, economic advisers, and the steady penetration of Third World economies by Core capital. Success came sooner than anyone had expected, in the early 1980s. It came at a time when the Third World, seemingly at the height of its power, was pressing its demands for a New International Economic Order.

The oil crisis of 1973 provided the trigger that shifted the dismantling of the Third World into high gear. The Arab members of the Organization of Petroleum Exporting Countries (OPEC), awash in dollars, recycled them to Western banks, which started the first wave of commercial lending to the Periphery since the Great Depression. In time, as Third World debts accumulated, the capitalist Core could act swiftly - and collectively, through the World Bank and IMF - to restore its old power over the Periphery. This had happened before, during the 19th century, when Britain and France created and manipulated debt crises in the Open Door countries to take over their finances. It was now repeated, starting with several Latin American countries during the 1980s, when they were unable to service their foreign debts. In short order, the success in Latin America would be extended to all the countries in the Periphery.

After a short interregnum, lasting roughly from the 1950s to the 1970s, the Civilizing Mission was back in force. Its mission was the same as before - to ensure that the economic and political evolution of the Periphery was owned and directed from the Center. The economic modus operandi too was the same as before - take down the nationalist barriers that countries at the Periphery had erected to nurture indigenous capital and technology. The dismantling of the Third World was formalized by the launching of the World Trade Organization - the new and more comprehensive Open Door treaty - imposed collectively by Core capital on all the Periphery.

In its latest phase, the Civilizing Mission has a different political modus operandi. The Core capitalist powers are not fighting one another to acquire monopoly control over segments of the Periphery. This is not desirable anymore. In the past, their rivalries had proved very costly to Core capital. Moreover, as major corporations from Core countries collaborate, the old rivalries are being replaced by cooperative relationships. Equally, colonization is not necessary for exercising control. The cumulative penetration of the Periphery by Core capital has produced an indigenous privileged class whose interests are closely interwoven with that of Core capital - and, more narrowly, with that of the United States. Core capital can now safely rely on this partnership to manage the affairs of the Periphery. It is quite safe now to allow the elites in the Periphery - barring segments of the Islamic world - to compete for the favors of Core capital. The global system now has the power to neutralize populist governments in the Periphery, should they manage to get elected. Of course, it can always use the solution of the last resort - a Central Intelligence Agency-instigated right-wing military coup. If that fails, there are sanctions, missile strikes and, finally, invasion, all of them illegal but duly sanctified by the Security Council.

In closing, it is worth pointing out that while Civilizing Mission II has produced the predictable rollback of previous gains across much of the Periphery, this latest phase of global capitalism is likely to produce some new results. [10] In its previous phase, stretching from 1800-1950, global capitalism was characterized by centralization of power, capital and manufactures in a few capitalist Cores. All three tendencies were temporarily reversed or weakened in the three decades that followed - the three decades of decentralization. Although the power to define the global system has once again been recentralized since the 1970s, leading progressively to the erosion of indigenous capitalist bases in most countries in the Periphery, it appears that the indigenous capitalist centers in some of these countries were sufficiently developed to compete with Core capital even on the latter's terms. This means that several new centers of capital and technology have now been established outside of the old Cores. Some of these centers have a very large economic base - as in China and possibly India. If these centers can sustain their growth momentum and autonomy, they are likely to produce forces that will both disrupt and stabilize global capitalism. I will attempt to offer the briefest sketch of these new forces.

The growth of the new capitalist centers - especially in China and India - has produced an altogether new situation in the global economy. There now exist two pools of comparable labor skills in the new centers and the old Cores, divided by large gaps in the relevant wages, and still separated by strong barriers to their mobility. In itself, this represents a serious disequilibrium in the global economy, the first time such a disequilibrium has emerged on this scale in the markets for medium and high-end labor skills. This disequilibrium contains vast ramifications for the political economy of global capitalism. I can only itemize these ramifications here; their elaboration would require another essay.

First, the disequilibrium in global markets for labor skills will continue to fuel growth in the new centers, directing their capital increasingly to high value-added activities; in the big new centers, such as China and India, this growth can continue for a long time because of their nearly inexhaustible reserves of labor.

Second, the growth of the new centers has been squeezing profits in high value-added industries in the old Cores, forcing them to relocate to the new centers. A direct result of this is a downward pressure on wages of skilled labor in the old Cores.

Third, as the new centers continue to grow and as they continue to upgrade their skills, the competition between the two pools of labor will escalate to affect ever higher skills. This means that the downward pressure on skilled wages in the old Cores is unlikely to be compensated by the upgrading of labor skills. We may be looking at a full-spectrum decline in wages in the old Cores.

Fourth, since the new communications technology is rapidly extending the range of services that are internationally tradable, the forces of wage convergence just described will be felt over a growing range of activities, and this will tend to accelerate the speed at which wage convergence takes place.

Fifth, taken together, these new dynamics are producing an altogether new phenomenon in the history of global capitalism: a decline in the real wages of labor in the capitalist Cores, and this is sure to be accompanied by erosion of many of the gains in working conditions that labor in the Cores had won in the past century.

Sixth, these developments are producing a growing trade imbalance between the new centers and old Cores because the availability of low-wage but efficient skills in the new centers gives them a long-term competitive advantage in a wide and growing range of activities. The imbalance is likely to be largest between the United States and the new centers as long as the US dollar remains the world's leading reserve currency.

Seventh, the downward pressure on wages and working conditions may produce a variety of political consequences in the old Cores: protectionism, growing class consciousness, erosion of democracy, and even class warfare. At the international level, the old Cores - in particular, the US - may respond to the crisis by starting wars to convert India and China into the equivalents of Brazil and Mexico.

Eighth, in this new phase of capitalist development, the workers in the old Cores may be offered a second chance to launch a revolution against capitalist control of the economy.

References

1. Ralph Raico, "American Foreign Policy: The Turning Point, 1898-1919", Part 3 (Fairfax, VI: The Future of Freedom Foundation, April 1995).

2. "Europe" here means primarily Western Europe and its overseas offshoots. The nearest work to such a general history is Samir Amin, Eurocentrism (New York: Monthly Review Press, 1989). In addition, Michael Adas, Machines as the Measure of Men (Ithaca, New York: Cornell University Press, 1989) discusses how Europe's growing mechanical superiority produced its racism.

3. Robert C Tucker, ed, The Marx-Engels Reader (New York: W W Norton and Co, 1978): 657.

4. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed Edwin Cannan (London: Methuen and Co Ltd, 1904).

5. See M Shahid Alam, Poverty from the Wealth of Nations (Macmillan: 2000); 111-115. These sovereign countries were located in Europe, North America (including Mexico after 1910), South America, Japan and South Africa.

6. The data in this table are from Angus Maddison, Monitoring the World Economy, 1820-1992 (Paris: OECD, 1995).

7. For a list of these countries - mostly in Eastern Europe and South America - see Alam (2000): 188-189.

8. Alam (2000): 189.

9. If we use regression analysis to control for two determinants of growth, viz, initial per capita income and adult literacy rates, the sovereignty differential in growth - the growth advantage enjoyed by sovereign countries over QCCs because of their sovereignty - for our sample countries is 1.60% per annum over 1900-1950. In addition, the interested reader may check out Alam (2000: chapter 6) for additional results on sovereignty differentials in levels of export orientation, industrialization, adult literacy rates and years of education in the labor force - all estimated for the year 1960. The sovereignty differentials for each of these variables are very large, statistically significant and robust.

10. I discuss the impact of Civilizing Mission II in "Pauperizing the Periphery", Counterpunch.Org, June 7, 2003.

M Shahid Alam is professor of economics at Northeastern University, Boston. Visit his website at http://msalam.net. He may be reached at m.alam@neu.edu.

(Copyright 2004 M Shahid Alam.)

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