The Brooklyn Rail

The following interview was conducted by Komite in English and subsequently translated into Turkish, to be published on their web platform in two parts.¹ Komite is a Turkish collective of socialist militants who call for a break with the corrupt and inefficient institutions of the existing Turkish labor movement, mobilizing class politics to militate against the sweatshop regime of neoliberal globalization and the political oppression conducted by the current government. They work closely with newly established labor unions in the mining, logistics, and agribusiness sectors. The interview below follows an earlier one focusing on the author’s book Hinterland, conducted in 2021.² The impetus for this interview was an academic paper by the author on the question of “premature deindustrialization” and Chinese outward investment.³ The paper was published earlier this year and summarized a portion of the author’s dissertation research.⁴ Part two of the interview will follow next month.

Komite (Rail): As a communist geographer, you have spent time in China and Tanzania doing field work on the mobility of capital, labor movements, and urban transformation. Can you talk a little bit about what this looks like and what your focus has been?

Phil Neel: Specifically, I’ve focused on a few “territorial industrial complexes” that either act as important centers within the planetary production system or are poised to emerge as important centers in the future. These are places where I’ve lived, worked, and conducted field studies. One thing about communist geography that I really emphasize is reviving the classic geographic field survey—which basically just means going out and actually looking at the places you’re researching and talking to the people who live and work there, getting a sense of the “vibe,” for lack of a better word, and then combining this with the abstract analysis of datasets and scholarly literature to create a coherent narrative. This is very important to communist theory because the whole point of the “critique of political economy” is that you can never just focus on “economic” questions.⁵ You’re always talking about social forces and these social forces always involve the material formation of subjectivity and the material impact of subjective action. And this embedded style of inquiry is really the only way you can get a true sense of these subjective dimensions.

So I’ve studied what’s now called the Greater Bay Area region in Southern China, which includes the Pearl River Delta (PRD) and Hong Kong. Technically the world’s largest megacity—a massive exploded urban area that encompasses major centers such as Guangzhou, Shenzhen, Dongguan, Foshan, and Zhuhai—the PRD alone has a GDP larger than that of Indonesia and is still the single most important industrial and trade complex in the world, accounting for something like a quarter of all of Chinese exports (and Chinese exports compose something like fourteen or fifteen percent of the global total). To put that in perspective: if you were to appraise all the exports flowing out of this single river delta as if it were its own country, it would be basically tied with Japan and the Netherlands for fourth place (third place would go to Germany, second to the US, and first place to the remainder of China). The entire planetary production complex has many centers of gravity, but if you had to choose a single region that acts as something like the heart of global manufacturing, the PRD would probably be it.

Of course, these goods are flowing within planetary supply chains within which Chinese firms—whether we’re talking large monopoly steelmakers or smaller contract workshops in sectors like garments—mostly just occupy the middle rungs, with much of the value flowing through these industrial networks passing through a nested hierarchy of subcontracting that is effectively controlled by what are called “lead firms,” which are still predominantly (though not exclusively) headquartered in the world’s richest countries.⁶ These companies are the major brand names (think Nike), the big retailers (think Wal-Mart), the firms that control the IP for the most advanced technologies (think Qualcomm), and of course the big financial interests channeling and managing capital in the abstract (think JP Morgan Chase or “asset managers” like Blackrock). The Greater Bay Area is also an extremely important zone for industrial upgrading, in which firms adopt new organizational practices (especially greater consolidation) and new technical systems (especially more automated production lines and a pivot to more complex products) in order to claw back more of the total profit passing through the chain of production and elevate their position within this industrial hierarchy. They also, of course, relocate to areas with cheaper labor, cheaper land, or other basic cost-saving features. So now the Greater Bay Area is not so much just a production hub, but also a center for the headquarters, R&D centers, and advanced manufacturing lines of Chinese firms attempting to climb into higher-value segments of production. Shenzhen, for instance, has been trying to rebrand itself as the “Silicon Valley of Hardware,” and Guangdong province leads the nationwide trend in automation.

Basically, there is this intense competitive struggle between different individual capitals and between various factions of capital to appropriate more of the total social value flowing through these planetary production networks, which then leads to overcapacity in these sectors, further intensifying competition. This then induces technical change, organizational consolidation, and industrial relocation—all of which constantly reshapes the character of these “territorial industrial complexes” where tens of millions of people live and work. Marx described this sort of inter-capitalist conflict as a struggle between “hostile brothers” dividing up their plunder. This is a great description, because it captures the idea that this is a real conflict, but also a fraternal one. Ultimately, these capitals have a shared class interest, in the sense that they’re the ones who get to appropriate the plunder, not the ones forced to produce it. So what we see in these supply chains is actually a simultaneously competitive and cooperative struggle, where each individual firm and all these blocs of capital (sectoral, regional, national, etc.) are both dependent on the others and in competition with them, even while they all share the same fraternal class interest when it comes to things like disciplining labor and making sure the basic infrastructure of the market is functioning smoothly.

This complicated, competitive form of codependence is well illustrated by industries like electronics, where you have a lead “monopsony” firm like Apple,⁷ headquartered in the US, which owns all the IP and does the advanced design but subcontracts actual production to a massive contract manufacturing monopoly like Foxconn, headquartered in Taiwan, which then buys from other higher-tech component suppliers headquartered in places like Japan and subcontracts lower-end component work to smaller manufacturers that you may have never heard of like Lens Technology, Longcheer, Huaqin, GoerTek, AAC Technologies, Luxshare Precision, all headquartered in mainland China, who may be sourcing components or farming out piecework to even smaller firms both in China and elsewhere, as well as buying raw materials from other big upstream suppliers. The cooperative element is visible in this interdependence. And if you can secure a good, reliable dependence on a major lead firm, you will benefit enormously. The monopsony that Apple held over the smartphone market is basically what enabled Foxconn to get so large. But the competitive element also becomes immediately evident. Foxconn is now such an enormous monopoly power that it can throw around more of its weight to secure a greater share of the total profit. And then of course Foxconn’s own subcontracting helps to feed these lower-order manufacturers based in mainland China, which can then become monopolies in their own right and are now even stealing big contracts from Foxconn.

So now you have this strange situation where a company like Apple is still certainly in a privileged position at the top of the supply chain, but has enormous difficulty diversifying its sourcing away from a small handful of large contract manufacturers such as Foxconn, all while these “original design manufacturers” (ODMs) such as Longcheer or Huaqin are now designing and producing most of the world’s lower-end smartphones as “white label” products, which companies can just buy in bulk and slap their own brand name on. And this ODM industry is what allowed Chinese brand-name smartphones like Xiaomi, Huawei, OPPO, Vivo, and Tecno to gain such massive influence in both the domestic market and in the markets of poorer countries—markets that were initially too small to be lucrative for the lead firms. So the most intense competition is lateral competition between these lower-order contract manufacturers, operating at a point in the supply chain where profits are razor-thin and where there is immense overcapacity, in the sense that you have too many firms able to do the same work competing for too few major contracts. These firms then grow by defeating and swallowing one another and by expanding into marginal markets in poorer areas, which then enables them to start competing with the higher-order contract manufacturers further up the chain. Despite the fact that so much focus gets placed on the supposed “trade war” between the US and China, then, the reality is that most of the intense, head-on competition is actually happening slightly lower down in the supply chain, as mainland Chinese companies gain market share or even lead hostile takeovers and industrial espionage efforts against firms headquartered in places like Taiwan or South Korea.

With all that in mind, I’ve also done quite a bit of research in some of the places where these lead firms are headquartered, such as the Cascadia megaregion in the US (which technically extends into Canada)—and which I won’t talk about too much here, but discuss at length in my book Hinterland⁸—and in areas that are supposedly emerging industrial centers further down the hierarchy of global value chains, including the eastern seaboard of Thailand and, most recently, Dar es Salaam, Tanzania. These areas are crucial for understanding the future geography of production and the prospects of capitalist society more generally because, as that competitive-cooperative struggle between various capitals plays out within global supply chains, there is a continual incentive to relocate more production to cheaper labor markets. This fact has produced the idea that industrialization proceeds through a “flying geese” pattern, in which the leading “geese” like Japan shed lower-end industries to places like South Korea and Taiwan, which then shed them to places like China, inducing development wherever those industries land. As I’ll explain below, this is not exactly correct, but it does capture the basic pattern of inter-industrial competition and the idea that “development” follows from these investment decisions expresses the basic fact that industry is always anchored in specific places through fixed capital (things like plant, equipment, and infrastructure) which then literally produces these territories that appear to us as startling spurts of urban growth. But beneath all the migration and the construction of residential complexes lies the humming engine of the planetary factory.

Rail: Chinese investment in Africa is an important yet insufficiently investigated issue of our times. How does this relationship shape both places? What do you see as strictly site-specific or conjunctural in these two countries? And how do they relate to the global capital flux on a greater scale?

Neel: All of the dynamics I just mentioned obviously create these major dramas over where, exactly, the new centers of industry will be. For the past decade there’s been a lot of talk about industrialization in Africa in general and in East Africa specifically, with a lot of claims that countries like Ethiopia are going to be the next big export centers and that the entire region could even become something like the “next factory of the world.”⁹ But, in general, proximity is still extremely important. So it’s not coincidental that industrialization has followed an arc around the littoral zones of the Pacific Rim—and specifically bays with deepwater ports—jumping from Tokyo to Taipei, Seoul, and Hong Kong and then from there to Shanghai, Shenzhen and Beijing, and now to Hanoi, Phnom Penh, and Jakarta. At each stage, established supply chains tend to seed new centers in nearer locations rather than ones too far afield—though “near” here should be understood mostly in terms of “logistical” distance, which is why so much industry is centered on these maritime amenities like river deltas and why it takes such enormous infrastructural investment to make inland production profitable even if labor is cheaper.

And the cost calculus is obviously not fixed, either. Infrastructural investments change the basic equations, but so do things like economic crises, demographic trends, and competition from other areas. For example, prior to the Asian Financial Crisis, it was widely predicted that countries in Southeast Asia—especially Thailand and Malaysia—would be the next “Asian Tiger” economies, since they started to see these massive booms of export-led development beginning in the eighties. But a whole confluence of events ensured that this would not ultimately come to pass, with countries like Thailand falling into what’s now called the “middle-income trap.” The crisis in 1998 played a major role here, but China’s industrial ascent was probably the biggest single structural factor behind the stunting of the boom in Southeast Asia. So it’s somewhat ironic that Chinese capital has now become increasingly important to the current industrial boom in the region. In fact, while the image of a “Global China” is true in trade terms, when it comes to investment, most Chinese capital overseas goes into corporate acquisitions in the wealthy countries, and, of the portion that is greenfield investment in poorer places, the vast majority remains within Asia and is especially concentrated in areas that either share a border with China or are not that far in maritime distance: Laos, Vietnam, Thailand, Indonesia, Malaysia, and Cambodia, Pakistan and Kazakhstan.

And these histories should give us pause when we hear news reports about how countries in Africa are now on the verge of their own “economic miracles,” successfully constructing developmental states and attracting major infrastructural and industrial investments. In part, I conducted research in Dar es Salaam to “ground truth” available data and appraise some of the major claims made in the media about Chinese investment in Africa more generally. Dar es Salaam was a prime location for this, because Tanzania lies at a good midpoint between more intensive developmental states like Ethiopia and the countries with more traditional dependencies on one or two key natural resources, such as copper in Zambia or oil in Angola. Meanwhile, political stability and a moderately active developmental regime in the form of the ruling party (Chama Cha Mapinduzi, or CCM) ensure that there aren’t particularly volatile civil conflicts poised to threaten developmental schemes, even if the CCM itself tends to oscillate between vaguely populist and more conventionally “neoliberal” forms of governance that alternately constrain and encourage foreign investment. Tanzania is also the site of two supposedly “Chinese” megaprojects: a completely new deepwater port and associated trade zone in Bagamoyo, which was set to be the largest port in East Africa when announced; and the Julius Nyerere Hydropower Station on the Rufiji river, which will be the largest power station in East Africa. But both of these turned out to be deceptive, which I’ll explain in a moment.

The city itself is also an amazing case study. Dar es Salaam is not only the industrial and economic center of Tanzania but has also been one of the fastest growing cities in the world and will likely grow to megacity status sometime in the next few decades as it sprawls out into the surrounding Pwani region (which saw something like six percent average annual population growth between the 2012 and 2022 censuses). Its historic integration within Indian Ocean commercial networks also means that the city is in a prime location if the development of territorial industrial complexes continues to lurch westward from the Pacific littoral to the Indian Ocean. Meanwhile, Chinese firms have played a role in the rapid construction of new urban infrastructure, including a series of prominent skyscrapers that have completely reshaped Dar es Salaam’s skyline over the past fifteen years. But even when you look at real estate and roadbuilding, the picture is actually much more complicated, development is far more muted than you might expect, and the exact role of Chinese capital is often—in fact, almost always—portrayed incorrectly. Probably the most common error is that people think construction projects are “Chinese” projects just because they see a lot of Chinese workers on-site or even just some construction equipment from China. While it’s true that Chinese construction and engineering contractors are extremely important when it comes to who is actually doing the work of constructing dams, roads, railway lines, and all kinds of residential and commercial buildings in poorer places, it’s also important not to confuse winning a construction contract with providing the capital for the entire construction project.¹⁰

And exaggeration is even more extreme within sectors like manufacturing and warehousing. These are the sectors I was looking at in my field survey (conducted in 2020, right before the pandemic), where I was basically just walking around all the city’s major industrial districts, interviewing workers and residents in Swahili—and periodically some workers or managers in Chinese—asking about the size of different factories, what they produced, and who owned them. Based on reports in the press and the general tone of the academic literature, I was expecting to find far more Chinese companies than I did, and I assumed that the firms that I did find would be larger. But most Chinese manufacturing and warehousing firms in the city were small private companies, with just a few bigger ones, and basically only one subsidiary of a major conglomerate.¹¹ Similarly, I was expecting a lot of the big infrastructural projects going on in the city—the construction of a new standard-gauge railway line, two major bridges, and any number of roads—to be financed by Chinese capital. In fact, this was not the case at all. The New Selander Bridge, for example, was jointly financed by the South Korean Economic Development Co-operation Fund (South Korea’s major developmental aid institution) and the Tanzanian government (which uses money not from tax dollars but from sovereign debt mostly financed by traditional multilateral institutions like the IMF and World Bank), and the lead contractor was a South Korean engineering firm. But everyone thought it was a “Chinese” project because the sub-contractor tasked with much of the physical construction was China Railway Seventh Group. The Nyerere Hydropower Station is the exact same story: financed by the Tanzanian government, with early feasibility, design and environmental impact studies by a Brazilian firm, ultimately handed over to two Egyptian contractors, but because one of the major sub-contractors is a Chinese company, it’s often presented as a “Chinese” project.

And those are at least projects that exist! The majority of announced projects simply never happen. But they get reported on in the media as if they’re done deals. It’s absurd. Sort of like pretending that you’ve just added thousands of dollars to your net worth whenever a bank sends you some junk mail saying that you’re “pre-approved” for a credit card. The Bagamoyo Port is representative of these projects: it was announced in the early 2010s as a “Chinese” project, despite the initial plan being to source funding from both China and Oman, in addition to the Tanzanian government. As soon as it was announced, it stalled. It has been more than a decade now and no ground has ever been broken. You can go to Bagamoyo whenever you want—it’s a beautiful historic town—and clearly see that there is no megaport there, and no megaport being built. And now the new president of Tanzania is talking about reviving the project, but no one wants to fund it.

There are tons of projects like this, and one of the persistent problems in the data is that many sources that ostensibly record “Chinese investment” are actually just listing all these announced projects. Many of these stories are just outright lies—stuff that would be basically unprintable in any other context, such as wild claims that China planned to conduct widespread land grabs and even settle thousands of peasants in Mozambique.¹² So, in this sense, the “Belt and Road” is mostly a mirage. It simply does not exist in the way that people talk about it. But the local media in many African countries, the big media outlets in the US and EU, and the Chinese media all have different vested interests in presenting this image of a massive, state-led developmental project conducted as some sort of grand geopolitical strategy.¹³ In Chinese media it’s presented as a good thing (as “win-win development”), in US and European media it’s presented as an evil threat (with all the orientalist undertones you’d expect), and in African media it can be either, depending on which local political faction a given news outlet supports—because the image of Chinese investment and influence is often an important tool mobilized within local electoral campaigns.

And even the sectors where Chinese contractors are very active, such as infrastructure, are hardly dominated by “Chinese” projects, but are instead the product of complex chains of international financing and often serve the needs of international capital first and foremost. The building boom in Dar es Salaam, for example, has really not been attuned to local needs, because the vast majority of the population migrating to the city cannot afford the apartments that are being built in these big multi-story residential complexes—and as a result, on any given night when you go out and look at this skyline, most of the windows are dark, but beneath and beyond them there is this soft glow from the sprawling “uswahilini” (which are single-story, makeshift “slum” settlements composed of largely hand-built construction) where most people actually live. So the building boom is better understood as an outlet for surplus real-estate capital (and the affiliated construction and engineering work) being crowded out of bubbles elsewhere.

Ultimately, all of these misconceptions serve to disguise many of the more concrete trends in Tanzania and in Africa more generally, in which more traditional forms of international hierarchy persist: most funding for infrastructure construction in Africa still comes from familiar sources, such as national governments taking out IMF loans; the big natural resource firms are still largely headquartered in the wealthiest countries or in proximate sub-imperial centers like South Africa; very traditional neocolonial relationships still exist in places like Francophone West Africa, where France still plays its role in controlling currencies¹⁴ and conducting mercenary military actions to secure supplies of uranium; and the biggest foreign military ventures are all, of course, linked to the US and are justified in the language of anti-terrorism and humanitarianism. Chinese firms operate in Africa within these existing hierarchies, not against them.

And the bulk of Chinese influence is therefore not found in developmental aid, FDI, or even construction contracting, but instead precisely where you’d expect it to be: in the dominance of Chinese firms within the middle and lower tiers of global industrial supply chains, which means both that Chinese goods are overrepresented in the composition of manufactured goods and that the Chinese economy exerts a disproportionate impact on global commodities markets—i.e. goods like copper, oil, agricultural products, etc. This then creates trade dependencies in both these directions: dependence on Chinese sellers to supply manufactures and dependence on Chinese buyers to clear stocks of core commodities. Much of the supposed industrial boom that took place in Africa in the first two decades of the century therefore is better described as a form of “shadow industrialization” linked to the global commodities supercycle that was driven by the Chinese urban and infrastructural boom.¹⁵ And a similar phenomenon followed from the gradual dominance of Chinese manufactures within African consumer markets, which created a shadow boom in sectors like logistics, wholesale trade, and retail. In the Kariakoo market district in Dar es Salaam, you can find hundreds of young Tanzanians who make a living traveling back and forth from Guangzhou, buying garments from these big wholesale malls (which I also visited while living in the city in the mid-2010s, they’re fascinating places). So it’s no coincidence that Chinese loans, developmental aid, and FDI all just happened to plateau and then decline almost exactly in line with the commodities boom, leaving a trade deficit in their wake since most places are still dependent on imports of manufactured goods from China.

At the level of capital flows, then, China has actually been becoming much less important in most African countries, even while it remains central as a trade partner. Many of the traditional colonial patterns also remain extremely relevant, and these have little to do with China. For example, trade and finance links with South Asia and the Arab World remain central in many former British colonies, and South Africa has continued to play its “sub-imperial” role as a regional power.¹⁶ Meanwhile, the rapid economic ascent of Saudi Arabia, the UAE, and, to a lesser extent, Oman, Turkey, and Egypt, have seen these countries often playing far more important roles within East Africa than China does. This influence is multifaceted, as well, ranging from the remittances of East African “guest workers” in the gulf states (subject to some of the worst forms of brutality, verging on literal enslavement), to large-scale infrastructural investment and construction contracting, to vicious forms of geopolitical intervention—as is currently visible in Saudi and Emirati influence in Sudan, which is becoming something like a proxy war echoing the conflict in Yemen. This is sort of an extreme case. Most of this influence is much more mundane. For example, while I was living in Dar es Salaam, probably one of the most prominent large infrastructural projects under construction was the Standard Gauge Rail being built in the south of the city by a Turkish construction contractor (Yapi Merkezi) working alongside a Portuguese firm (Mota-Engil). So whenever you went out on the road toward the airport you had to go under this big elevated construction site that was flying the Turkish flag. And beneath all of this international influence we also have to remember that smaller-scale domestic capitalists and those from neighboring countries also play an important role. Kenyan construction firms are probably just as important in Tanzania as Chinese ones, for example. And the biggest industrial interests in the country are the Bakhresa Group and MeTL Group, both Tanzanian family businesses.

Rail: In your article “Broken Circle” you wrote about the question of “premature deindustrialization” in both China and Tanzania.¹⁷ Seemingly, in many places today, we see a fall in the agricultural population and a rise in the population that work in the services sector while the employment in the industrial sector is stagnant or has a relatively small increase. From a Marxist point of view, how can we analyze this phenomenon? What does it say about the global composition of capital and labor?

Neel: At root, it’s really just a confirmation of some of the most basic points that Marx makes in his critique of political economy: firms are induced to constantly revolutionize the technical process of production to ensure continued profits in the face of both competition from other firms and the ongoing class struggle on the shopfloor, and this then means that, over time, you’re going to see more people cast out of the core productive industries. But these people are still proletarians, they still need money to survive. And the process doesn’t actually decrease competitive pressure within industry. Profit margins continue to narrow, overcapacity develops, new monopolies emerge, and you see this build-up of surplus capital with few stable and profitable outlets to absorb it. You can pour that excess capital into speculative ventures, into real estate, into infrastructure, but eventually doing so gives diminishing returns and inflates these huge debt bubbles.¹⁸ The present situation in China is obviously a case in point. And beneath all this, the underlying trend continues. Marx literally calls it the “general law of capitalist accumulation,” describing the tendency for a “surplus population” to accrue alongside surplus capital. Traditional models of development tend to break down in the face of this reality.¹⁹

This surplus population doesn’t grow at the expense of social wealth or productivity but in line with it—in other words this is not a theory of absolute “immiseration,” the stalling of development, or some final crisis that comes to break the system once and for all. Instead, the surplus population increases because of economic growth and development. The bigger the extent and growth of capital at the entire global scale and the higher the productivity of industry as a whole, the larger the surplus population will be. This is true both absolutely, because obviously a large labor force will have a large “reserve army” of un- and underemployed people, but also relatively, because competition drives technical change within the process of production, ensuring that fewer people need to be employed in industry to produce the same quantity of goods. And this is the basic cause of what the conventional economic literature calls “premature deindustrialization.”

The key thing to understand is that this is deindustrialization of employment, but not necessarily output. So even in areas that are successfully attracting more export industries, there is often not an equal increase in formal industrial employment. And that’s because a company opening a new factory somewhere is usually going to need to install a plant and equipment that meet the prevailing technical level of the industry—otherwise they won’t be cost-competitive on global markets, even if their labor is cheaper. So when firms open new facilities in even very low-cost countries like Ethiopia, these facilities are going to be more mechanized than they would have been in the past. This then produces a divergence between the share of industry in total output and the share of industry in total employment (see the two charts below) and this divergence becomes more extreme over time as the technical standards become more complex within manufacturing as a whole. If you view this at the global scale over the long run, then, deindustrialization of employment occurs at lower points of per capita GDP and the peak of industrial employment tends to be lower in each new spurt of industrialization, so that many countries now “deindustrialize” before they ever have widespread industrial employment. Even the “exceptions” that see the strongest industrial booms see them peak faster and employ a smaller share of the total population at their height.

So China is not actually a real exception, as should now be obvious. But the Chinese case does illustrate another important part of this trend: as competition and overcapacity intensify, the competition to become the next site for industrialization becomes an increasingly zero-sum affair. Earlier I mentioned the Asian Financial Crisis and the bursting of the bubbles that followed the industrial boom in places like Thailand and Malaysia. That’s a good illustration of the basic point, because we see regions like the PRD essentially growing at the expense of places like Thailand’s eastern seaboard (this competition took off in the 1990s, intensified in the 2000s, and slowed a bit in the 2010s). And Thailand is a very good case study here because, under the Thaksin administration in the early 2000s, the country pursued “developmental” programs that tried to make industry more competitive, built a lot of infrastructure, and dumped various forms of stimulus into different segments of the economy. This successfully restored growth to moderate levels, but didn’t come close to reigniting the engine of the export industry in the face of Chinese competition. So, today, you now have new centers rising in places like the Red River Delta in Vietnam and these do drive new seemingly “exceptional” cases where formal industrial employment increases. But we can expect this employment to peak more quickly and at a lower overall level than it did in China, and we can also clearly see that these few cases of “successful” industrialization are simply the victorious minority that, in their very contrast, help to illustrate the conditions that prevail for less successful majority. Their growth ensures that industrial employment will be lower elsewhere.

For conventional economists, this sort of deindustrialization is “premature” because there is supposed to be a fixed process of maturation that all economies go through in the process of growth.²⁰ In other words, it’s an exception or aberration that then has to be addressed by various policies designed to exert national developmental interests both in and against so-called “neoliberal” globalization in order to ensure that structural development is not “stunted” by the inequalities built into the global market. In this literature, deindustrialization and globalization are often linked to the rise of populism. Thus, many of these economists now argue for the revival of industrial policy, selectively increasing tariffs, and mobilizing monetary policy for developmentalist ends. This is supposed to both enhance the competitiveness of domestic industry and ward off the specter of populism by reviving certain classic features of liberal governance that the “neoliberal” ideological norm had disavowed, including many supposedly “Keynesian” policies.²¹ And this, in turn, has generated a big discussion about the “death of neoliberalism” and “deglobalization.” But of course all those things are overblown and there was really never that big a difference between the “neoliberal” order and those that preceded it, with each period of economic policy simply reiterating the same basic capitalist imperatives in slightly different contexts.

The communist understanding of the phenomenon, rooted in Marx, doesn’t really think of this deindustrialization as “premature.” It’s right on schedule. In fact, it’s just an extension of “deindustrialization” in general, now taking place in a world fully enclosed by capitalism. In other words, a world where “depeasantization” has largely been completed—farmers in poor countries are now largely dependent on the market for their survival, even if they still enjoy a certain “subsistence buffer” that remains important in periods of high unemployment—and therefore where people have little choice but to work in the vast, informal, black-and-gray market service sector. At the extreme end, this surplus population is visible in what are now typical images of abjection: the mega-slums filled with un- and underemployed youth who invariably pose a “social problem” for the state. In Arabic-speaking countries in North Africa, the term is hayateen, referring to young men who have nothing to do but “lean against walls.” In Dar es Salaam and other Swahili-speaking areas, the term is wahuni—related to uhuni, which means something like “aimlessness”—in use since the colonial era to describe the young “hoodlums” attracted to the city, which never had a big enough labor market to absorb them.²² But this is nothing new. Thinkers like Frantz Fanon or Eldridge Cleaver long ago emphasized the political potential of this “lumpen” faction of the proletariat, which should not be confused with “surplus population” as such.

Overall, though, the surplus population is a broader category, not synonymous with the lumpenproletariat and not well represented by these images of absolute abjection.²³ Today, some people even pretend that the “surplus population” has been excluded from “the economy” as such. But the whole point is that people in the surplus population aren’t able to escape the economy. They still need money to survive and they still rely largely on goods produced and distributed within the market—even if they’re stealing them, or depending on humanitarian support, or living on some sort of state welfare. And of course the most common method of survival is simply to work. Again: the surplus population is not necessarily unemployed, but underemployed, or employed in these catchment service sectors that make up for the lack of employment in industry. This will look different in different areas that have different levels of wealth. So, when we talk about the surplus population, we’re really talking about something quite familiar: an entire range of flexible “bullshit” service jobs occupying the entire spectrum from informal street hawkers to people in supervisory and administrative roles, to an array of skilled and speculative occupations spanning social reproductive activities like education and entirely superfluous things such as house flipping or managing the backend of some cryptocurrency platform. Yes, we’re talking about the slums and the prisons and the refugee camps. But we’re also talking about a big chunk of what is conventionally called the “service economy.” It’s not a coincidence that Marx himself often portrayed capitalism’s future not as a giant factory in which everyone is employed in manufacturing but instead as something like a “society of servants,” where most people are forced to be butlers and maids and cooks for the better-off just in order to make enough money to survive.²⁴

Rail: Nowadays the concept of “debt trap” is widely used in academic research concerning the ties between the African continent and China. Moreover, it seems that such research is mostly funded by the government institutions of Western nations, some of which are former colonial masters of these nations. What is your take on this concept and this kind of academic research?

Neel: Yeah, the “Debt Trap” thing is just complete bullshit, and it’s quite obviously a product of orientalist China-scare media and the DC think tank industry. It’s actually very useful, though, because it’s like a little badge that certain people put on marking them out as mildly racist idiots. Anyone who advances this narrative doesn’t need to have their opinion taken seriously. You can ignore them.

Every single aspect of the “Debt Trap” narrative has been so thoroughly disproven that it really doesn’t make sense for me to talk about it in any detail, I’ll just give you some footnotes for more detailed sources debunking these claims.²⁵ But the general overview would be something like: 1) most poor countries owe far more debt to traditional multilateral institutions, the terms of Chinese loans are usually far more lucrative for poor countries, and Chinese lenders have been much more willing than their Western counterparts to renegotiate, extend repayment, and forgive debt; 2) local opposition politicians often have a vested interest in promoting these stories in order to gain votes against incumbents who have done deals with China; 3) China has never once “seized” the infrastructure or assets of any of these countries in repayment for its loans—stories about the Hambantota port in Sri Lanka and the Entebbe international airport in Uganda being “handed over to China” are complete falsehoods; and 4) the narrative was clearly and explicitly promoted by rightwing politicians and conservative think tanks in the US (and India, where the meme originated) and has been quite obviously mobilized to justify the hawkish stances against China taken by both the Trump and Biden administrations.

(This discussion will be continued in the next issue of Field Notes)

1. The first part is online here: Phil Neel, “Güneydoğu Asya’dan Afrika’ya küresel fabrikanın peşinde”, e-komíte, 8 October 2023.
2. The English version of that earlier interview is available here: Phil Neel, “New Battlefields,” Ill Will, 30 June 2022. ; and the Turkish version here: Phil Neel, “Küresel Hinterlandın Hayaletleri – Phil Neel ile Söyleşi”, e-komíte, 17 July 2021.
3. Phillip Neel, “Broken Circle: Premature Deindustrialization, Chinese Capital Exports, and the Stumbling Development of New Territorial Industrial Complexes,” International Labor and Working-Class History, 102, Fall 2022. pp.94-123.
4. Phillip Neel, “Global China, Global Crisis: Falling Profitability, Rising Capital Exports and the Formation of New Territorial Industrial Complexes”, Doctoral Dissertation: University of Washington Department of Geography, 2021.
5. This is also why “Marxist political economy” is an idiotic appellation, demonstrating nothing more than the fact that whoever is using the term doesn’t know what they’re talking about.
6. For anyone interested in Marxian appraisals of how these supply chain structures work, I’d suggest the work of John Smith, Ashok Kumar, and Intan Suwandi. But if you just want a conventional overview of the “supply chain” literature from a basic liberal perspective, Gary Gereffi’s book Global Value Chains and Development is a good summary.
7. Monopsony describes a condition where a single buyer or a small handful of buyers are able to exert substantial control over a market simply because they constitute the majority of demand.
8. Hinterland: America’s New Landscape of Class and Conflict (London: Reaktion, 2018).
9. This is the title of one widely-read study of Chinese investment in Africa, by Irene Yuan Sun.
10. By far the best studies of these construction and engineering contractors operating in Africa have been produced by Stella Hong Zhang. For example: “Chinese International Contractors in Africa: Structure and Agency”, China Africa Research Initiative, Working Paper 47, May 2021.
11. This is, however, in line with many of the other field-based surveys of Chinese investment in the region and on the continent as a whole, the most comprehensive of which is: Tang Xiaoyang, Coevolutionary Pragmatism: Approaches and Impacts of China-Africa Economic Cooperation, Cambridge University Press, 2021.
12. For a systematic debunking of these sort of claims, I’d suggest the work of Deborah Brautigam.
13. For a critical take on this idea, see: Lee Jones and Shahar Hameiri, Fractured China: How State Transformation is Shaping China’s Rise, (Cambridge University Press, 2021).
14. Much of West and Central Africa still uses the colonial-era currency, called the CFA Franc (split into West African and Central African varieties), which is pegged to the Euro. Monetary policy for the region is therefore effectively set via the European Central Bank. Even more egregious was a requirement that all member states deposit half their foreign exchange reserves with the French Treasury—in sum, this meant that most countries sent more money to France every year than they received in aid. In response to criticisms, the system is currently under reform. In 2020, France agreed to end the Treasury requirements for the West African CFA Franc and withdraw its officials from the currency’s governing bodies. With a legal endorsement from the French Parliament, talks have since begun to create a new common currency within the Economic Community of West African States, ostensibly by 2027. But the roadmap remains vague and few of the member countries have met the criteria (such as keeping deficits and inflation under a certain threshold) set out by the West African Monetary Institute for adoption of the currency. For a history of the CFA Franc and an overview of its neo-colonial governance mechanisms, see: Marceleau Biankola-Biankola and Aubin Nzaou-Kongo, “International Law and Monetary Sovereignty: The Current Problems of the International Trusteeship of the Cfa Franc and the Crisis of Sovereign Equality,” African Review of Law and Critical Thinking, 1(1), 2020. pp.25-61
15. For more detail about this, see: Pádraig Carmody, Peter Kragelund, and Ricardo Reboredo, Africa’s Shadow Rise: China and the Mirage of African Economic Development, (Zed Books, 2022).
16. For more discussion on the concept of “sub-imperialism” and the specific role played by South Africa, see the work of Patrick Bond.
17. Phillip Neel, “Broken Circle: Premature Deindustrialization, Chinese Capital Exports, and the Stumbling Development of New Territorial Industrial Complexes”, International Labor and Working-Class History, 102, Fall 2022. pp.94-123.
18. Robert Brenner offers a very good account of this trend. For example: The Boom and the Bubble: The US in the World Economy, (Verso, 2002).
19. For one good piece that complements the “Broken Circle” article, I’d suggest reading: David Oks and Henry Williams, “The Long, Slow Death of Global Development,” American Affairs, VI: 4, Winter 2022.
20. The first part of this process, shifting from agriculture to industry, was formulated in the “dual-sector model” of W. Arthur Lewis, while the final wave of rising service employment was theorized in the “three-sector model,” developed by Allan Fisher, Colin Clark, and Jean Fourastié—between the 1930s and 1950s—all of which would form an important basis for development economics and modernization theory epitomized by the work of figures like Walt Rostow. Later, these theories would be combined with the “flying geese” model formulated by Kaname Akamatsu in the 1930s. Initially, this theory was limited to Imperial Japan, where it influenced the economic logic of the “Greater East Asian Co-Prosperity Sphere.” The theory was then formally published in the international economic literature in the 1960s, after many of the figures who managed the Japanese imperial project were placed back into power by the US military regime in the name of anti-communism. By explaining the sequential rise of new export regimes in places like Japan, South Korea, and Taiwan (which, not coincidentally, mirrored the structure of the Co-Prosperity Sphere), the theory became a foundational component of conventional economic accounts of globalization.
21. And the focus on “neoliberalism” as a target of critique, rather than capitalism as such, is not just theoretically misguided but politically quite dangerous. It’s a good illustration of how poorly thought-out theory can lead to poorly devised political strategy. For example, the exclusive emphasis on “neoliberalism” is one of the reasons that it was so easy for the Democrats in the US to absorb the energy of the “socialist” movement that had sprung up around figures like Bernie Sanders. His politics could appear as “socialist” simply because “capitalism” had been equated with a fantasy image of “neoliberal” market fundamentalism. But Sanders was essentially just proposing a return to standard mid-century liberalism. And now, instead of Sanders himself, we get a figure like Biden, who you can think of as what happens when you order FDR on Wish.com, or if the Democratic Party had been inbreeding the imperial dynastic bloodline of Eisenhower for half a century to retain its purity and instead ended up producing this brain-damaged puppet emperor. Maybe “neoliberalism” is dead, but it’s not like this fantasy image of the Keynesian social compact is going to replace it. Instead, we get an aggressive, dysfunctional echo. Keynes with a Habsburg jaw.
22. The term has been in use since at least the 1930s, and was revived again in the post-colonial ujamaa era as a symbol of urban disorder. The popularity of the term has tended to accompany every period of rapid urban growth in Dar es Salaam, including the most recent one. Thus, many people today incorrectly trace its roots back to the early hip-hop culture of the 1990s and early 2000s, where it took on a connotation similar to “thug” or “gangster.”
23. This has unfortunately become quite common in the academic and activist literature, where people now love to talk about “racialized populations of surplus proletarians” concentrated in places like prisons, slums, refugee camps, etc.
24. This is a point made by Jason E. Smith, in his book Smart Machines and Service Work: Automation in an Age of Stagnation (Reaktion, 2020). And the more general theory of “premature deindustrialization” is also explained in detail in: Aaron Benanav, Automation and the Future of Work, (Verso, 2020).
25. Basically, I’d just suggest looking at the work of Deborah Brautigam, who has long been the main figure debunking false “China in Africa” stories. Here are a few of the main overviews from Brautigam and a few other authors: Deborah Brautigam and Meg Rithmire, “The Chinese ‘Debt Trap’ is a Myth”, The Atlantic, February 6, 2021. ; Lee Jones and Shahar Hameiri, “Debunking the Myth of ‘Debt-trap Diplomacy’, Chatham House Research Paper, August 19, 2020, ;Deborah Brautigam, “A critical look at Chinese ‘debt-trap diplomacy’: the rise of a meme”, Area and Development Policy 5: 1, 2020. ; Deborah Brautigam, “How Zambia and China Co-Created a Debt ‘Tragedy of the Commons’,” CARI Working Paper, Number 51, September 2021. ; Deborah Brautigam, Vijay Bhalaki, Laure Deron, and Yinxuan Wang, “How Africa Borrows From China: And Why Mombasa Port is Not Collateral for Kenya’s Standard Gauge Railway,” CARI Working Paper, Number 52, April 2022.