Neocolonialism

Essentially, neocolonialism refers to the perpetuation of colonial economic relations after formal independence. [Page 329]The long centuries of European colonialism drew to a rapid close after World War II, when the West's self-destruction provided a window of opportunity for nationalists in Asia and Africa. From the late 1940s to the mid-1970s, the number of ostensibly independent countries multiplied rapidly. (Latin America had achieved this state following the Napoleonic Wars of the early 19th century.)

However, despite the promises of modernization theorists that patience and the acceptance of Western capital ultimately would lead to social and economic development, many in the developing world, and some in the West, exhibited concern that long-standing colonial relations remained de facto, if not de jure, even though the former colonies had attained formal independence. Neocolonialism differs from colonialism, therefore, in the sense that the former colony has attained a nominal degree of political sovereignty. A new national flag or anthem in many respects did little to change the status for most of the population or the real relations of power between the former colony and the former colonizer. Poorly prepared for independence, many former colonies had little preparation to compete in the global economy and suffered from inadequate infrastructures, unskilled labor, a lack of managerial skills, and insufficient investment capital. Many had artificial borders that forced very different ethnic groups together, sewing the seeds for secessionism and tribal wars. In practice, most former colonies could offer the global economy little more than cheap raw materials (e.g., mineral ores, foodstuffs) and cheap unskilled labor. Thus, Western powers—typically the same ones that had once formally colonized them—retained effective economic control if not direct, formal political oversight.

The role of the United States is central to neocolonialism. Although the United States itself was a product of colonialism, by the late 19th century (following the Spanish-American War of 1898) it had increasingly become a colonial power in its own right. After World War II, when the United States remained unquestionably the leading economic superpower in the world, the age of the Pax Americana became virtually synonymous with neocolonialism. This relation reflected the dominant role of the United States politically and militarily, the enormous influence of American popular culture and media (which essentially rendered postwar globalization the same as Americanization), and the huge influence of American multinational corporations. Thus, despite its pretense to serve as a fount of world freedom, from the perspective of neocolonialism, the American empire more closely resembles its European antecedents.

Multinational corporations or transnational corporations (TNCs) often are held to be the prime agents underlying neocolonialism. The vast bulk of them originate in the developed world, where large pools of investment capital exist, and many have output levels that exceed small or even intermediate-sized countries. The postwar rise of multinationals dramatically altered global investment and trade flows, as well as government policy, around the world. Today, some 30,000 TNCs control two thirds of world trade and employ 100 million people. Although some TNCs originate in Europe, Japan, and Canada, American ones are by far the largest group. Whereas most such firms invest in other developed countries, their presence in the developing world has mixed economic costs and benefits, including job generation and technology transfer but also displacement of local suppliers. Profits generated by the investments of such firms frequently are repatriated to their origin countries. Bank loans to developing countries, and the ensuing global debt crisis, are another form of foreign economic domination. Moreover, TNCs have a long and unsavory history of political interference, ranging from demands for tax relief to support for military coups d'état. States in the developing world that dared to confront multinationals often have faced the military wrath of the United States (e.g., Iran in 1953, Indonesia in 1965, Chile in 1973). Since the 1990s, the International Monetary Fund and the World Bank often have been accused of playing roles that aid and abet international capital at the expense of the citizenry in developing countries through neoliberal programs that tie debt restructuring to the privatization of public goods (e.g., airports, telecommunications firms, hydroelectric plants), deregulation, currency devaluations, and reductions in public assistance to low-income people. The local ruling class within developing countries often actively assists TNCs, global capital, and international institutions in this process.

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