NOTES The Politics fo Dependent Capitalism CAPITALISM evolves its own escape valves for survival in the wake of crisis—throwing up new mechanisms whereby the developed capitalist world carries out its exploitation process in the underdeveloped regions. It began with piracy and plunder by European nations in the 15th and 16th centuries The next stage was the political annexation of what is now the less developed world, and exploitation through colonialism. In the post-colonial era neo-colonial dominance replaced political dominance—international linkages being forged with the peripheral regions of the Third World in interlocking relationships of dependence with the metropolitan centres—fostering the continued transfer of wealth from the periphery to the centre. Starting around the 1960's the pattern of imperialist expansion took a new turn. Arising around 1967 the crisis of Western capitalism is characterised by recurrent and sharper downswings in economic activity where, for the first time, stagnation co-exists with high rates of inflation. In earlier decades, periods of inflation alternated with periods of stagnation; both phenomena did not appear at the same period of time. In the current phase termed 'stagflation' these phenomena surface together and the normal Keynesian formulas are seen to work no longer. The cure for stagflation whilst eliminating one of its twin components aggravates the other. Expansionary policies for curing the stagnationary elements make the inflation aspect take on crisis proportions. To snap out of the crisis, capitalism has evolved two mechanisms where the adjustment process falls heavily on labour both at the metropolitan centres as well as at the periphery.1 One is the migration of capital to the peripheral regions of South Asia in the form of "export processing zones' (EPZ) creating 'indigenous capitalisms'. The other is the tailoring of immigration formulas at the centre to suit the needs of monopoly capital. In order to exploit the peripheral regions of South Asia it is essential that metropolitan capital allies itself with social classes in the periphery that stand to gain the plums from the sharing of the economic pie.2 "The peripheral nation", according to James Petras^ "contains classes of double nationality; state rule is shared with economic 'subjects' with external political allegiances." These'liaison