Imperialism, the Highest Stage of Capitalism

October 23, 2024

Concepts featured: natural tendency towards monopolization, power-law distribution of production, virtues of vertical integration, value accretion to speculators, capital oligpolies, capital export.

The basic argument:

Imperialism emerged as the development and direct continuation of the fundamental characteristics of capitalism in general. But capitalism only became capitalist imperialism at a definite and very high stage of its development, when certain of its fundamental characteristics began to change into their opposites, when the features of the epoch of transition from capitalism to a higher social and economic system had taken shape and revealed themselves in all spheres. Economically, the main thing in this process is the displacement of capitalist free competition by capitalist monopoly. Free competition is the basic feature of capitalism, and of commodity production generally; monopoly is the exact opposite of free competition, but we have seen the latter being transformed into monopoly before our eyes, creating large-scale industry and forcing out small industry, replacing large-scale by still larger-scale industry, and carrying concentration of production and capital to the point where out of it has grown and is growing monopoly: cartels, syndicates and trusts, and merging with them, the capital of a dozen or so banks, which manipulate thousands of millions. At the same time the monopolies, which have grown out of free competition, do not eliminate the latter, but exist above it and alongside it, and thereby give rise to a number of very acute, intense antagonisms, frictions and conflicts. Monopoly is the transition from capitalism to a higher system.

Lenin is surprisingly perceptive. Or, perhaps, his ideology tended to notice inconvenient truths about the "market" economies of the Gilded Age (most of which are downstream of markets having power-law distributions in outcomes) such as the centralization of not just raw material production, but commodity production and capital itself.

Repeatedly, I have seen the biggest flaw of pre-WW2 Marxist analysis to be its inability to predict or even notice the effects of technological innovation on the common man.

It goes without saying that if capitalism could develop agriculture, which today is everywhere lagging terribly behind industry, if it could raise the living standards of the masses, who in spite of the amazing technical progress are everywhere still half-starved and poverty-stricken, there could be no question of a surplus of capital. This “argument” is very often advanced by the petty-bourgeois critics of capitalism. But if capitalism did these things it would not be capitalism; for both uneven development and a semi-starvation level of existence of the masses are fundamental and inevitable conditions and constitute premises of this mode of production. As long as capitalism remains what it is, surplus capital will be utilised not for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists, but for the purpose of increasing profits by exporting capital abroad to the backward countries.

Sure, the Haber process was incubated and developed on the government's dime. But BASF then matured and implemented it, massively multiplying crop yields because there was money in it. Only capital-rich organizations can afford to invest in 0-1 jumps, and nations happen to be capital-rich organizations which work for the public benefit. Yet the exact ills of monopolies are also boons: vertical integration and large scale production allows the 1-many innovations to be implemented.

Regardless, companies will take the low-hanging fruit, and the low-hanging fruit in the early 20th century was investing in colonies. Railways, oil, coal, metals, cash crops, etc.. Marx and Engels claim that this results in the "bourgeoisification" of the British working class, as the profits from such foreign investment accrue in Britain rather than South Africa, and that British labor unions were pro-imperialist. This seems to be broadly correct.

Capital as export is a powerful force:

In 1904, Great Britain had 50 colonial banks with 2,279 branches (in 1910 there were 72 banks with 5,449 branches), France had 20 with 136 branches; Holland, 16 with 68 branches; and Germany had “only” 13 with 70 branches.68 The American capitalists, in their turn, are jealous of the English and German: “In South America,” they complained in 1915, “five German banks have forty branches and five British banks have seventy branches.... Britain and Germany have invested in Argentina, Brazil, and Uruguay in the last twenty-five years approximately four thousand million dollars, and as a result together enjoy 46 per cent of the total trade of these three countries.”

He also makes the argument that the cause of net immigration to the colonial powers rather than net emigration from them is that such profit accruement decreases the incentives to leave:

One of the special features of imperialism connected with the facts I am describing, is the decline in emigration from imperialist countries and the increase in immigration into these countries from the more backward countries where lower wages are paid. As Hobson observes, emigration from Great Britain has been declining since 1884. In that year the number of emigrants was 242,000, while in 1900, the number was 169,000. Emigration from Germany reached the highest point between 1881 and 1890, with a total of 1,453,000 emigrants. In the course of the following two decades, it fell to 544,000 and to 341,000. On the other hand, there was an increase in the number of workers entering Germany from Austria, Italy, Russia and other countries. According to the 1907 census, there were 1,342,294 foreigners in Germany, of whom 440,800 were industrial workers and 257,329 agricultural workers. In France, the workers employed in the mining industry are, “in great part”, foreigners: Poles, Italians and Spaniards. In the United States, immigrants from Eastern and Southern Europe are engaged in the most poorly paid jobs, while American workers provide the highest percentage of overseers or of the better-paid workers. Imperialism has the tendency to create privileged sections also among the workers, and to detach them from the broad masses of the proletariat.

Centering the monopoly as simultaneously alien to the free market and yet the inevitable result of a free market is particularly poignant, I feel. His other analyses are interesting from a historical perspective, but without intimate knowledge of the context they should not be wholly trusted.My translation was particularly good. Quite happy with it.