By the end of the 60s, what had once been “the pride” of Marxism — the theory of imperialism — had become a “tower of Babel”, in which not even Marxists knew any longer how to find their way. Giovanni Arrighi
There is not, nor can there be, such a thing as a “negative” Social-Democratic slogan that serves only to “sharpen proletarian consciousness against imperialism” without at the same time offering a positive answer to the question of how Social-Democracy will solve the problem when it assumes power. A “negative” slogan unconnected with a definite positive solution will not sharpen, but dull, consciousness, for such a slogan is a hollow phrase, meaningless declamation. V I Lenin
Maybe the first big classical-Marxist statement on imperialism was by Karl Kautsky, in 1899, replying to Eduard Bernstein’s call for a “revision” of the perspective of Marx and Engels.
In the 1890s Engels had identified monopolies, cartels, credit and high finance as expressions that classic individual capitalism was decaying and becoming “socialistic”, but in an upside-down way which sharpened plunder, swindling, and crises. Colonialism was a profit-making venture of the new financial aristocracy.
Bernstein argued, on the contrary, that the new trends made capitalism more open to peaceful and piecemeal progress. Credit gave the system more flexibility. Industrial cartels (associations of companies bound together by agreements on production levels, prices and sales) gave the capitalists more conscious control. They could avoid overproduction by mutual agreement. The growth of the world market, and improvements in communications and transport, also made the system more flexible. Capitalism could probably postpone “general commercial crises” for a long time.
Bernstein’s scenario of peace and free trade was an illusion, replied Kautsky. “Protective tariffs are easier introduced than abolished, especially in a period of such raging competition on the world market... Free trade! For the capitalists that is an ideal of the past.” Bernstein claimed that speculation was a disease of capitalism’s infancy. But infant capitalism was being promoted across the world by the “overflowing capitals of the older countries... Argentinian and Transvaal speculation holds its ‘wildest orgies’ not only in Buenos Aires and Johannesburg, but equally in the venerable City of London.”
And colonialism, Kautsky insisted, was inseparable from militarism and the despoiling of colonial peoples for the benefit of “the modern kings of finance [who] dominate nations directly through cartels and trusts and subject all production to their power”.
“The financier,” Kautsky went on to argue, “finds militarism and a strong active governmental policy, both external and internal, very agreeable. The kings of finance need not fear a strong governmental power, independent of people and Parliament, because they can rule such a power directly either as bondholders [i.e., as people who lend money to the government], or else through personal and social influences. In militarism, war and public debts they have a direct interest, not only as creditors, but also as government contractors...
“It is wholly different with industrial capital. Militarism, war and public debts signify high taxes... War signifies besides this... a break in trade... A strong governmental power arouses anxiety in [the industrial manager] because he cannot directly control it... he inclines rather to liberalism... [But] The opposition between finance and industry continually decreases... finance ever more and more dominates industry.”
Much of Kautsky’s argument was a Marxist conversion of ideas which were to be summed up with great verve by the English radical liberal, J A Hobson, in a book motivated by the Boer War (Imperialism, 1902).
For Hobson, “the economic taproot of Imperialism” was overproduction and glut of capital. “Messrs Rockefeller, Pierpoint Morgan [etc.] need Imperialism because they desire to use the public resources of their country to find profitable employment for the capital which would otherwise be superfluous.”
Kautsky saw a similar permanent glut. He differed from Hobson in arguing that this glut would be resolved by the collapse of capitalism and the socialist revolution, rather than by “social reform”, and in contending that finance-capital dominated, rather than being only a “sectional interest” counterposed to “the business interests of the nation as a whole”.
Many of the core ideas of the whole literature were already expressed by 1902: militarism, colony-grabbing, conflict and an authoritarian state as the political trends; high finance, economic decadence and glut, and export of capital, as the economic underpinnings.
But what exactly was finance capital? This question was never properly resolved. And the recurrent idea of metropolitan capitalism having become “glutted” would also cause confusion.
Effective demand depends not only on consumption but also on investment; and, in fact, fluctuations in demand for investment goods are generally the prime movers in crises. Demand for those investment goods can soar while final consumption stagnates — and, vice versa, the run-up to a crisis is generally a period of unusually high working-class consumption but sagging investment.
“Overproduction” is not a permanent condition; capitalism constantly sheds overproduction through crises and then builds it up again. The notion of an absolute level after which a capitalist economy will become permanently “glutted” is a recurrent theme in mainstream economics, from Adam Smith to Keynes. It has been attractive to socialists because it seems to show that capitalism must inevitably break down. It is misleading.
In Germany’s election of January 1907 the ruling Conservative/National Liberal bloc made imperialism the central issue. They denounced the Social Democrats, who had been criticising the German state’s brutality in its South West African colony, as unpatriotic — and reduced them from 81 parliamentary seats to 43.
For a party so convinced that the laws of social development guaranteed it steady growth, this result was a catastrophe. What had gone wrong? Too much radical agitation, said the right wing. Imperialism had attracted the middle classes, replied the left, and undercut liberalism; but it would lead capitalism into convulsions, and eventually alienate the middle classes. The socialists must prepare for revolutionary upheavals by militant anti-imperialism and by distancing themselves from liberal illusions.
Kautsky wrote a pamphlet on Socialism and Colonial Policy to defend the views of the left. This was the most comprehensive statement of classical Marxism on imperialism as it affected the colonies.
Colonialism, despite all the Revisionists’ argument, wrote Kautsky, was inseparable from brutal force and heavy, pauperising taxation of the local people. And so India showed “continual increase in famine and misery, in spite of heavy flow of English capital to India with a consequent improvement of the Indian “productive forces in places”.
The export of capital produced malign results even in formally independent states, for example Turkey. “Oriental despotism becomes horrifyingly oppressive wherever it masters the instruments of power of European civilisation, but at the same time becomes the debtor of Europe... [The resulting regime] brings to a peak the oppressive and degrading effects of capitalism, without developing any of its progressive qualities... It pairs despotism and capitalism in an abominable union.”
“If the ethic of capitalism says that it is in the interests of culture and society for lower classes and nations to be ruled, the ethic of the proletariat says that precisely in the interests of culture and society the oppressed and those under tutelage must throw off all dominion.” This remains the bottom line for revolutionary Marxists to this day.
This analysis of capitalist development in the colonies was taken further by Rosa Luxemburg in her 1913 book, The Accumulation of Capital.
She too described how the development of capitalist relations in the underdeveloped countries, and the clawing-in of their pre-capitalist economies to the capitalist world market, led the big powers to use force, seizing colonies or using the local state as, “a political machinery for exploiting peasant economy for capitalist purposes — the real function, this, of all Oriental states in the period of capitalist imperialism.” It created, “the most peculiar combinations between the modern wage system and primitive authority in the colonial countries.”
Capitalism in the colonies and semi-colonies, however, occupied only the last quarter of Luxemburg’s book. She gave pride of place to a new statement of the thesis that a permanent “glut” within the advanced capitalist economies was the motor force of imperialism.
Rudolf Hilferding’s Finance Capital was published in 1910 but mostly written in 1905.
The book starts with a long and intricate discussion on the theory of money, credit, interest and the stock exchange, aiming to show that, “there is a growing tendency... to concentrate all capital in the form of money capital, and to make it available to producers only through the banks... Even today, taking possession of six large Berlin banks would mean taking possession of the most important spheres of large-scale industry.”
Hilferding defines finance capital as, “capital in money form which is... transformed... into industrial capital.” He adds a qualification: “this does not mean that the magnates of industry also become dependent on banking magnates”; rather, bank capitalists and industrial capitalists, “unite in close association.”
Cartels are generated because otherwise the rates of profit would be lower for giant enterprises. With modern credit it is easy to get into large-scale production; given the huge amounts of fixed capital involved it is difficult to get out. So the giant enterprises form cartels to keep their profits up. The banks help them.
Kautsky and Luxemburg, in polemic against Bernstein, had stressed the instability and fragility of cartels, but Hilferding shifts the emphasis: “there is a constant tendency for cartelisation to be extended.” Cartels generate high profits, but they also restrict investment, both inside the cartel (because it restricts production) and outside (because profits are low). Cartelisation therefore gives an extra push to the export of capital.
Since they export capital, the big powers need to clear the way for capitalism in underdeveloped countries. They force peasants to become wage-workers. “these violent methods are the essence of colonial policy, without which it would lose its capitalist rationale.” But “capitalism itself gradually provides the subjected people with the ways and means for their own liberation” through national independence movements.
The competitive drive for economic territory will lead to war between the big capitalist states. “The response of the proletariat to the economic policy of finance capital — imperialism — cannot be free trade, but only socialism.”
The book was a formidable work, but not the definitive summing-up which Hilferding intended. Rather than developing a whole new theory, it pulled together ideas from writings such as Kautsky’s into a tidier structure — and often through very dubious logical deductions. The analysis moves too directly from abstract economic reasoning to current German realities and back again, so that we get a picture of finance capital in general, and of Germany in 1905-09, but not much of the general development of imperialism in a variety of countries.
About 1912 Kautsky shifted to views on militarism and inter-capitalist conflict (though not on colonialism) very similar to those of Bernstein which he had criticised 13 years earlier. In 1914 world war erupted. Kautsky said that socialists should press the capitalist governments to make peace — for that was a better policy in the long run even from a capitalist point of view — and in the meantime each group of socialists could only defend their “own” country. The next phase in the classical Marxist argument was a polemic against Kautsky from the revolutionary anti-war left, by the Russian Marxists Bukharin and Lenin.
Bukharin’s book Imperialism and World Economy was written in 1915, and read by Lenin, who wrote a preface for it in December 1915. The manuscript was lost, and recovered for publication only late in 1917. Bukharin rewrote missing sections and added material from Lenin’s pamphlet. Imperialism, written in January-June 1916, and published in April 1917. Each work was therefore influenced by the other.
Lenin drew on the same concepts as Kautsky in his radical days, but crafted a sharper and tighter argument, and with militant conclusions. He built on the identification of monopolised, cartelised, organised, gigantified capital as the core of imperialism first made, I think, by Hilferding, but honed the argument done to something much crisper and more politically pointed than Hilferding’s sprawling volume. Like Hilferding, Lenin used the term “finance capital” a lot, but finance was far less central for Lenin than it had been Kautsky at the start of the whole classical-Marxist discussion.
The immediate cause that Lenin cited for “the conquest policy of modern capitalist states” was the competition between the great monopoly capitalists for raw material sources. He cited other factors, but as secondary: a struggle to seize potential sources of raw materials as well as actual ones, arenas for other monopoly business, ideological reasons, territory for emigration.
This argument obviously raises the question: could not the monopolies obtain their raw materials more cheaply through free trade? In replying, Lenin puts the competition for raw material sources into context as only an expression of what he considers fundamental to imperialism: the growth of monopoly capital and its inherent striving for “violence and reaction”.
“Economically, the main thing in this process [of imperialism emerging] is the displacement of capitalist free competition by capitalist monopoly.” “Domination, and the violence that is associated with it, such are the relationships that are typical of the ‘latest phase of capitalist development’; this is what inevitably had to result, and has resulted, from the formation of all-powerful economic monopolies.”
Where Lenin honed down the stock ideas of the pre-1914 left, Bukharin expanded them, taking up an idea hinted at by Rosa Luxemburg in 1899 when she wrote about “the contradiction between the international character of the capitalist world economy and the national character of the capitalist state...” Technical progress, improved communications, larger-scale industry, and the expansionist drive of capitalism, led capitalists to make more links across national borders. “The course of economic development creates, parallel to this process [of internationalisation of capitalist interests], a reverse tendency towards the nationalisation of capitalist interests.” So: “The process of the internationalisation of economic life can and does sharpen, to a high degree, the conflict of interests among the various ‘national’ groups of the bourgeoisie...”
It is true that “high imperialism” was based on, depended on, arose from, the development of large concentrations of highly mobile capital, ready for bold foreign ventures. In the world as it was in 1916 — where British industrial supremacy had broken down but no rival had been able to establish general supremacy, either, and where vigorous capitalist exploitation in the less-industrial countries generally required a capitalist state authority imposed from outside to establish its preconditions — those large concentrations of highly mobile capital were the vectors of imperialism. Recent research also indicates that Hobson and Kautsky were probably right about Empire bringing net gains only to some sections of the capitalist class — in Britain, lords, landowners, bankers and London merchants — while for the class as a whole the extra taxes cancelled any extra gain.
But large concentrations of highly mobile capital can operate under different regimes, as since the mid-1980s. The structure of the world economy, rather than just the growth of big capitalist money-fortunes in a few countries, was the fundamental basis of “high imperialism”.
Moreover, the early 21st and late 20th centuries prove that “monopoly capitalism” — a capitalism dominated by huge corporations — divides the world into territories policed and tariff-walled by rival states only under certain conditions. Kautsky’s and Luxemburg’s stress on the fragility and instability of cartels has turned out more accurate, in the long run, than Hilferding’s scenario of ever-more-cartelised, ever-more-”organised”, capitalism.
Monopoly is not necessarily the direct opposite of competition. Global corporations may operate fiercer competition than the smaller local-market-focused capitalists of “competitive capitalism”.
An “imperialism of free trade” in which huge global corporations are central has become the dominant pattern. States play a big role, but are structured by a drive of each to make its territory a congenial site for mobile global capital.
The wartime political struggle gave Bukharin’s and Lenin’s pamphlets greater vividness and focus than the pre-1914 literature. As polemics they were devastating; as sharpened summaries of the Marxist literature, they stand up very well to later bourgeois-academic criticisms. Their adequacy as textbooks for the study of imperialism across the whole of the twentieth century — which is not the purpose for which they were written — is another matter. Their summary statements on finance capital and monopoly capital, if cited as laws for the broad sweep of history, are wrong.
Bukharin’s schematism led him to present a world of militarised state-capitalist monoliths as an irreversibly established fact, rather than a one tendency among others in a complex whole, and to argue that national self-determination had thus been made “economically impossible”.
Lenin — despite summary statements implying otherwise — did allow for much more complexity in the relation between economics and politics than the other classical Marxists. “At the same time,” he emphasised, “capitalism engenders democratic aspirations in the masses, creates democratic institutions, aggravates the antagonism between imperialism’s denial of democracy and the mass striving for democracy.” He ridiculed Bukharin’s crude argument that, “imperialist annexation is only a case of the general capitalist tendency towards centralisation of capital.” “Everyone would laugh... if, parallel with the law that small-scale production is ousted by large-scale production, there were presented another ‘law’... of small states being ousted by big ones.”
There was a problem, however, I think, with the grid within which even Lenin saw the question of bourgeois state forms.
At one pole was a parliamentary republic based on small proprietors, with a minimal permanent state machine, no standing army, wide civil rights, etc. At the other pole was Prussian absolutism — a big military machine and state bureaucracy, topped by a monarchy, with restricted civil rights and the most limited forms of parliamentarism. All other state forms (so the implicit assumption ran) were to be found somewhere on the scale between those two poles.
Monopoly capitalism required a sizeable state machine, and the big capitalist interests would often bypass parliament to deal with state officials directly. It meant a move away from Jacksonian democracy — and therefore necessarily towards Prussian absolutism.
The modern bourgeois democratic state machine makes the Prussian state of Lenin’s time look a very skimpy amateur outfit. Yet it has parliamentary democracy (hollowed-out but still not meaningless) and relatively wide civil rights. It is not somewhere on a spectrum between Jacksonian democracy and Prussian absolutism; it represents movement in a different direction.
After Lenin’s death, the Stalinists constructed a chopped-up orthodoxy of “Leninism”, which, by sheer weight of literature and resources, shaped left wing thinking way outside the Stalinist parties.
Lenin’s pamphlet did not cover what became the hottest question about imperialism, its relation to economic development in the Third World. To fill the gap in “Leninist” theory, phrases from the pamphlet which looked as if they might be about that were taken as the “Leninist” line! And the theory got distorted “honestly” by statements about tendencies being taken as a comprehensive account, without regard to counter-tendencies. And some real weaknesses in Lenin’s account provided fertile ground for confusion.
Imperialism, wrote Lenin, was “parasitic”, “decaying”, and “moribund” capitalism. He was restating Kautsky’s ideas of 1899-1909. In so far as he was just doing that, he was trapped by the mechanical alternatives of pre-1914 “Marxist orthodoxy” — either capitalism was progressing, and its new developments, like imperialism, should therefore be supported, or it was plunging to collapse — and within those false alternatives he was plainly wrong. A hundred years later, capitalism has grown, not collapsed.
As Lenin himself noted: “History does not stand still even in times of counter-revolution.”
To recognise this is not to slacken our fight against capitalism. As Lenin put it: “Can anyone in his senses deny that Bismarckian Germany and her social laws are ‘better’ than Germany before 1848?... Did the German Social-Democrats... vote for Bismarck’s reforms on these grounds?”
To discard mechanical notions of the “epoch of decay” is, however, essential if we are to understand realistically the adversities and the prospects of the socialist movement. There have been several “epochs of imperialism”, not one.
We should also discard Lenin’s confused link, following Kautsky, between “decay” and “finance capital”. In his analysis, Lenin has two completely different concepts of finance capital, incoherently combined. He writes of “the several hundred kings of finance who reign over modern capitalist society”. Elsewhere, however, it is a matter of “the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by “clipping coupons”, who take no part in any enterprise whatever, whose profession is idleness.”
So which is it? Are the finance capitalists the masters of large-scale industry, the directors of the economy — or people like the rentier who “if he speaks of work at all means the ‘work’ of picking flowers or calling for a ticket at the box office of the opera.”
Weaknesses in Lenin’s pamphlet enabled later writers to stamp “Leninist” authority on arguments about the permanent “glut of capital” and about the capitalist development of poorer countries being impossible under imperialism.
In 1957 Paul Baran, an unorthodox Stalinist, initiated a new strand: “dependency theory”.
Third World countries were underdeveloped, argued Baran, mainly because of parasitism within the Third World countries and a drain of surplus to the advanced countries. The answer was for those forces seeking development in Third World countries to follow the model provided by the USSR — expropriate the parasitic old property-owning classes, centralise resources in the hands of the state, cut down economic relations with the rest of the world to a minimum.
Andre Gunder Frank, Samir Amin, Immanuel Wallerstein and others built on Baran’s analysis, developing the idea that imperialism created distorted, stunted, dependent structures in Third World countries. Though heavily discredited by recent facts, such as the capitalist development of Asia’s Pacific Rim, this “dependency theory” remains very influential on the left, especially in pseudo-Trotskyist restatements.
This doctrine (“import of revenue”, so to speak) had obvious differences even from the conventional interpretation of Lenin (“export of capital”), but was assimilated to it via Lenin’s speculations about metropolitan capital “growing rich by usury” or “tribute from Asia and Africa”.
Crucial to the “dependency” framework is the notion that the essence of world capitalism is the relation between two relatively homogeneous blocs, centre and periphery. The focus of study is on factors keeping the hierarchy of capitalist economies fixed, keeping centres central and peripheries peripheral. The classical Marxists, on the contrary, focussed on the fluidity and changeability of the hierarchical relations between capitalist economies.
Robert Brenner commented: “So long as incorporation into the world market/world division of labour is seen automatically to breed underdevelopment, the logical antidote to capitalist underdevelopment is not socialism, but autarky. So long as capitalism develops merely through squeezing dry the ‘third world’, the primary opponents must be core versus periphery, the cities versus the countryside — not the international proletariat, in alliance with the oppressed people of all countries, versus the bourgeoisie. In fact, the danger here is double-edged: on the one hand. a new opening to the ‘national bourgeoisie’; on the other hand, a false strategy for anti-capitalist revolution... of semi-autarkic socialist development”.
And Anthony Brewer points out, Frank ends up arguing for socialism in a spirit very different from Lenin — not by identifying a revolutionary class generated by capitalist development, but by indicting capitalism for its lack of capitalist development.
“The classical Marxists assumed that each country must go through successive stages of development; the capitalist stage performed the historic task of creating a proletariat and laying the material basis for the succeeding stage of socialism. Lenin and Trotsky argued that the bourgeoisie in Russia (then a relatively backward country) was too weak to carry through the political tasks of the bourgeois revolution, so that the proletariat had to take the lead and could then carry straight on to the socialist revolution. The evolution of a relatively backward country differed from that of the more advanced centres.
“This argument, however still presupposes the existence of a proletariat adequate to the task, and thus a certain degree of capitalist development. However, in the first half of the 20th century, there were few signs of capitalist development in underdeveloped countries, and many Marxists came to argue a position almost diametrically opposed to that of the classics.
“Where it had been argued [by Marxists] that capitalist development had to create first the possibility of a socialist revolution, it was now argued that the absence of capitalist development made socialist revolution necessary... This shift of perspective entails a shift to a more voluntaristic concept of politics and to treating the peasantry or lumpen-proletariat, rather than the industrial proletariat, as the revolutionary class.”
In some circles, the idea of the “glut of capital” led to the conclusion that decolonisation would mean metropolitan capitalism choking to death on its uninvestible riches. Thus the Second World Congress of the Fourth International in 1948 argued that the loss of colonies for Europe removed all chance of regaining “even the pre-war [i.e., 1930s!] economic equilibrium”.
Michael Kidron of the International Socialists (now SWP), on the other hand, used the same assumptions to argue that the post-1950 metropolitan capitalist prosperity meant the end of imperialism.
Imperialism had been the “highest stage but one” of capitalism. The SWP has since flipped over from that view to something much more like standard Stalinised-Leninism, but at the time Kidron’s argument was an organic part of a world-picture also involving state capitalism in the USSR and the “permanent arms economy” in the West.
Arms spending was draining away the glut of capital, so the basic economic mechanism of imperialism no longer operated. Export of capital was no longer needed to provide a “drain” for excess capital from the advanced countries.
“The societies maimed and shattered by the imperialist explosion of the last century are again being maimed and shattered — by the growing economic isolationism of the west (an imperialist implosion as it were)...”
So drastic was the factual falsity of Kidron’s argument that another “end of imperialism” argument soon developed which was its exact contrary. For Kidron, imperialism had ended because of “not enough” capital in the Third World; for Bill Warren, because of “too much” capital there.
Warren’s first article was useful in forcing Marxists to re-think their “conventional wisdom” of the time about the supposed impossibility of serious capitalist development in the ex-colonies. But Warren’s later writing became a simple inversion of “dependency”, or “centre-periphery”, theory.
“Centre-periphery” theorists said that colonialism hindered the development of the colonies, also that the removal of formal colonial rule had not removed those hindrances. Warren replied that colonialism helped the development of the colonies — and that the end of colonialism helped even more!
He played up everything that pointed to capitalist progress in the Third World, and played down everything else.
By Stalinised “Leninism”, meanwhile, the theory of imperialism was converted into a set of axiomatic equations: advanced capitalism equals domination of monopolies and finance-capital, equals imperialism, equals a push for colony-grabbing, equals “moribund and decaying capitalism” in the metropolis and blight in the periphery, equals the dead-end of capitalist progress.
This turned “anti-imperialism” into a garbled global version of the 1950s-1960s European Communist Party line of “the anti-monopoly alliance”, which defined the biggest, most advanced, capitalist interests as ipso facto the worst.
Advanced capitalism was bad not so much because it was capitalist as because it was advanced. Stalinism, or Islamic fundamentalism, should be supported because, despite their crimes, they could not fail to represent progress as against the absolute dead-end denoted by imperialism.
The Stalinised “Leninists” claim great strictness in their definitions. Because the strictness is not true theoretical rigour, developed by constant checking and revision of theory against reality, but rather a matter of esoteric codes and buzzwords, they invariably end up slipping and sliding between their “high science” and looser usages imported from current radical politics (such as “dependency theory”, as above). Politics becomes wordplay.
The USSR was not dominated by finance capital, hence its conquests could not really be imperialist, hence they could not represent domination, oppression and plunder of the weak by the strong. Or at any rate they were less grievous examples of such evils than “proper” imperialism.
The only way to break through this word-play is to recognise flatly that we must use a broader definition of imperialism, and within that to distinguish between forms of imperialism. Advanced capitalism continues to be imperialist, but less-advanced capitalism, or Stalinist state-capitalism, is not necessarily less imperialist.
The evil in advanced capitalism is capitalism, not advance. Capitalism develops unevenly on a world scale, and with a tendency for the unevenness to increase and compound itself. Some countries become sites for modern infrastructure, advanced industries and services, major finance capital, the headquarters of multinational companies, and heavy investment, while others remain with few industries (often primary-product or low-technology), operated by low-wage labour, with low investment and widespread pauperism.
Capitalism is in its very essence a system of ruthless competition, where the rich and the strong do down the poor and the weak, and the richer capitalist states, and the banks and multinationals based in them, dominate over poorer countries. This is imperialism.
Against political domination we fight for the right to self-determination of all nations and for consistent democracy.