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An introduction to a new kind of capitalist imperialism

Transcribed by Joseph Auciello. Introduction Since the spring of 1916 when Lenin wrote his pamphlet Imperialism, that work has been a focal point of discussion by both Marxists and non-Marxist political economists.

The author of the first article, E. Germain, is one of the leading theoreticians of the Fourth International and the author of numerous essays on Marxist economics. After discussing the historical development of the theory, Germain goes on to deal briefly with the most important contemporary critics.

The word is used in a much more precise sense to describe the general changes which occurred in the political, economic and social activity of the big bourgeoisie of the advanced capitalist countries, beginning in the last quarter of the 19th century.

These changes were closely related to alterations in the basic structure of this bourgeoisie. Marx died too early to be able to analyze these changes. He did not see more than the preliminary signs. Nevertheless, an introduction to a new kind of capitalist imperialism left some profound remarks in his last writings which later Marxists used as starting points for developing the theory of imperialism.

In studying the rapid development of limited liability corporations, Marx underlined, in the Third Volume of Capital chap. In this expropriation the legal owner of capital loses his function as entrepreneur and abandons his role in the process of production and his position of command over the productive forces and the labor force.

In fact, private property seems to be suppressed, says Marx elsewhere, it is suppressed not in favor of collective ownership but in favor of private ownership by a very small number. Concentration of Capital Marx foresaw the modern structure of capitalism as the final phase of capitalism resulting from the extreme concentration of capital.

This was also the starting point taken by most Marxists, especially Hilferding and Lenin. In a paragraph devoted to countertendencies to the trend toward a falling rate of profit Capital, Volume III, chap. A little further on he generalized this idea by insisting that a capitalist society must continuously extend its base, its area of exploitation.

In his last writings, especially in his famous 1892 introduction to The Condition of the Working Class in England, he underlined other structural phenomena to which the theoreticians of imperialism attached great importance. Thanks to that monopoly, in the second half of the 19th century, at the time of the rise of craft unions, English capitalism could grant important concessions to a section of the working class. But, towards the end of the 19th century the German, French, and American competition made inroads into this English monopoly, and inaugurated a period of sharp class struggle in Great Britain.

In two comments on the Third Volume of Capital, edited by Engels in 1894 comments on the 31st and 32nd chaptersEngels emphasized how difficult it was going to be for capitalism to find a new basis for expansion after the final conquest of the world market.

This colonial expansion stimulated the first efforts by Marxists to interpret the development of this period of capitalism. Karl Kautsky emphasized the commercial reasons for imperialist expansion. According to him, industrial capital cannot sell the whole of its production within an industrialized country.

In order to realize surplus value, it must provide itself with markets made up of non-industrialized countries, essentially agricultural countries.

This was the purpose of the colonial wars of expansion and the reason for the creation of colonial empires. Parvus, in the beginning of the 20th century, while underlining this phenomenon emphasized the role of heavy industry above all the iron industry in the transformation which was about to take place in the politics of the international capitalist class. He pointed out how iron played a more and more preponderant role in capitalist industry, and demonstrated that government orders, direct armaments race and indirect competition in naval construction, building of railways and harbor installations in colonial countries, etc.

It was Rosa Luxemburg who drew together in a complete theory all these concepts of an imperialism expanding to compensate for inadequate markets for the products of the biggest capitalist industries. Her theory is mainly one of crises, or to express it more correctly, a theory of the conditions of realization surplus value and of accumulation of capital.

It is consistent with the theories of under-consumption worked out over the course of a century by numerous opponents of the capitalist system to show the inevitability of economic crises.

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According to Rosa Luxemburg, the continual expansion of the capitalist mode of production is impossible within the bounds of a purely capitalist society. The expansion of the production of the means of production within capitalist society is only possible if it goes hand in hand with the expansion of the demand for consumer goods.

Without this expansion of the latter demand, the capitalists will not buy any new machines, etc. It is not the expansion of the purchasing power of the working class which allows an adequate expansion of the demand for consumer goods.

On the contrary, the more the capitalist system progresses, the more does the purchasing power of the workers represent a relatively smaller proportion of the national income. In order for capitalist expansion to continue it is necessary to have non-capitalist classes which, with an income obtained outside the capitalist system, would be endowed with the additional purchasing power to buy industrial consumer goods.

These non-capitalist classes originally are the landowners and farmers. In the countries where the industrial revolution first occurred, the capitalist mode of production developed and triumphed in a non-capitalist milieu, conquering the market which consisted above all of the mass of peasants.

Rosa Luxemburg concluded that after the conquest of the national non-capitalist markets, and the not yet industrialized markets the European and North American continents, capital had to throw itself into the conquest of a new non-capitalist sphere, that of the agricultural countries of Asia and Africa. She foresaw the mechanism which did not reveal its full functioning until the eve of the Second World War. However, from the point of view of economic theory, the Luxemburgian conception of imperialism has certain flaws.

It is important to underline them because they obscure certain long run trends in the development of capitalism as a whole. For instance, Luxemburg argued that the capitalist class could not enrich itself by passing its own money from one pocket to another.

However, this ignores the fact, illuminated by Marx, that the capitalist class taken as a whole represents a useful abstraction to unveil the laws of motion of capital, but that the phenomenon of periodic crises is understandable only in the framework of the competition of antagonistic capitals and the concentration resulting from that competition.

This is what has occurred for the last forty years in the United States, at first in relation to the American capitalists, then particularly in relation to the international capitalist classes first of all the European. This will occur more and an introduction to a new kind of capitalist imperialism as the purely agricultural markets disappear.

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These were the structural problems which Rudolf Hilferding and Lenin tackled. The Theory of Imperialism by Hilferding and Lenin Starting with the remarks made on this subject in the later works of Marx and Engels, Hilferding studied the structural changes of capitalism in the last quarter of the 19th century. From this Hilferding defined what he called finance capital, that is, banking capital invested in industry and controlling it either directly by the purchase of shares, the presence of bank representatives on the boards of directors, etc.

Hilferding discovered the preponderant role played by banks in the development of heavy industry, especially in Germany, France, the United States, Belgium, Italy and Czarist Russia. In a brilliant conclusion to his work on finance capital, Hilferding predicted the rise of fascism, that is, a merciless and absolute political dictatorship, exercised in favor of big capital, corresponding to the new stage of capitalism as political liberalism corresponded to early competitive capitalism.

Confronted with the threat of such a dictatorship, Hilferding concluded, the proletariat must engage in the struggle for its own dictatorship. Like Hilferding, he started from capitalist concentration — the establishment of trusts, cartels, holding companies, etc. Lenin extended and generalized this structural analysis, naming it monopoly capitalism, in contrast to 19th century competitive capitalism.

In contrast to competitive capitalism, which concentrated on the export of commodities and which was not interested in its clients, monopoly capitalism, exporter of capital, cannot be without interest in its debtors. Applying the law of uneven development both to the relations between the imperialist powers, Lenin showed that the division of the world an introduction to a new kind of capitalist imperialism the imperialist powers can only be a temporary one, and is inevitably followed by struggles — imperialist war — to obtain a new division as the relationship of forces among these powers changes.

The colonial super profits, brought in by the capital exported to backward countries, permit the corruption of part of the working class, above all a reformist bureaucracy which cooperates with the bourgeois democratic regime and obtains great benefits from it. Historical experience of the last fifty years has proven that: An epoch of monopoly capitalism has followed the capitalism of free competition.

Monopoly capitalism does not overcome the fundamental contradictions of capitalism. It does not overcome competition but merely raises it to a higher level encompassing new and bigger competitors. It does not overcome crises but gives them a more convulsive character. Two rates of profit are substituted for the average rate of profit of the previous period: The suppression of free competition within certain bounds is essentially a reaction against the threats to monopolist rates of profit.

For this reason it is tied up not only with the artificial limitation of production in certain sectors, but also with the frantic search for new fields of capital investment new industries and new countries. It is true that the monopolies strive to monopolize research and suppress or retard the application of many technical discoveries; but it is equally true that monopoly capitalism also calls forth an increase in these technical discoveries.

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One reason for this is the monopolies themselves need to open new sectors of exploitation in order to have an outlet for their excess capital.

Experience has shown, especially in the chemical, iron, electronics and nuclear domains, that the last fifty years have at least been as fertile in technical progress as the preceding fifty years. Beside these fundamental characteristics which remain valid, some secondary characteristics should be modified: The control and domination of industrial capital by finance capital has proved to be a passing phenomenon in numerous countries United States, Great Britain, Japan, Belgium, Netherlands, etc.

Thanks to the accumulation of enormous super profits, the trusts are expanding more and more by self-financing and are freeing themselves of bank tutelage. Only in the weaker or more backward capitalist countries does finance capital remain predominant. The export of capital continues to represent a safety valve for the over-capitalized monopolist trusts, but this is no longer the main safety valve, at least in the United States except in the oil industry.

Government orders are the main safety valve. The increasing role of the State as guarantor of monopolist profit, and the increasing fusion of the monopolists with the State are today the main characteristics of declining capitalism. They spring as much from social and political as from economic causes colonial revolution, industrialization of backward countries, narrowing of operational field of capital in the world, etc.

The layer of coupon-clippers unique to parasitic imperialism has been reduced rather than extended following the structural transformations mentioned above.

The big trusts finance their investments more by self-financing than by issuing negotiable shares. There is a bureaucratization of monopolist capital, and the structure rests more and more on a hierarchy of big administrators executiveswho are most often themselves big or medium share-holders.

The parasitic character of declining capitalism appears above all in the enormous extent of unproductive expenditures in the first place armaments, but also the maintenance of the state apparatusand in the enormous costs of distribution valued at more than 30 percent of the national income in the United States. Today, political factors — such as the rising colonial revolution — are increasingly combined with fundamental economic characteristics to give capitalism its particular outlines and behavior.

The Critics Bourgeois and reformist theoreticians have generally been very tardy in contesting the Marxist conception of the new phenomena which appeared in the capitalist world of the 20th century. In fact, they have seemed hardly aware of the existence of these phenomena. To be convinced an introduction to a new kind of capitalist imperialism this it is sufficient to run through the main subjects with which they were preoccupied and which they discussed in the years preceding the First World War.

While Kautsky, Hilferding, Luxemburg, Lenin Trotsky, Parvus, the Dutch Marxists grouped around De Nieuwe Tijd, and the Austro-Marxists around the young Otto Bauer devoted their economic research to the phenomena connected with monopolist imperialism, the bourgeois economists, apart from a few outsiders, were discussing monetary phenomena, prolonging the polemic of the marginal utility school against the labor theory of value school, and concentrating on the development of the theory of market equilibrium under conditions of perfect competition.

This lag continues to prevail: All this confirms once again the correctness of the comment made by Marx some 80 years ago: The majority, if not all, the bourgeois conceptions of imperialism and monopoly capitalism possess this pronounced apologetic character. They constitute an ideology in the Marxist sense of the word: They are conceptions formulated to justify and partly conceal the existing reality. The barrenness of these conceptions is the most striking manifestation of the lamentable theoretical breakdown of Kautsky and Hilferding, a breakdown which followed their political betrayal.

Starting from the inevitability of a supreme concentration of capital, the reformist theoreticians approve this development and discover in it surprising virtues of economic and social harmony.

Just as the cartels and trusts suppress competition to a very large extent, so also the anarchy of production and the crises which it provokes can be abolished by the monopolies. The latter are interested in completely reorganizing economic and social life to avoid needless expenses which costly conflicts incur crashes, strikes, etc.

Just as the great captains of industry learn to reach an understanding among themselves, so also they learn to reach an understanding with the labor unions. The labor movement should neither oppose the cartelization of industry nor defend small industry against big. On the contrary, they say, the labor movement should support all tendencies towards a maximum concentration of industry, towards the leadership of the trusts, towards the organized economy.

  • They are conceptions formulated to justify and partly conceal the existing reality;
  • Capitalism has evolved by deepening economic ties, especially within territorial spaces, marked by national borders and identities Panitch and Gindin 2005:

Thus, the stage of monopoly capitalism can represent a transitional stage between capitalism and socialism during which the contradictions and conflicts can gradually be lessened.