US-China trade tensions, Germany’s slide into recession, EU crisis and regional conflicts all bear witness to increasing rivalry between the major powers and trading blocs. They also mean that an understanding of the imperialist stage of capitalism is more relevant than ever. ROBIN CLAPP writes.
When Jeremy Corbyn wrote the foreword to a 2011 edition of John A Hobson’s classic work, Imperialism: A Study, a Guardian reviewer called it a “perfectly decent introductory essay”. Yet in May of this year, Corbyn’s endorsement of this 1902 book was weaponised by a Times journalist, who claimed that Hobson was anti-Semitic and, by extension, the Labour leader must be so too.
In fact, the book contains no evidence of antisemitism and, although some of the terminology describing the oppressed masses of the then colonial world would be considered unintentionally offensive by today’s standards, Hobson’s purpose in writing the book was to analyse and expose the economic, national and cultural exploitation of the millions held in economic and, in many places, military bondage by the imperialist powers. Lenin valued Hobson’s work and quoted from it extensively in Imperialism, the Highest Stage of Capitalism, written 14 years later. He praised its scholarly approach in arriving at “a very good and comprehensive description of the principal specific economic and political features of imperialism”.
Hobson was a social reformer and pacifist, not a socialist. His legacy was even endorsed by Tony Blair in the 1990s. Nevertheless, his meticulous research into capitalist economic, social and political relations at that historical moment drew him to conclude: “Secure popular government, in substance and in form, and you secure internationalism; retain class government and you retain military imperialism and international conflicts”.
Imperialism is a specific stage in the development of capitalist production and exchange relations on a world scale. It describes a higher, more predatory and more mature stage of economic interactions than those which existed in capitalism’s nascent phase. The early growth of capitalism was dependent upon the most barbaric forms of primitive accumulation, including the forced exportation of millions of African slaves and brutal colonial plunder.
In his Grundrisse notebooks, unpublished until 1939, Karl Marx had observed: “As long as capital is weak, it still relies on the crutches of past modes of production… As soon as it feels strong, it throws away the crutches and moves in accordance with its own laws. As it begins to sense itself and become conscious of itself as a barrier to development, it seeks refuge in forms which, by restricting free competition, seem to make the rule of capital more perfect, but are at the same time the heralds of its dissolution and of the dissolution of the mode of production resting on it”.
Hobson and later Lenin showed that the golden era of capitalist ‘free trade’ and competition was already declining by 1870, with the first monopolies and cartels beginning to appear shortly after. By 1900 these had become the principal developing form of production across the major capitalist economies.
Cartels and monopolies
Imperialism heralds that stage of capitalism in which the transition from free competition to monopoly becomes dominant. These giant companies merge with ever more powerful banks into a new, higher form of monopoly which Lenin referred to as ‘finance capital’, controlled by rentiers and unaccountable financial oligarchies. This process unleashes a further massive concentration and centralisation of capital. Ultimately, modern industrial capital is finance capital.
Modern multinationals constitute a more developed form of monopoly than the cartels and trusts analysed by Lenin. Privately controlled firms signify a strengthening and not a weakening of capitalist monopoly. Previously, the state had to substitute in part for the weakness of undeveloped commodity relations.
The Bolshevik leader Nikolai Bukharin – in his work, Imperialism and the World Economy – pointed in 1916 to the ‘state capitalist trust’ model that was emerging. He believed this would become the dominant trend but, with significant exceptions in east Asia – especially China today – modern multinational monopolies are mainly now privately owned. In both interlinked models a commodity economy based on a world market prevails and class relations between the working class and the ruling class remain conflicted. Moreover, despite their international reach, it is important to recognise that most major multinationals are still owned and located in a specific country and retain the majority of their sales within one of the major trading blocs, however widely their tentacles extend across the globe.
A key feature of the imperialist stage of capitalism is the export of capital, as opposed merely to the export of commodities. This is necessitated by the need for capitalists to locate new markets through which to make their surplus value work more profitably for them. Marx had already identified this development in Capital, Volume 3: “If capital is sent to foreign countries, it is not done because there is absolutely no employment to be had at home. It is done because it can be employed at a higher rate of profit in a foreign country”.
The territorial division of the world into competing economic spheres of influence after 1870 saw oppressor nations – principally Britain, France, Holland, Belgium and Portugal, and later Germany, Japan and the US – carve out or consolidate empires through the division of Africa, the bloody dismemberment of China, and economic dominance over swathes of Latin America and pre-revolutionary Russia. Colonial conquests extraordinarily sharpened territorial rivalries as the world was partitioned for profit. Between 1876 and 1914 the imperialist countries acquired about 25 million square kilometres of colonial lands, an area twice the size of Europe.
Preparing the ground for war
The conquests of finance capital were and still are underwritten and guaranteed by prodigious expenditures on weapons of destruction. While the productive forces are hemmed in by the narrow framework of private property and competing nation states, in Lenin’s words, “for the first time the world is completely divided up, so that in the future only re-division is possible…”
The 1914-18 war germinated in the years of imperialist expansion. Writing in 1939, on the eve of the second world war, Leon Trotsky observed: “Imperialist war is one of the functions of finance capital, ie the bourgeoisie at a certain stage of development resting upon capitalism of a specific structure, namely monopoly capital”. Marxists like Lenin, Bukharin and Rosa Luxemburg, writing about the contradictions inherent in imperialism, understood the inevitability of conflict between the great powers.
What was not so clearly foreseen before 1914 was the manner in which the leaderships of the international workers’ movement would capitulate to the capitalist ruling classes in the warring nation states. In a shameful article on 8 November 1914, Neue Zeit, the theoretical journal of the formerly Marxist Social-Democratic Party of Germany, wrote: “The world war divides the socialists of the world into different camps… The international cannot prevent this… it ceases to be an effective instrument in times of war. Its great historic problem is the struggle for peace and the class struggle in times of peace”.
After 1918 the world economy relapsed into blockades, discriminatory policies, high tariffs and exchange controls that fuelled the forces precipitating the great depression of the 1930s. Trade between 1913 and 1950 grew at just half the pace of output compared to before 1913. A new world war was rooted in the build-up of imperialist clashes, and Trotsky warned with Hitler’s ascent to power in 1933 that “fascism is a chemically pure distillation of the culture of imperialism”.
Imperialism since 1945
The emergence from the war of a strengthened Stalinist Soviet Union represented a challenge to the hegemony of capitalism and made necessary a massive rise in armaments expenditure, including the nuclear ‘deterrent’. Capitalist politicians at the time pointed to the apparent hardiness of newly established international organisations, like the United Nations, International Monetary Fund, World Bank, Nato and the General Agreement on Tariffs and Trade. They claimed this showed that, in the post-war world, the capitalist classes in the dominant countries were committed to economic co-operation and a new US-stamped international order. This soothing narrative accompanied the dream that the capitalist boom-slump cycle was now tamed, and production and trade would keep growing and flowing freely without future tariff or trade wars.
In the 1950s and 1960s, across Africa, the Caribbean and Asia capitalism largely disengaged from its former direct colonial conquests. This was not based on a conversion to the idea of liberty by the western imperialists. It was a recognition that economic exploitation could continue more productively without having to have ‘boots on the ground’. In many cases, this process was forced upon them by the revolutionary struggles of the masses in the colonial world.
Key to this new relationship was ensuring that the freshly independent countries were not able to extricate themselves financially or economically from their former occupiers. Thus much of the industry in Ghana was smashed up by British imperialism on its exit in 1957 and monocultural (one crop) production was enforced.
Imperialism emerged stronger and apparently more durable after 1945, but with its bloody paw prints all over those parts of the world ‘freed’ from its military rule. The US enjoyed unassailable economic domination within the capitalist bloc in this era, acting as the world’s policeman, fighting wars against Chinese and Soviet-backed social liberation forces in Korea, Vietnam and elsewhere, while undermining and overthrowing regimes that were deemed to pose a threat to American interests.
Wars like that waged by the US in Vietnam cannot be reduced crudely to the simple requirements of capital accumulation. However, the territorial logic of anti-Russia cold war containment policies meant that US big business demanded that as much of the world as possible be opened to the penetration of the greenback and protected from the combined threats of national liberation, Moscow’s influence, or social revolution. There have been only 26 days of world peace since 1945, according to some authoritative estimates, underlining Lenin’s warning that monopoly capitalism represents horror without end.
Imperialism guarantees only a limited and conditional development of the productive forces. The post-war era saw the creation of the European Economic Community (forerunner of the EU), a strategic attempt by German and French capitalism to consolidate free trade within a western European trading bloc.
Other incipient multilateral blocs began to coalesce in this period too. However, even between 1950 and 1973, a time of rising GDP and trade, capitalism was unable to resolve the fundamental contradictions between the private ownership of the means of production, the rivalries between nation states, and the latent but largely unrealisable potential provided by new technologies to rationalise worldwide production, trade and value creation. In fact, this could only be achieved through a genuinely democratic, world socialist planning mechanism.
The economic crisis in the 1970s signalled the beginning of the end for this period of apparently peaceful western geopolitical and economic co-operation. The relative weakening of the economic and military position of the US, triggered a turn to more aggressive neoliberal economic policies and the key features of rapacious imperialism described by Lenin. Somewhat eclipsed in the boom years in the west by multilateral odes and platitudes, they began to become more clearly exposed again, as in the case of the economic sabre-rattling by Washington in the 1980s against ‘unfair’ Japanese trading policies.
A characteristic of the growth years after 1950 had been the state’s extensive involvement in economic life, with entire sectors being nationalised, not in the interests of the working class but in order to create stability and underpin profitability for the imperialists. In the core imperialist nations, one of the key scientific and economic purposes of the state is to use its resources and make freely available its research and development apparatus to assist the profitable functioning of ever-larger super-companies. Pioneering R&D by state institutions is pillaged without acknowledgement. State expenditure has been responsible for initiating almost all of the technological innovations in the last 70 years.
Meanwhile, the fundamental role of international institutions like the IMF and World Bank is limited to that of acting as enablers for neoliberal monopoly capitalism as imperialists extend their grip and power into every corner of the world. Smaller UN nations dare not confront the imperial powers and its peacekeeping forces may only be used where all permanent Security Council members agree.
According to the UN Conference on Trade and Development, today about 80% of global trade is linked to the international production networks of multinational corporations, either as in-house foreign direct investment or as ‘arms-length’ relations between lead firms and their formally independent suppliers. The centralisation and concentration of production analysed by Lenin is illustrated by the fact that the 500 largest multinational companies globally generated $31.1 trillion in 2014. A year later, figures show that, although 36 countries are represented in the Global 500 Index, 472 of the companies are from only 16 countries. Of these, thirteen are the world’s largest economies.
The total number of employees of the ten largest companies worldwide in 2014 exceeded 9.8 million, more than the population of many independent nations. The collapse of the Stalinist bloc in 1991, the ‘liberalisation’ and opening up of south and east Asian markets, and the beginnings of a restoration of a hybrid form of state capitalism bringing China more fully into key sectors of the world market, saw the doubling of the world labour force in the 1990s.
This process was accompanied by a dramatic change in the composition of the labour force across Latin America, South Asia and Africa, where hundreds of millions of workers and farmers were uprooted from the land and tied more fully into the capitalist market, not primarily as consumers but as valuable additions to a vastly expanded pool of super-exploitable labour-power. In 2010, 79%, or 541 million of the world’s industrial workers, lived in ‘less-developed regions’. Just 21% lived in imperialist countries.
Capitalism is inherently incapable of bringing about an integrated world economy where the producers of surplus-value – the working class – plan, own, produce and exchange commodities according to need and not private profit. Therefore, the epoch of so-called ‘globalisation’ never described a harmonious world economic and social order. It is a mask seeking to disguise the modern intensification of the struggle between capital and labour, the privatisation of former state-owned utilities, health and education services, an increasingly ferocious battle to obtain market share and domination, and a spiralling polarisation between the poor and the super-rich.
For 40 years a rising share of national income has been going to the owners of capital in the form of profits, a trend manifested in most imperialist and non-imperialist nations alike. In the UK the wealthiest 10% of households own 45% of wealth, while the least wealthy half has just 9%. Neo-colonial countries are now frequently susceptible to imperialist predation by more than one power, with China joining the new ‘scramble for Africa’ with its Belt and Road Initiative (BRI) trade inducements.
This involves infrastructural development and investment in 152 countries and international organisations in Africa, Asia, the Middle East and the Americas. It therefore poses a stark threat to US imperialism. China needs to find new ways to deal with its surplus production and over-capacity. Hence, BRI allows it to dump billions of manufactured commodities into Africa, forcing sovereign states to open up their markets to trade. Over three million Chinese workers and technicians now work in Africa assisting in the deepening of its imperialist ambitions.
Imperialism is frantically engaged in seeking to further exploit new markets in the neo-colonial world, with the US, EU nation states, China and Russia all knocking on the door. Oil, gas, minerals, land and a vast labour force are the prizes to be won. Like the missionaries of the 19th century, imperialism offers little more than perjured contracts and trinkets, in return for markets and minerals. Local laws are trampled over with impunity. According to the African Union, $150 billion disappears from Africa every year through illegal mineral exports.
Eighty percent of US imports from Africa are oil, while gas, minerals and oil make up 86% of China’s imports. Multinational corporations such as Shell and Total dominate the Nigerian oil market. However, signs of new frictions are appearing, with China’s Sinopec recently taking over the country’s largest independent producer of gas, while Russia’s Gazprom has invested $2.5 billion in Nigerian gas.
Imperialism’s message to Africa and everywhere else where it deepens its malign influence is very clear. In this era of rising neoliberal aggression, it is attempting to force down the value of labour-power in order to secure the super-exploitation of workers, especially youth and women. This is something that Marx was familiar with when he wrote in Capital that surplus labour time can also be extended “by pushing the wage of the worker down below the value of his labour-power”.
Parasitic finance markets
Strict exchange controls were not scrapped in the UK until Margaret Thatcher came to office in 1979. So there was little visible evidence until after then of the speculation that now increasingly provides a life source for an entire category of parasitic financiers, long ago witheringly referred to by Friedrich Engels as ‘coupon clippers’ who contribute nothing to the creation of real value.
In the build-up to the 2007-08 financial crisis, which was to precipitate a major and deep recession, the massive western banking sector became increasingly addicted to making easy money from fictitious and corrosive forms of ‘wealth creation’. They had been riding the waves of the volatile casino markets of derivatives, credit default swaps, futures and dozens of other ‘financial instruments of mass destruction’.
Despite some banks and other lenders going under or having to be bailed out by the state, they still trade in these ultimately valueless algorithm-driven markets, which have become embedded in the bowels of the system. No fundamental lessons have been drawn from the great recession by the capitalist class. Reliant on government handouts in the form of quantitative easing, the self-proclaimed masters of the universe view the current slowdown and next full-blown recession with foreboding.
The multinationals and their super-bank underwriters are at the very heart of the problem. Intra-firm transactions may now account for about one third of international trade. Meanwhile, many corporations are currently withholding fresh investments, sitting instead on huge capital reserves, periodically buying back their own shares in order to reward parasitic shareholders. This hesitancy reflects the capitalist class’s increasingly precarious over-reliance on fictitious capital. Accompanying this is a mania for mergers and acquisitions. Since 1998, in the UK over $5 trillion-worth of domestic acquisitions have taken place, massively deepening the centralisation of production while, more generally, encouraging rampant asset stripping.
Since 2016 new dangers have emerged to the established world order in the form of Donald Trump’s America First policy. The golden era of globalisation so beloved of politicians from Margaret Thatcher to Tony Blair has given way to anaemic growth rates, while cross-border investment, trade, bank loans and supply chains have all begun to shrink or stagnate relative to world GDP. The Economist (24 January) referred to this post-2008 age as one of ‘slobalisation’.
Nonetheless, multinationals remain hugely interconnected and are often reliant upon an international division of labour. Outsourcing, offshoring and subcontracting bulk production is a crucial part of the business strategy of most of these conglomerates. Profits are raised by separating highly complex and skilled processes, including research, design, engineering and marketing, to outside producers. In 2012, perhaps 60% of global trade was in intermediate goods and services. An iPod sold in the US for $300 provides American-based retailers with $75. Apple takes $80. Yet the Chinese workers and their employers fight to share just $2.61 between them.
Rising imperialist rivalry
The introduction of punitive tariffs by Trump against China, Mexico and the EU symbolises the new phase of imperialist rivalry that is afflicting investment plans, profit margins and geopolitical stability. Trotsky’s words from his 1924 essay, Europe and America, assume a sharpened resonance: “If we wish to give a clear and precise answer to the question of what American imperialism wants, we must say: it wants to put capitalist Europe on rations”.
It is less commonly realised that, since 1945, most countries have continued to use various forms of covert protection. The number of non-tariff measures imposed by WTO members in merchandise rose from 136 in 1986 to 2,456 in 2005, and to 43,268 at the end of 2016. The escalating tariff war between Washington and Beijing, notwithstanding temporary pauses by Trump’s mercurial behaviour, clearly signals that imperialist rivalries are escalating, with control of new technologies and rare earths one of the principal battlegrounds.
It is nonsensical, therefore, to assert that neither the US nor other capitalist nation states continue to act imperialistically. In the last 60 years, finance capital has become more powerful and destructive. Social conflicts continue to fester across every continent. The mechanisms established by the US after 1945 to ensure economic stability and shared political directives are increasingly impotent as financial and industrial interests clash and a new era of tariffs and international tensions deepens.
The crises of the last decade, especially, reveal the contradictions inherent within the capitalist system in this era of more aggressive imperialism. Vulnerabilities abound for the US, the splintering EU and China alike, as the imperialist blocs adopt more belligerent tones against each other’s trade, territorial and geopolitical interests.
There cannot be a stable integrated world system resting on market forces, any more so than when Lenin wrote. The unipolar domination of US imperialism after the demise of Stalinism has given way to a multipolar world, with the EU bloc and especially emergent Chinese state-capitalism challenging US hegemony in every sphere. Politics is concentrated economics and imperialism is the essential manifestation of modern capitalism. The perilous threat of climate change cannot be arrested by the imperialists, neither can poverty or wars.
US capitalism maintains permanent military bases and still seeks to intervene to undermine or crush movements that threaten its interests, albeit often through proxies, whether in the Middle East or other parts of the neo-colonial world. In the future, proxy wars conducted by imperialist adversaries in theatres like the Middle East can erupt into the nightmarish spectacle of open conflicts between the super-powers, as long as capitalism is permitted to prevail.
Lenin saw that the imperialist stage of capitalism, by developing the socialisation of production, had already begun to create the material prerequisites for a socialist transformation of the world. Standing in the way was the irreconcilable opposition of the world’s capitalists. Thus, the struggle to overthrow international capitalism and to fight for a socialist world takes on a new urgency. Our forces are the world’s working class, our weapon, the programme of revolutionary Marxism.