Philosophy

An In-depth Analysis of Imperialism

By on Tuesday, September 12, 2023

The Distinctive Characteristics of Capitalism

Capitalism is characterized by the rapid expansion of industry and the concentration of production in ever-larger enterprises. In Germany, large enterprises employ more than 50 workers, with a concentration of production surpassing that of workers due to the heightened labor productivity in large enterprises. In contrast, smaller enterprises, employing up to five workers, consume only 7% of the total steam and electric power supply.

In the United States, large-scale enterprises with an output value exceeding one million dollars numbered 1,900 out of 216,180, employing 1,400,000 workers out of 5,500,000, and their output’s value reaching $5,600,000,000 out of $14,800,000,000. By 1909, the figures were even more striking, with 3,060 enterprises employing 2,000,000 workers and an output value of $9,000,000,000.

The transformation of competition into monopoly is a significant phenomenon in modern capitalist economies. However, this transformation is only partially accurate. American statistics often depict 3,000 giant enterprises across 250 branches of industry, which is only partially accurate. A fundamental characteristic of capitalism’s advanced stage is the amalgamation of production, wherein various branches of industry are amalgamated within a single enterprise. This amalgamation serves to smooth trade fluctuations, ensure a more stable profit rate, eliminate trade, enable technical advancements, and bolster the position of conglomerate enterprises.

In free-trade Britain, concentration leads to monopolies, albeit at a later stage and potentially in a different form. Distinctions between capitalist countries, such as protectionism or free trade, primarily result in minor variations in the types of monopolies or the timing of their emergence. The ascendancy of monopolies due to the concentration of production is a fundamental and universal law in the current stage of capitalism’s evolution.

Monopoly represents power in industries where controlling raw material sources is unattainable. For example, the cement industry in Germany is extensively cartelized, with manufacturers forming regional syndicates and imposing monopoly pricing. Monopolists can hinder competition by spreading false information, issuing warnings, and acquiring outsiders. Monopoly also exacerbates the inherent disorder of capitalist production and intensifies the gap between agricultural and industrial development. Economic crises further bolster the inclination towards concentration and monopoly, with the 1900 crisis marking a significant turning point in the history of modern monopolies.

Banks as Profit-Generating Intermediaries

Banks play a crucial role in capital concentration and the formation of monopolies across all capitalist nations despite variations in their banking regulations. The German joint-stock banks, for example, held deposits exceeding one million marks during 1907-08. In collaboration with its affiliated banks, Deutsche Bank exercised dominion over nearly 3,000 million marks, establishing itself as the oldest world’s most significant and most widely distributed accumulation of capital. This concentration of capital and surge in bank turnover fundamentally redefined the role of banks, amalgamating disparate capitalists into a unified collective capitalist entity.

Savings banks and post offices are progressively competing with conventional banks, adopting a more decentralized approach and managing entrusted funds in the millions. The waning significance of the Stock Exchange underscores this shift from free competition to monopoly. Traditional capitalism, which heavily relied on the Stock Exchange for regulation, is gradually receding, with banks and industry now autonomously managing the economy.

The emergence and expansion of major capitalist monopolies occur through various natural and orchestrated means, resulting in a division of labor among the numerous financial magnates who exert influence over modern capitalist society. The growth of specialization among directors of significant banks stems from the broadening scope of activities undertaken by specific prominent industrialists and the appointment of provincial bank managers responsible for overseeing specific industrial regions. This system is further augmented by banks’ efforts to appoint industry experts to their Supervisory Boards, resulting in a deeper integration of bank and industrial capital and transforming banks into institutions with a genuinely “universal character.”

The Emergence of Finance Capital

Hilferding’s work highlights the rise of finance capital, controlled by banks and employed by industrialists. This concentration of production and capital leads to the dominance of a financial oligarchy, which arises from the business activities of capitalist monopolies. The “holding system” plays a crucial role in this oligarchy, allowing the leader of a corporation to oversee not only the leading company but also its subsidiary firms, which in turn exercise control over additional subsidiaries. This system enhances the power of monopolists and allows them to employ deceptive tactics to defraud the public.

The financial statements of joint-stock companies often resemble the Middle Ages, with the added benefit of dividing a business into multiple parts through the establishment of ‘daughter companies’ or their incorporation. Major Russian banks are classified into two primary groups: those under the ‘holding system’ and independent banks, and the division of banks’ capital into productively invested capital (dedicated to industrial and commercial ventures) and speculatively invested capital (used in Stock Exchange and financial operations). This merger of bank and industrial capital has made significant progress in Russia, where finance capital extracts substantial profits from activities like company flotation, stock issuance, and state loans.

In France, the financial oligarchy is dominated by four powerful banks that maintain an absolute monopoly in bond issuance, exercising control over the press and government. The early twentieth century marked a turning point in the expansion of monopolies and finance capital.

Capitalism’s Emphasis on Commodity Production

Capitalism operates as a system primarily focused on producing and trading commodities, particularly emphasizing the export of goods and capital. A notable characteristic of capitalism is the expansion of both domestic and international exchanges, often accompanied by disparities in development and the prevalence of substandard living conditions as fundamental aspects.

The substantial expansion of capital export only became genuinely significant in the early twentieth century, with the three major countries collectively investing between 175,000 million and 200,000 million francs in foreign territories. This export of capital yields substantial influence, significantly expediting the progress of capitalism in the recipient nations. While it has the potential to impede development in the countries exporting capital, it does so only by further extending and intensifying the overall advancement of capitalism on a global scale.

The era marked by finance capital and monopolies has given rise to a period dominated by monopolistic entities. These monopolies apply their principles by leveraging “connections” to engage in profitable transactions. It frequently leads to dealings between exceedingly large corporations that sometimes border on corrupt practices.

Financial capital emanating from France and Germany exerts a worldwide influence, with banks established in colonies playing a pivotal role in this global dynamic. German imperialists hold a deep admiration for the self-sufficiency achieved by colonial nations. At the same time, American capitalists covet the investments made by English and German banks in countries like Argentina, Brazil, and Uruguay. This division of the world is not merely a figurative concept but a palpable reality.

Capitalism and the Interconnected Global Market

Capitalism has created a global market where the domestic and foreign markets are intricately intertwined. It has been accentuated by the growth in capital exports and the expansion of monopolistic groups, leading to a trend towards international agreements and cartels. Significant advancements occurred in the electrical industry, especially in the United States and Germany.

The crisis of 1900 accelerated the concentration process, resulting in the emergence of two dominant players in the electrical sector: the American General Electric Company and the German General Electric Company. In 1907, trusts from Germany and the United States reached an accord to divide the world’s markets, effectively eliminating competition. However, it is crucial to recognize that this division does not preclude the possibility of a new division if the balance of power shifts due to factors like uneven development, war, or financial collapse.

The oil industry exemplifies an attempt at division, with figures like Rockefeller from the American Standard Oil Co. and Deutsche Bank striving to retain control over Romania and integrate it with Russia. The division contest reached its conclusion in 1907 with the defeat of Deutsche Bank.

The “comedy of oil” began when German financial leaders, including von Gwinner and his private secretary Stauss, initiated a campaign for a state oil monopoly. This idea gained popularity within the German government, and Deutsche Bank aimed to outwit its American counterpart while enhancing its business through a state monopoly. However, disputes among German banks over the distribution of profits emerged, leading to the eventual triumph of the Rockefeller Oil Trust. Germany confronted the oil trust by establishing an electricity monopoly and converting water power into affordable electricity. In Germany, monopolies have never been primarily motivated by the aim of benefiting consumers or sharing a portion of their profits with the state; their primary objective has consistently been to facilitate the rescue of private industries on the verge of bankruptcy.

The evolution of concentration in merchant shipping and the formation of the International Rail Cartel also played roles in the division of the world. International cartels, symbolizing the internationalization of capital, do not necessarily guarantee peace among nations within the capitalist framework. Instead, they underscore the development of capitalist monopolies and the ongoing struggle among capitalist associations. The core of this struggle, its class nature, remains unchanged as long as class divisions persist. Capitalists allocate control over the world proportionately to their capital and influence, fluctuating with economic and political developments. A comprehensive understanding of these dynamics is crucial for grasping the latest stage in the evolution of capitalism.

The Final World Division and the Emergence of Colonial Policy

The final division of the world marks the period in question as capitalist nations complete their colonization of unclaimed territories. It signals the onset of a distinctive era in global colonial policy, intricately linked with the latest stage in the development of capitalism, known as finance capital. Morris’s book, which explores the history of colonization, offers a synopsis of data regarding the colonial holdings of Great Britain, France, and Germany across different periods of the nineteenth century.

The era of pre-monopoly capitalism, which dominated the 1860s and 1870s, peaked during that period. The shift to monopoly capitalism, characterized by the dominance of finance capital, is associated with the heightened global competition for territorial control. British bourgeois politicians like Cecil Rhodes and Joseph Chamberlain championed imperialism, citing modern imperialism’s economic and socio-political foundations.

The Changing Territorial Division

The territorial division of the world has undergone significant changes in recent decades, with countries such as Persia, China, and Turkey coming under increased colonial influence. The world’s partitioning at the turn of the twentieth century was comprehensive, resulting in a more than fifty percent increase in colonial possessions for the six major powers. By 1914, these four leading powers had amassed colonies covering an area of 14,100,000 square kilometers, approximately half the size of Europe.

The pace of colonial expansion has been uneven, with France, Germany, and Japan collectively acquiring nearly three times as much colonial territory as the other two combined. The impact of large-scale industry, international trade, and finance capital has influenced the process of global leveling. Smaller colonies belonging to less powerful states are potential subjects of a future “redivision” of colonies, often holding onto their colonial possessions due to conflicting interests and disputes.

The latest phase of capitalism is marked by the ascendancy of monopolistic associations comprised of significant employers, and this dominance is most pronounced when a single group gains control over all sources of raw materials. Finance capital demonstrates a strong enthusiasm for existing and prospective reservoirs of raw materials in light of the swift progression of technology and the possibilities for enhancing land resources through inventive approaches. This drive fuels the pursuit of expanding influence and territory, including colonial conquest.

For instance, British capitalists are focused on developing cotton production in Egypt and Turkestan to outcompete foreign rivals and secure a monopoly over sources of raw materials. The non-economic aspects of finance capital, including politics and ideology, catalyzed colonial conquest. This era of capitalist imperialism gave rise to intermediate forms of state dependence, such as semi-colonies and British protectorates. For example, Argentina experiences financial dependence on London, while Portugal has been under British protectorate for over two centuries.

The global division of territories has been discussed in various literary works, encompassing American, English, German, and French bourgeois literature. Historian Driault argues that the empires’ might in the 19th century far exceeded the power of the nations that established them. This division of the world is likely to continue exerting influence on European political dynamics.

Imperialism

Imperialism naturally emerges as an extension of capitalism, and it reaches its peak during an advanced stage of development. This phase involves the displacement of free-market capitalism by monopolistic capitalism, leading to the growth of large-scale industries at the expense of smaller ones. Consequently, this process results in the concentration of production and capital, giving rise to cartels, syndicates, trusts, and the fusion of bank capital with industrial capital. The transition from a colonial policy to a policy centered on monopolistic control of the world marks the division of the globe.

A comprehensive definition of imperialism comprises five key elements:

  1. The advancement of production and capital concentration to an advanced stage.
  2. The amalgamation of financial capital and industrial capital.
  3. The export of capital.
  4. The formation of international monopolistic capitalist alliances.
  5. The partitioning of the world among the most prominent capitalist powers.

Karl Kautsky, the leading Marxist theoretician of the Second International, criticized this definition of imperialism, contending that it should not be seen merely as a distinct “phase” or stage of the economy but as the preferred policy of finance capital. According to Kautsky, imperialism, as he defines it, constitutes a political and economic struggle for annexation. However, his definition needs to be completed as it primarily emphasizes finance capital over industrial capital.

The core characteristic of imperialism centers on the rivalry among multiple significant powers for hegemony rather than immediate benefits. Kautsky’s definition diverges from Marxist principles, as it separates the politics of imperialism from its economic foundations. He argues that annexations are a policy “preferred” by finance capital, in contrast to an alternative bourgeois policy. This separation obscures the profound contradictions intrinsic to the latest stage of capitalism, fostering bourgeois reformism instead of adhering to Marxist principles.

Kautsky’s theory of ultra-imperialism, which envisions a scenario of superimperialism and the union of the world’s imperialistic powers, is illogical and inconsistent with Marxism. It is vital to scrutinize economic data on this matter.

The epoch of finance capital, commencing at the turn of the twentieth century, represents a historically specific era that differs from the contemporary global economy. R. Calwer’s work, An Introduction to the World Economy, categorizes the world into five primary economic regions: Central Europe, Great Britain, Russia, Eastern Asia, and America. The three regions characterized by highly developed capitalism include Central Europe, the British and American regions, and the United States. These regions experience intense imperialistic rivalry and competition, with Germany, Great Britain, and the United States competing for global dominance.

The most rapid development of railways has occurred in the colonies and independent states of Asia and America, firmly under the influence of financial capital. While roughly 80 percent of all existing railways are controlled by the five major powers, the concentration of ownership, represented by finance capital, is significantly greater.

The fundamental question that remains is this: Within the capitalist framework, what alternative methods, apart from warfare, exist to address the discrepancy between the advancement of productive forces and capital accumulation on the one hand and the division of colonies and spheres of influence to benefit finance capital on the other?

The Role of Parasitism in Imperialism

Imperialism is marked by parasitism, serving as its profound economic foundation. Capitalist monopolies, born out of capitalism, coexist within the broader framework of capitalism, commodity production, and competition. However, they inherently cultivate a proclivity for stagnation and deterioration. Monopolies within the capitalist system cannot wholly eradicate competition on the global stage, and the potential to intentionally impede technological progress remains.

Imperialism also encompasses the substantial accumulation of monetary capital in a select few countries, amounting to 100,000-150,000 million francs in securities. This accumulation leads to a class of rentiers who subsist by collecting interest payments (“clipping coupons”) and do not engage in productive enterprises. The term “rentier state” (Rentnerstaat) is gaining traction in economic literature related to imperialism as the world increasingly stratifies into a small group of usurious states and a vast majority of debtor states. This rentier state embodies a parasitic and deteriorating form of capitalism that exerts influence over all socio-political conditions and shapes the two fundamental trends within the working-class movement.

Hobson underscores the heedless indifference of Great Britain, France, and other imperial powers concerning their precarious reliance on China. He envisions a scenario where Western Europe could evolve into a federation of great powers, ushering in a form of Western parasitism. It would result in subjecting China to the economic control of a new financial elite, siphoning off the vast potential source of profit it represents.

The author acknowledges the significance of a “United States of Europe” in the contemporary imperialist landscape while recognizing opposing forces against imperialism and opportunism. Schulze-Gaevernitz’s account of British imperialism reveals similar parasitic characteristics, with Great Britain’s national income expanding nine-fold from 1865 to 1898. The peril of imperialism lies in transferring the burden of physical labor to the colored races, which could potentially open the path to economic and political liberation.

Imperialism has led to a decline in emigration from imperialist countries and an increase in immigration from less developed nations with lower wages. Emigration from Great Britain has steadily decreased since 1884, whereas emigration from Germany has experienced an upswing. Imperialism tends to create privileged segments among the working class, detaching them from the proletarian majority. In Great Britain, imperialism has temporarily impeded the working-class movement due to its extensive colonial holdings and dominant position in the global market. Consequently, some British working class embraced bourgeois ideals and allowed themselves to be influenced by individuals aligned with the bourgeoisie. The present situation is characterized by economic and political conditions that exacerbate the irreconcilable differences between opportunism and the broader interests of the working-class movement.

Classes and Imperialist Attitudes

Critiques of imperialism revolve around how different societal classes perceive imperialist policies and their underlying ideologies. The substantial concentration of finance capital in a few hands creates a complex network of relationships and connections, subjecting small and medium capitalists and smaller-scale masters. The intensifying struggle among various national groups of financiers for global dominance and control over other countries leads the propertied classes to align themselves entirely with imperialism. Concurrently, the working class also becomes influenced by imperialist ideology, and no insurmountable barriers are separating it from the other classes.

Bourgeois scholars and publicists defend imperialism in a somewhat concealed manner, obscuring its complete dominance and deeply ingrained foundations. The central questions in the critique of imperialism revolve around whether it is feasible to reform its core, progress towards an intensified and deepened manifestation of the conflicts it generates, or regress towards mitigating them.

Kautsky’s economic critique of imperialism relies on statistical data concerning British trade with Egypt between 1872 and 1912. He concludes that the growth of British trade with Egypt would have been slower without military occupation, as capital expansion is most effectively promoted through peaceful democracy, in his view. Kautsky departs from Marxism by advocating for a “reactionary ideal,” “peaceful democracy,” and the sole operation of economic factors. Nevertheless, this argument lacks significance as it fails to clarify how capitalism and trade would have developed more rapidly without monopolies, cartels, or the influence of finance capital.

German imperialism’s superiority over British imperialism extends beyond colonial boundaries and protective tariffs. Even the bourgeois economist A. Lansburgh scrutinized an imperialist nation’s export trade, investigating the relationship between exports and loans. He discovered that exports to countries financially dependent on Germany experienced more rapid growth than those to financially independent nations. Lansburgh’s argument regarding the instability and irregularity of export trade is rooted in the maneuverings of finance capital, which prioritizes profits from loans over adherence to bourgeois morality. The increase in exports is connected to the strategies employed by financiers, particularly in the sale of goods by cartels.

Kautsky’s theoretical critique of imperialism is a precursor to his advocacy for peace and unity with opportunists and social chauvinists. This stance evades and obscures the fundamental contradictions of imperialism. Kautsky’s theory of “ultra-imperialism,” a term he coined, is regressive and deceives the masses with the false hope of achieving permanent peace under capitalism. Comparing facts to Kautsky’s “Marxist” theory reveals that the sole conceivable foundation for allocating spheres of influence, interests, and colonies within a capitalist framework hinges on evaluating the power held by the parties concerned, and this power distribution does not evolve reasonably.

Kautsky’s theory of imperialism places significant emphasis on the concept of “inter-imperialist” or “ultra-imperialist” alliances, which he sees as periods of “truce” between wars. These alliances lay the groundwork for wars and stem from them, resulting in alternating phases of peaceful and non-peaceful struggles, all rooted in imperialist connections and relations within global economics and politics. Nonetheless, Kautsky distinguishes the present peaceful alliance for “pacifying” China from the imminent non-peaceful conflict, which he believes will prepare the ground for another “peaceful” general alliance focused on the partition of Turkey. This obfuscation of the deep-seated contradictions of imperialism leaves its mark on his critique of imperialism’s political characteristics. He argues that imperialism represents an epoch of finance capital and monopolies, which fosters ambitions of dominance rather than freedom. This intensification of national oppression and resistance threatens European capital in its most valuable and promising areas of exploitation.

Evolution from Free Competition to Monopoly Capitalism

Imperialism embodies a variant of monopoly capitalism that has developed from the early phase of free competition, advancing towards a more sophisticated socio-economic arrangement. It can be classified into four primary categories: monopoly arising from the concentration of production, monopoly driven by the acquisition of raw materials, monopoly originating from the banking sector, and monopoly emerging from colonial policies. The cumulative presence of monopolistic tendencies, the prevalence of oligarchic control, and the pursuit of dominance collectively contribute to the distinctive features associated with imperialism, which are marked by parasitic or deteriorating manifestations of capitalism.

A key aspect within imperialism is the notion of the “rentier state,” where the bourgeoisie sustains itself using capital exports and the accrual of interest payments, often colloquially referred to as “clipping coupons.” Despite capitalism experiencing rapid expansion, disparities become evident as some nations with highly concentrated capital undergo a decline. The swift economic development witnessed in countries such as Germany and the United States has played a role in the emergence of parasitic characteristics seen in contemporary American capitalism. Furthermore, the previous political distinctions that separated the republican American bourgeoisie from their monarchist counterparts in Japan or Germany have faded away.

Capitalists across various industries amass significant monopoly profits, leading to the enticement of workers through bribery and fostering a connection between imperialism and opportunism. This nexus was particularly pronounced in Great Britain, where specific aspects of imperialist development became noticeable earlier than in other nations. Nonetheless, an aura of optimism regarding opportunism serves as a diversion, as the rapid growth of opportunism does not ensure its ultimate triumph. The struggle against imperialism is inherently linked with the battle against opportunism.

Modern capitalism is often characterized as “moribund capitalism,” with terminology like “interlocking” and “absence of isolation” commonly employed to depict the prevailing dynamics. However, this interconnection is fundamentally grounded in the production process becoming more communal as significant corporations manage the acquisition, conveyance, and dispersal of raw materials to countless consumers. This notion of socialization of production constitutes a continuation of the Marxist concept of the “socialization” of production.

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